Government Role In Economic Growth

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Economic Growth The role that the government plays in the economy of a country is a subject that has attracted a lot of attention in the works of many scholars. Notably, there is a direct relationship between the policies that the government puts in place and the ability of a country to gain the potential to grow economically. Since the government profits from the economic growth of a country, it has an obligation to make laws that will stimulate economic development within the country. However, there is a limit to which the government can regulate the business market. Therefore, it becomes crucial for the government to design desirable laws that will promote rather than inhibit business. As management theories point out, the government should…show more content…
Laws should ensure that the every investor has a fair chance to start business and compete with its rivals. This helps to prevent monopolistic competition that may impact negatively on the economy of a country. Monopolistic competition results in unfair competition, which benefits only a few investors. Unhealthy competition within the business market has a wide range of disadvantages to the economy of a country. To begin with, it prevents the entry of many investors within the market, hence reducing the government revenue. Secondly, it reduces the consumer bargaining power, leading to high prices of products (Minniti, 2008, Pp. 779-790). High prices, products results in the exploitation of the public resulting increase in the poverty levels within a country. From this point of view, the government policies should serve to discourage unhealthy completion within a…show more content…
Harrison (2008, p. 11) defines economic growth as the percentage increase in the national input within a year. This is among some of the scholars that presented both sides of economic growth within a country. On one side of the coin, economic growth may be beneficial to the development of the country. Economic growth is directly linked to the improvement of the social welfare of the public. As a country gross domestic product increases, the person’s income level is bound to rise and life becomes more affordable. Therefore, the living standards within a country will rise while the poverty level will decrease. As the life of the people improves, they can afford better healthcare, education and other basic needs. While the level of literacy and life expectancy grows, there is going to be further growth as the public becomes more productive in the economic realms. Secondly, economic growth reduces country’s dependence on other countries, allowing them to exit exploitative relationships. The economic growth of countries such as US has led to the improvement in the quality of life and economic independence in the
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