Sunday, September 7, 2008

Ecomomic Efficiency And Size

Businesses make money by filling inefficiencies in the market.

That's how stock traders make money, and all businesses follow the same basic path. They identify some gap between supply and demand (an inefficiency) and they bridge that gap, making the economy flow.

The greater the size of the inefficieny, the grater the prospects of the business. 

That's why small countries with small economies are at a disadvantage. Because the ecomomy is smaller, the size of the inefficiency must be greater to make a living solving it. Hence, small economies are destined to be more inefficient. That means, it's harder to do business, and the quality of life is also reduced.

The solotion for such small economies is to form solid alliances with other countries.

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