ABSTRACT
All economies display short-term cyclical fluctuations around longer-run trends. The economic policies which influence the trends, and the policy response to each short-term cycle, are the result of interactions among groups of actors (or policymakers). These actors therefore participate in a complex process of policy formulation which in turn determines the basic structural features of an economy. For example, the structure of the manufacturing industry will be related to such factors as the government’s tax and anti-trust policies, although the companies in the manufacturing sector may make forceful representations to the government about the consequences of such policies. Changes in policy may then result. In addition, the banks and trade unions may also play creative roles because where and how the companies raise the funds for investment in capital equipment, decide how to train their labour (human capital) and settle the wage rates of their employees will affect the structure and organisation of the industry.
