Informative Essay: Relationship Between Government And Economic Growth
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
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13) points out that in some occasions economic growth does not lead to the benefit of a country. In some instance, economic growth may be beneficial to the government only in the short-term, but a burden in the long-term. The long-term benefit of an economic growth depends on the sustainability of growth. For instance, in the China, the government enacted measures to encourage business growth within the country as part of its strategy to improve the country’s growth. Consequently, the country enjoyed a rapid economic growth for 25 years characterized by a rise in the social class, improvement in living standards and high income tax. However, in 1997, the country experienced a high inflation rate of about 6.9%, leading to decrease growth. This is linked to the inability of the government to support policies that stimulate sustainable growth within its country. From a global perspective, the great depression that hit across the world was a result of the World Banks initiative to promote growth by stimulating public borrowing. As more people borrowed, the investment opportunities decreased, leading to high rates of debts and inflation in the global economy. From this point of view, unless country invoke sustainable development, economic growth may not be necessarily beneficial to a
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