TOPIC

POLITICAL AND GOVERNMENT

ENVIRONMENT
 Institutions of Democracy
1. Legislative:
- Policy making, low making, budget approving, executive
control, and a mirror of public opinion
2. Executive or Government:
- A centric political authority having the power to govern
those it serves
- State and Central
3. Judiciary:
- Determines the manner which the work of Executive has
been fulfilled. It conforms the general rules laid down by the
legislatures
 ECONOMIC ROLES OF THE
GOVERNMENT

• Basic Functions • Regulatory Role

•Intermediate Functions • Entrepreneurial Role
•Activist Functions • Planning Role
• Promotional Roles
 Functions of Government

Basic Functions Intermediate Activist Functions

- Provisions of Functions -Use of various
property rights - Regulation of measures to stabilize
- Macro economic monopolies and promote markets
stability - Provision of social
- Protection of health insurance
- Water availability - Pensions,
- Transportation and unemployment
communication benefits
 Economic Roles of Govt.
• Regulatory Role: Formation of regulations for industry and
business for entry, conduct and exit.

• Entrepreneurial Role: Direct participation of Govt. And

freedom and opportunities given to private entrepreneurship

• Planning Role: Proper utilization of scarce resources and

prioritization of development objectives.

• Promotional Role: Promotion of industry and commerce,

trade, infrastructure etc.
 FUNCTIONS OF THE STATE
Addressing Improving
Market Failure Equity

Providing a pure public goods and Public Health Protecting the poor
Defense Antipoverty
Minimal
Law and Orders Programmes,
Functions
Property Rights Disaster relief
Macroeconomic Management
Addressing Regulating Overcoming Imperfect Providing Social
externalities Monopoly Information Insurance
Inter- Insurance (Health, Life, Redistributive
mediate Basic Utility
pension ) Pensions
Functions Education Regulation
Financial Regulation, Family Allowances
Environmenta Antitrust
l Protection Policy Consumer Protection Unemployment Ins.

Coordinating Private Activity Redistribution

Activist
Fostering Markets Asset
Functions
Cluster Initiatives Redistribution
 Business and Government

B Information B
U Taxes G Laws & Orders U
O
S Inception & Licenses S
Voluntary Programs V
I E Money & Credit I
Information
R
N N
Contracts N Competition
E M E
Government Services E Tariff and
S N Quotas S
Political Activity Small Business
S T S
Technology
 Reasons for state intervention
• Sponsor to the economic development
• Planned economy
• What people need only be understood and provided by
the state
• State participation to provide strong base for future
development
• To correct the market failure
 Types of Intervention
• On the basis of Nature
– Formal
– Informal
• On the basis of Approach
– Corecive
– Inducive
• On the basis of Spread
– Direct
– Indirect
• On the basis of Effect on Competition
– Make competition works
– Set the standard for performance
– Supplement Competition
• Promotional and Regulatory Control
Thank you…