The Importance Of Government Intervention

Introduction
In the 1970s and 1980s there were market failures in many developing countries. Due to the breakdown of the markets development economist consider that it was necessary for government to intervene in the market to recompense for market failure. Over the decades, development has presented that government intervention has not functioned as economist anticipated. This led to failure in government intervention which is defined by Krueger (1990) “as failure if the outcome is worse than what would have occurred under laissez-faire”. The increase in the colossal government failure has led to a substantial suspicion about the usefulness of government interventions. Krueger (1990) mentioned that there are two types of government failure

This raised a number of questions. The author outlined some of the questions that help to understand why government intervention may be imperfect. These questions are grouped in four categories: (1) “what is the government”? (2) “What is the comparative advantage of government”? (3)” What are the dynamics of government intervention”? (4) “can a positive theory of political behaviour be formulated that will help explain when and of alternative policies will evolve in political arena”. The purpose of the article is to examine each of these questions. “It focuses on the insights relating to government behaviour affecting economic activity and economic growth in developing

It must first be established that the government will be both willing and able to act in the required way. The need of a positive theory of government decision making in the same way that the predictions of consumer or firm behaviour requires a positive theory of consumer or firm decision making.
Two propositions have been made in support of the argument that it is not obvious that government intervention in the economy will fully correct market failure:
Firstly: the policies pursued by the state results from the actions and interactions of politicians, bureaucrats, voters, managers and civil servants. We cannot assume any of these individuals are completely altruism in the sense that they are motivated solely by the desire to achieve a pareto efficient resource allocation.
Secondly: information is required for policy making and controls both in deciding what policy should be adopted and in ensuring that it has in fact been implemented and the desired results is achieved . But information is no a free good, it is often dispersed over many individuals and it is costly to acquire and to