3.

Market structures
I. Introduction to the topic

Market economy
The market economy is an economic system where the allocation of resources on the market
is determined primarily by supply and demand. Private ownership enables individuals to
possess factors of production. In a market economy the state has a limited share in
regulating and intervening in the economy (e.g. providing welfare benefits).

Planned economy
The planned economy is controlled and coordinated by the state. The production and the
allocation of resources are prescribed centrally by the state (pricing, production and
distribution). In state-owned companies there is full employment leading to unemployment
on the job. There is no competition on the market, therefore efficiency is not increased by
private entrepreneurs who are motivated by profits. The black economy is strong because of
the shortage economy.

 Staple commodities are subsidised. The social net is relatively strong

 There is not a big gap between the layers of society

The 4 magic areas of economic policy

 Price stability
 Low level of unemployment
 Balance of payments equilibrium
 Economic growth

The six different models of mixed economies

Anglo-Saxon model  USA, United Kingdom

 The state has only a small role in the economic processes; this is a relatively
liberalised market structure.
German model  Germany (Hungary)
 It is characterised by dynamic market competition and a wide social network
provided by the government (social market economy).
French model
 The state has a dominating role in the economy as it is not only a regulator but a
proprietor/owner as well (state capitalism).
Austrian model  Austria, Denmark, Finland, Norway
 The employers negotiate directly with the representatives of the employees / trade
union. The government doesn’t take part in the negotiations, but it has to approve the
decisions (social partnership).
Swedish model
 The state regulates/supervises the labour market/ labour relations, and cares about
the social interests of workers. The government plays an especially important role in
redistribution (the golden mean).
Japanese model
 There is an excessive supply of capital, a strictly organised education system and the
utilisation of special methods in business management.

Vocabulary exercises based on the introductory text

A. Match each item in the left-hand column with a word or phrase similar in
meaning from the list opposite

1. possess a. social strata, classes

2. welfare benefits b. people working in return for pay
3. full employment
4. unemployment on the job
5. entrepreneurs
6. social net
7. layers of society
8. balance of payments
9. employees
10. golden mean
c. people who start companies
d. difference between the amounts of money
coming into and going out of a country
e. situation when everyone has a job
f. system of social care provided by the state
g. hidden unemployment
h. own
i. intermediate position between two extremes
j. financial and other assistance provided for
lower income groups
 B. For each item in the list below, find in the text a word or phrase similar in meani
1. act of setting apart for a purpose ……………………
2. money, property, skill, labour ……………………
3. availability (of goods and services) for sale ……………………
4. restricted role (two words) ……….……………
5. determined, fixed ……………………
6. earnings of a business when its income is
higher than its costs ……………………
7. basic ……………………
8. controller ……………………
9. talks aimed at coming to an agreement …………
10.reducing inequalities of income through
progressive taxation of income and wealth …………………

II. Hungarian text

Exercise 1
Cover the English words and expressions given on the right and try to guess the English equivalents
of the underlined parts of the Hungarian text.

Exercise 2

After checking your guesses against the list on the right, give an oral summary of the text in English.

Vonzó Közép-Európai
.

Világgazdaság Takács Gábor 2007.10.26.

Magyarország és a többi új EU-tagállamii a követk ező öt évben is legalább olyan vonzó

beruházási célpontiii marad, mint amilyen az elmúlt időszakban volt – jósoljaiv az Economist
Intelligence Unit (EIU). A londoni intézetv a világ 82 országában vizsgálta megvi az üzleti
környezetetvii a 2003–2007-as időszakbanviii, illetve a 2008– 2012 között várhatóix
változásokat. A legfontosabb következtetésx az, hogy a kormányok zöme folyamatosan
javítjaxi a beruházási feltételeketxii, és ennek köszönhetőenxiii középtávonxiv a legtöbb vizsgált
ország magasabb pontszámraxv számíthat az eddiginél.

Így van ez Kelet-Közép-Európábanxvi is, ahol – amint Laza Kekic, a jelentés szerzője
kifejtettexvii – az EU-csatlakozássalxviii kapcsolatos reformok kedvező hatásáraxix ugyan
ezentúlxx nem lehet számítani, mégis egyre jobbxxi üzleti környezettel szembesülhetnekxxii a
beruházók. Az indexérték emelkedésexxiii azonban legfeljebb egy-két helynyi előrelépéstxxiv
biztosít a világranglistánxxv, hiszen a versenytársakxxvi is javítják teljesítményüketxxvii.
Magyarország a 2008–2012 között várható majdnem 0.4 pontos emelkedés dacáraxxviii
továbbra is a 36. helyet foglalja elxxix a sorban; a visegrádi államok, Észtország és
Szlovéniaxxx is megelőzixxxi hazánkat.

Az elemzők felhívják a figyelmetxxxii arra, hogy az Egyesült Államokban a nemzetközi

tendenciákkal ellentétbenxxxiii stagnálni fog az üzleti környezet színvonalaxxxiv. A technológia
és az infrastruktúra fejlettségexxxv, valamint a munkaerőpiac rugalmasságaxxxvi ugyan továbbra
is nagyon vonzóvá teszi a világ legnagyobb gazdaságátxxxvii, ugyanakkor a biztonsági
aggályokxxxviii, a makrogazdasági egyensúlyhiányxxxix, az erősödő protekcionista hangokxl és a
feszült külpolitikai helyzetxli sokat rontxlii az összképen. Így aztán az USA az eddigi
negyedikről a kilencedik helyre csúszik visszaxliii a nemzetközi ranglistán. A nyugat-európai
országokban kisebb-nagyobb mértékű javulást vár az EU, bár hozzáteszixliv, hogy a szerkezeti
reformok sebessége elmarad a kívánatostólxlv.

III. English Text

A Tesco in every town
The Economist, 1 November 2007

1. Two years ago, after vigorous campaigning and a judicial review, small shopkeepers
forced competition authorities to look at the conduct of the biggest supermarket chains.
They complained that the giants were abusing their market power, squeezing suppliers too
hard and selling goods at a loss to drive mom-and-pop stores off the high street. Their hope
was that regulators would stop new superstores being built. Instead, when the Competition
Commission released its provisional recommendations on October 31st, it stunned many with
proposals that are likely to result in still more supermarkets springing up.
2. The commission proposes to relax planning constraints on big new stores. It also wants to
make retailers sell land to rivals, after finding that many have been buying up sites in towns
where they are strong in order to keep out competitors.
3. Such proposals may seem counterintuitive, given widespread concern about the clout
wielded by mammoth supermarket chains: the four biggest control almost 75% of the market
and Tesco alone has 31%. The Federation of Small Businesses reckons the proposals are
letting down both shoppers and small retailers, and thinks they will entrench the dominance of
existing big supermarkets.
4. Yet where many see cause for alarm, the competition regulator sees consumer choice in
action. It thinks the rise of big supermarkets has been good for consumers, on the whole. Food
prices have fallen a real 7% since 2000, choice has widened as some 2,000 new products have
been added to the shelves each year and most people in Britain live a short drive away from at
least one large shop. “It's a free country and shoppers can shop where they like,” says Peter
Freeman, the chairman of the commission. “The consumer is getting a reasonable deal from
the retail industry.”
5. Crucially, however, the commission found that many of the benefits to consumers arise
from competition between big supermarkets. In towns with few or just one, prices rise, or the
range and quality of goods on offer decline.
1700
Important terms

judicial review - a type of court proceeding in which a judge reviews the

lawfulness of a decision or action made by a public body

Competition Commission (CC) – an independent public body which conducts

in-depth inquiries into markets. These include investigating
anti-competitive conduct, monitoring competition levels,
identifying impediments to competition and playing an
advocacy role in addressing these impediments

competition authorities – representatives of the Competition Commission

mom-and-pop stores – small shops or businesses that are mostly family-

owned
clout wielded – power or authority exercised

Extended vocabulary

 vigorous: aggressive
 abusing: misusing, taking unfair advantage of
 stunned: shocked
 relax planning constraints: make building rules or requirements (e.g. permits) less strict
 sites: pieces of land on which buildings can be built
 counterintuitive: contrary to common-sense expectation
 mammoth: very large
 entrench: establish in a position of great strength
 crucially: most importantly

Comprehension questions

1. What action did small shopkeepers force competition authorities to take?

2. What was the main complaint of these shopkeepers?

3. What had these shopkeepers hoped to achieve by appealing to the Competition

Commission?
 4. What recommendations did the Commission actually come up with?

5. What share of the market in Britain do these supermarket chains have?

6. How does the Federation of Small Businesses view these CC proposals?

7. How does the competition regulator (CC) see the growth of supermarkets and why?

8. Why is it good that large supermarkets compete with each other?

IV. Discussion questions

A. Discussion questions related to the article

1. What is your opinion about large multinational superstores like Tesco or Metro; are they good for
Central European economies, or do they cause more harm than good in the long run?

2. We often hear about the effect that superstores have on small retailers. What influence, if any, do
you think small shops could have on superstores?

3. What are some of the ways in which both companies and consumers benefit from increased
competition?

B. Additional discussion questions

1. What are the differences between a planned economy and a market economy?
2. Make a comparison between the different models of mixed economies, focussing on the
advantages of each.

V. Role-play

5. Getting ready for a job interview

Student:
A friend of yours has been shortlisted for interview for a job as marketing manager of a
software company. This is a very important interview and he’s asking you how to prepare for
it, because he knows that you were recently successfully interviewed for a job. What advice
can you give him?

Examiner:
You are preparing for an extremely important job interview for which you have been
shortlisted. Your friend was in a similar situation recently and he managed to get the job.
You want to know what the secret of his success was. What advice can he give you?

6. Move my family or commute?

Student:
You are a manager with a European company the head office of which is to be moved to
Brussels. You have been offered a fantastic job by the new boss in Brussels. But your
wife/husband and teenage children are well settled where they are and you don’t want to
move. How will you convince the new boss that it’s better for you to commute?

Examiner:
You are the manager of a new joint venture which has its head office in Brussels. You’re
keen to recruit one particular European manager, but you also know about his/her reluctance
to relocate from his/her own country. You want to hear about his/her reasons for not wanting
to move.

i Attractive Central Europe

ii EU member states
iii investment targets
iv predicts
v London institute
vi examined
vii business environment
viii in the period between 2003 and 2007
ix expected
x conclusion
xi majority are constantly improving
xii conditions for investment
xiii as a result of / owing to / this
xiv in the medium term
xv higher index numbers
xvi in East Central Europe
xvii author spelled out
xviii EU accession
xix favourable effects
xx from now on
xxi better and better
xxii face
xxiii rise in the index number
xxiv advancement
xxv world ranking list
xxvi competitors
xxvii improve their performance
xxviii in spite of
xxix occupies the 36th place
xxx Estonia and Slovenia
xxxi overtake
xxxii analysts call attention to
xxxiii in contrast with
xxxiv standard will stagnate
xxxv highly developed state
xxxvi flexibility of the labour market
xxxvii the largest economy
xxxviii safety concerns
xxxix macroeconomic imbalance
xl strengthening protectionist voices
xli tense situation in foreign policy
xlii spoils
xliii slips back
xliv adds
xlv falls short of what is desirable