The role of the state in economic development (2023)

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Using national and international examples, critically assess the role of government in managing the economy and economic development.

The government plays an important role in keeping the economy stable. The economy during an extreme downturn like World War II forces governments to participate in the rehabilitation of the economy. During the 1980s, growth in many developing countries faced a severe slowdown (Adelman, 1999). However, many Asian countries helped by their governments can maintain or even improve economic development. His government found the way out by avoiding deflation and restricting imports and wages. Instead, they promoted their export capability that allows foreign countries to trade and invest in their market.

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(Video) Role of the State in Economic Development

The US federal government is another example of a government-run economy. By adjusting taxes, the money supply, or wages, governments are able to control the rate of economic growth at which they affect the number of jobs and the price, which in turn affects supply and demand. During the Great Depression, in the 1930s, the government faced economic recessions (Government's Role, 2010). Concerned about slow growth, the government treated this situation as the most “serious”. They greatly reduced the tax rate and financed the money supply themselves. Later, in the 1970s, the government faced another problem, inflation. To deal with inflation, government leaders brought the situation under control by restricting the rate of demand, avoiding "tax cuts" and keeping the money supply growing.

For decades, the Thai government has mainly focused on industrialization policy along with its economic situation. To stabilize economic development, they make the industrial market their top priority. First, the government allowed the private sector to support industrial development. They would then avoid forming any investment that might compete for support from private industry. These strategies are used to support the private sector, provide government support, and encourage people to compete. However, to participate in the competitive international market, the government would have to improve its productivity index both in quality and quantity. Therefore, the government reinforces qualified labor and the most advanced technology to help industries raise the standard of their products. With the help of the government, we were able to cooperate with the countries of Indochina in their international trade and investment (Adelman, 1999).

(Video) The World Economy and the Role of the State in Economic Growth (Session I)

Q3. Think of the connection between food production and the climate. Write an essay covering a list of the various ways in which production, distribution, and consumption contribute to or counteract climate effects.

One of the main factors related to agriculture is the climate. Like climate change, it causes serious damage to soils, crops, livestock, pests or even disease. Therefore, we humans try to find solutions that can neutralize this damage.

Policies are made to solve the problem of climate change. First, the policy called “Agricultural and Trade Subsidy Policies” (Antle, 2010). This method has been established since the 1930's; encourages farmers to grow funded crops instead of trying to adapt to climate change. This policy controls the activity of the farmer. It eventually twisted the international market. The second policy or “Production and Income Insurance and Disaster Assistance Policies” (Antle, 2010) is a long-term method of insuring against disasters. This policy ensures that the farmer will receive partial payment in return if their farms are damaged but it is a natural disaster. The third policy is called “Soil and Water Conservation and Ecosystem Services Policies” (Antle, 2010). This policy protects soil and water fertility in a given area. Crops are ordered to be removed and replaced with trees. However, this policy did not grant the desire to adapt to climate change, despite promoting “environmental value” (Antle, 2010). The next policy is “Tax Policies” (Antle, 2010). Since taxation affects almost everything, rein in adaptation by accelerating “asset depreciation” or promoting environmentally friendly investments. However, taxes can only help agriculture indirectly. It is more effective in other areas of the economy, so this policy is often overlooked. The fifth policy is “Energy Policies” (Antle, 2010). We are more and more concerned about our weather condition. Therefore, we are more interested in “non-fossil base energy” (Antle, 2010). Food production can also help solve this problem. Crops or waste products can be turned into energy. The cost of this method is also very low. “Environmental policies and agricultural land use” is another policy contributing to climate change (Antle, 2010). This policy manages the amount of land used as climate changes vary in different areas. For example, animal waste has been put together in a specific location so that the location can be used later.

Unwittingly, food production or farming can be helpful in helping the environment. Since climate change cannot be prevented, all available resources are used to slow it down. From animal waste to taxation, each has its own values ​​for adapting to climate change.

Q4. Where is future energy demand likely to be greatest and why? Which energy sources are likely to dominate in the near future? Long-term? Should we be bullish or pessimistic about the short-term and long-term outlook for energy?

India is home to more than 15% of the world's population (India Energy Data, 2010). With a high rate of economic growth, they consume a lot of energy resources, just like developed countries like USA or Japan. In the future, demand tends to increase due to higher population and vehicles. As the fifth largest consumer of energy in the world, India used 3.7% of the world's commercial energy (Shanker, n.d.). Instead, resource availability is low; it is likely that one day the resources will be insufficient. According to statistics, an 8% DGP rate growth would also require higher commercial energy such as coal from 3.7% to 6.1% and primary energy supply such as fossil fuel from 2.2% to 5.1 % (Shanker, n.d.). However, all resources are limited, especially for coal. They are not only scarce in quantity, but also provide low-quality energy, including harm to the environment.

Knowing that one day we will use all these non-renewable resources, we also discovered another reliable energy source like solar energy. Many scientists claim that in the near future, solar energy may be the number 1 energy source (What will solar energy need to dominate in the future?, 2010). With an unlimited amount of energy, the sun has the potential to create enough solar energy to meet the needs of every human being. Furthermore, energy provided by the sun is acceptably clean and requires no maintenance (Future Uses of Solar Energy, 2009). However, this energy resource is still incomplete. Solar energy does not have the power to complete with fossil fuel. It is also expensive to obtain this energy and still requires more research. Despite the incomplete factors of solar energy, this type of energy is likely to dominate the future in the near term.

Nuclear power is unparalleled in creating energy. Like solar energy, nuclear energy leaves no carbon footprint (Liptak, 2009). The amount of energy it is capable of is extremely high. However, nuclear energy has its own disadvantages. Start with the unstable cost of uranium. The amount needed for the nuclear power plant can be estimated at around four million tons. Calculating from the current price of uranium ($50/lb), it could one day suddenly increase to double its original cost (Liptak, 2009). The other downside would be your risk factors. Nuclear energy is dangerous and its toxic waste is highly contaminated. The scientist has yet to investigate how to keep it safe. But the use today is already abundant; provides energy for more than 7.5% of total consumption (Liptak, 2009). So now it's slowly rising to the top of long term energy.

(Video) CGEG: The Role of the State in Economic Growth - Session I: Setting the Stage

Both solar and nuclear energy are expected. He believed that they were capable of replacing existing non-renewable resources such as fossil fuels. Future science and technology can reduce the cost of these energies. Ultimately you will be worthy and secure.

Q5. “Regionalization versus Globalization” looks at how globalization has led to regionalization and the tensions that have arisen between these two forces as they are involved in current trends towards the formation of continental trading blocs and trade regimes. Compare and contrast the protectionist trends of the 2000s with those of the 1930s.

The economy of many countries has tried to expand its market internationally. The process of globalization has taken them all over the world. However, at some point, it encourages these countries to invest in the smallest area. Barriers between cultures can interfere with the market (Clancy, 2009). Therefore, it is more convenient to invest in an area with the same lifestyle or beliefs. That's why some countries change their method from globalization to regionalization. Trading with neighbors is obviously easier than trading with distant foreigners. The price rate also differs between places. For example, the textbook used by the Thai university cannot be sold in the United States, why is this? The price rates between Thailand and the US differ so much that the prices of US-made books are unaffordable for Thai people. That's why the books were printed here just for us and are strictly US restricted.

Since it is more difficult for Southeast Asian countries to trade with the United States compared to neighboring countries. These countries have established their own market with neighboring countries to strengthen themselves. ASEAN is one of them. With cooperating countries, trading with distant foreign countries is much easier.

In the early 1930s, protectionism kept US trade away from abroad. With few international trading partners and fewer “economic tools”, this period was known to be disastrous (Clancy, 2009). In the 2000s, the United States seems to have learned its lesson. Protectionist tendencies abate, allowing global trade to grow. When the money supply is stable, investors regain confidence in the market, hence economic rate growth. Most people agree that protectionism is not the right way out. This method in both periods risked the market with a depressed state.

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(Video) Role of State in Economic Development

Q6. Describe and explain differences in the age composition of populations in advanced and less developed countries. What economic and social problems do these population characteristics create in each case?

In different living environments, the age difference of the population is distinct. The fertility rate is a factor that determines population size (World Population Prospects, Volume III). In well-developed countries, the fertility rate due to technology and medicine is higher as compared to developing countries. This is the reason why the age composition in these two environments is different.

In advanced countries, the proportions of elderly people are much higher compared to less developed countries. According to statistics, the rates of people over 65 years old tend to increase from 15.3% in 2005 to 25.9% in 2050, while the population of young people under 15 years old will slightly decrease from 17% to 15.6 % in the same period. . For less developed countries, the elderly population increases from only 3.2% to 6.6%, while the population of young people under 15 years of age will apparently decrease from 41.5% to 28.9% due to a lower rate of fertility. However, these children do not simply disappear, over time the proportions of the population aged 15-64 will increase from 55% to 64.5% over this period (World Population Prospects, Volume III).

As the overall youth population rate decreases while the elderly rate increases, the dependency rate will also increase. In the period 2005-2050, in developed countries, the dependency ratio for every 100 employed persons increased from 47.7 to 71.2. Obviously, this will pose a problem of independence for people over 65, as the number of working people relative to retirees is decreasing. In contrast, dependency ratios for people working in less developed areas fall from 81.8 to 55.1, which means that children in these regions are entering the labor phase while the elderly (retired) die (World Population Prospects, Volume III).

(Video) The World Economy and the Role of the State in Economic Growth (Session II)

The dependency ratio not only affects people's lives, but also affects economic performance. If the population of workers increases, the per capita income of this group will also increase. In less developed countries, economic growth is achieved by increasing the “working-age” population (World Population Prospects, Volume III). As per capita income grows, people tend to spend more, which encourages an active economic market. During this period, the active population drives economic growth rates. However, rates differ in developed countries. As the working population declines, the economic growth of countries also declines.

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What is the role of the state in economic development? ›

Another important role of the state is to industrialize the economy. It is the responsibility of the state to nationalize its mines, plantations, and other assets. It should investigate its natural resources, devise a plan for their exploitation and development, and construct industries to maximize its profitability.

What are the 3 major roles of economic development? ›

Economic Development Strategies

Creating more jobs and more job variety. Keeping businesses and getting new ones. A better quality of life.

What is the role of the government in development? ›

In the early stages of sustained growth, government has often provided the incentives for entrepreneurship to take hold. In some economies the development of transportation, power, and other utilities has been carried out by the government. In others the government has offered financial inducements and subsidies.

Why is the state of the economy important? ›

Economic growth increases state capacity and the supply of public goods. When economies grow, states can tax that revenue and gain the capacity and resources needed to provide the public goods and services that their citizens need, like healthcare, education, social protection and basic public services.

What are the roles of the state? ›

State Functions
  • Governance. Public sector management is a unique but essential challenge that forms the bedrock of the inclusionary compact between the state and its citizens. ...
  • Market Engagement. ...
  • Security. ...
  • Infrastructure. ...
  • Rule of Law. ...
  • Human Capital. ...
  • Public Financial Management. ...
  • Citizen Engagement.

What roles do the state governments play in our economy? ›

Economists, however, identify six major functions of governments in market economies. Governments provide the legal and social framework, maintain competition, provide public goods and services, redistribute income, correct for externalities, and stabilize the economy.

What is state led economic development? ›

State-led development occurs when the government is involved in economic planning or ownership of enterprises, subsidizing production or managing competition.

What are the 3 important role of nation state? ›

Transparency. Fair cause and consequence allocation. Compensation and support to the regions that are most vulnerable to global environmental change.


1. The Role of the State | Economics for People with Ha-Joon Chang
(New Economic Thinking)
2. Role of Govt./State in Economic Development (Growth & Development)
(Economics learning Point)
3. CGEG: The Role of the State in Economic Growth - Keynote Address by Joseph E. Stiglitz
(Columbia SIPA)
4. CGEG: The Role of the State in Economic Growth - Session II: Industrial and Financial Policy
(Columbia SIPA)
5. Institutions, Democracy, and Economic Development
(New Economic Thinking)
6. CGEG: The Role of the State in Economic Growth - Session IV: Europe and Global Institutions
(Columbia SIPA)
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