From small start-ups, to foreign aid and the housing crisis, absorptive capacity can impact capital allocation decisions in often unpredictable ways. Identifying the issues underlying absorptive capacity can assist us both as individual economic agents and at an aggregate level. This post reviews three examples where absorption capacities can adversely affect economic outcomes and how pragmatic awareness can assist in reaching a better solution.
Tag Archive 'Financial services'
Financial institutions are often criticized for being too opaque or pushing too strongly for self-regulation as opposed to external intervention. But perhaps this concern is based on the reality of finance, of its embedded nature in our lives and in its purpose of being a reliable intermediary in our economic lives. Perhaps what happens in finance is in itself financial and therefore, in and from itself, best left to finance?