Roles of the State and the Market in Economic Development

Indian Economy Essay Questions
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Indian Economy Essay Questions
Question One
Roles of the State and the Market in Economic Development
The government plays a crucial role in promoting economic growth in a country. Some of most common contributions of governments to the economic growth in their countries include the following;
Organizational change; governments promote organizational change, which influences the process of economic development (Marcu, 2014). It involves the expansion of the market size and the organization within the labor market. The state has the responsibility of developing the means of communications and transport to expand the market size since such schemes cannot be undertaken by private enterprises. This creates room for improved economic development and growth.
Economic and social overheads; one of the major obstacles to economic growth and development in under-developed countries is lack of such economic overheads as effective modes of transportations and communications, electricity, ports, and irrigation, among others (Sanchez-Graells 2016). In countries that are industrially advanced, the state provides such facilities. Such facilities promote economic growth as they clear obstacles to growth.
Education; Education is a major contributor to economic growth and development. As such, it is the role of the state to ensure that the population can access affordable education to equip them with the relevant skills and knowledge to contribute to economic growth (Lemstra & Melody, 2014). It results to futility if national development programs are initiated while the population is largely left illiterate. Provision of educational facilities increases occupational and geographic mobility, thus improving productivity and facilitating economic development.
Family Planning and Public Health; developing and maintaining public health services are some of the important functions whose responsibility lies with the government/state (Lemstra & Melody, 2014). It is important for the health of the population to be maintained so as to increase the productivity and efficiency of labor. A healthy nation is better placed to promote economic growth and development.
Reforms in institutional framework; economic development can be slow or inefficient in an institutional framework that is static (Sanchez-Graells 2016). An institutional framework that is rigid is a major hindrance to effective economic development. Therefore, one of the major differences between developed and under-developed countries are the attitudes and rigidity of framework adopted in both cases. As such, the state has the responsibility of implementing reforms in institutional frameworks to enhance flexibility and hence position the nation for economic development.
Role of State in Economic Growth: Comparing India to South Korea
Economic development in India is largely attributed to the state’s commitment and reforms, and the economic trends show the influence of the government on economic growth. In 2011, economic growth slowed down due to the government’s slowdown in expenditure and a decline in investment, resulting from investor pessimism on the commitment of the go...