What does well-functioning markets rely on according to the Globalisation Trilemma?

Well-functioning markets rely heavily on government-provided institutions, as outlined in the Globalisation Trilemma. This concept highlights the necessity of established frameworks and regulations that ensure market efficiency, protect rights, and foster fair competition. Efficient institutions are crucial in creating a stable economic environment where businesses can operate without uncertainty.

Government-provided institutions include the rule of law, property rights, contract enforcement, and regulatory bodies that oversee market operations. These elements are vital for instilling confidence among investors, promoting accountability, and reducing the risk of market failures. In essence, strong institutions facilitate the smooth functioning of markets by ensuring that all economic actors can engage and compete fairly, thus underpinning overall economic development and globalization.

Understanding this reliance allows one to grasp why many nations strive to strengthen their institutional frameworks to capitalize on the benefits of globalization. Other factors, like community relationships, international trade agreements, and corporate governance structures, play important roles in the economy but do not address the foundational need for regulatory and institutional support that governments provide for markets to thrive effectively.