2. Roles of the Government

I. Introduction: What is a market economy?

- Market economy: is one which a nation’s economic decisions are the result of individual, buyers and sellers in the market place. Government plays a limited role in economic activities.

However, no economy can exist and develop well without the Government.

II. Body:

The role played by the government as an economic agent in the economy is very important.

-  The government can act as the provider of goods and services.

+ Provides goods and services for the poor, the disabled, etc.

+ Pays for many social services such as military service, defense service, medical service.

+ Sometimes, the Gov makes transfer payments to some members of society. Transfer payments are payments made to individual without requiring the provision of any service in return. Example: social security, retirement pensions, unemployment benefits, etc.

- The government is a helper of weak business groups and an organizer of income allocation.

+ Helps the weak business groups to develop by many ways such as providing capital and technology as well as levying tariffs and taxes on the strong business groups.

+ Allocate income in the society. The government plays its role as an organizer of incomes redistributing

- Acts as the stabilizer in the market.

+ Create jobs to the unemployed. Some communities have fewer job opportunities and higher unemployment than others. By way of attracting new business into those areas, the gov directly creates aid to the development of these areas.

+ Narrow the gap between the rich and poor people. Narrow gap between rural and urban areas. The gov also uses its power to tax to protect certain industries. It protects domestic industries by placing a high tax on goods brought in for sale from foreign countries.

- Acts as the producer of goods and services in the absence of the business venture.

+ Businesses always do business to seek for their self-interest. Gov is obliged to consider the needs of its citizens. The provision of atomic energy, some utilities at the local level, and security at the national level are example in which the gov is a direct producer.

+ However, the role of the Gov is to satisfy all the consumers' demand.

III. In conclusion

Gov  plays an important economic role in all economies. Indeed it is hard to imagine an economy with no gov role. A well functioning economy requires that the gov play a role in maintaining law and order and defending people against external enemies.