Using national and internationally examples critically assess the role of government in the management of the

economy and the economic development. Everyday, when we turn on the news, we discover that what it contains
consists of what governments around the world are doing. It seems that if we didn’t have governments to amuse
us, there would be no news at all. In fact, without the beneficence government, life might become so boring as
to not be worth living at all. Even with all this talk about the government, it is amazing that the population in
general does not have a clear idea of what government is and what they do. When people are asked what the
purpose of government is, they frequently shrug their shoulders.

Government plays an important role in keeping the economy stable. One good example is when the growth of
many developing countries faced a serious down turn during 1980s when government take part in rehabilitating
the economy after World War II. These changes have had profound implications for the way the role of
government has been viewed by development practitioners. However, many Asian countries assisted by their
government are able to maintain or even improve the economic development. Their government found their
way out by avoiding deflation and restriction of import and wage. Instead, they promoted their export capacity
which allows foreign country to trade and invest in their market.

The US federal government is another example of government managed economy. By adjusting the tax, money
supply, or the wages, the governments are capable of controlling the rate of economic growth in which affect
the amount of employment and price, in turn affect demand and supply.

Government-set trade policies and the international trade and payments regimes are critical for economic
development. But, this does not mean that free trade policies are either necessary or optimal for industrialization.
For decades, Thai government has focus mainly on industrialization policy along its economic situation. To
stabilize economic development, they improvise industrial market to be their priority. These strategies are used
to support the private sector, providing government's support, and promote people to compete. However, to be
able to take part in international competitive market, the government would have to enhance their productivity
rate in both quality and quantity.

It also suggests that governments must take the lead in promoting institutional development. The institutional
readiness for capitalist economic growth is key to economic development, because it provides the conditions
that enable technical progress and export-expansion to induce widespread economic growth. Once the
institutional and physical frameworks for development were established, the primary function of government
consisted of the promotion of industrialization while raising the productivity of agriculture. The government's
economic policies, particularly with respect to institutions, trade, industrial policy, agriculture, investment and
macroeconomic management really mattered.

The government has a critical role to play in promoting technological dynamism, industrial policy, and in
increasing productivity in both industry and agriculture. Historically, governments imported technology, financed
and promoted different industries, and induced domestic industrialists to climb the ladder of comparative
advantage. In developing countries like the Philippines, upgrading industrial technology became important once
the major social and infrastructural bottlenecks to technical change were removed and industrialization that
progressed from staple processing to consumer goods more generally and then integrated backwards into
intermediate goods and machinery was the major instrument for development at all levels of development of
the country.

Apart from that the Government has 4 distinctive roles:

REGULATORY ROLE: The rules that are established to make the market system work efficiently. Any market
economy necessitates some collective authority in order to enforce property rights and to make sure that people
execute contractual responsibility. Citizens receive value from the government's role of making and enforcing
laws that give the citizens the opportunity to freely pursue opportunities. Having an orderly governing body
allows private citizens to make long-term investment decisions about their personal resources. A credible
governing body contributes to the economic growth of a nation and provides the best opportunity to accomplish
its national investment and growth goals through the entrepreneurial spirit of all its citizens. Making fundamental
changes to the rules and agencies that have become outdated and opaque will provide economic stability and
give potential entrepreneurs the confidence to work toward meeting the ever-changing needs of society.

ALLOCATIVE ROLE: The government must determine how some resources are allocated. The allocative function
refers to how much of the government’s budget will be allocated to particular projects. For example, the
government may decide that, as part of their economic policy, it needs to spend more money on developing
collective goods such as roads, education and health care. Allocating funds gleaned from taxes also allows the
government to create jobs or public venues.

DISTRIBUTIVE ROLE: The free market outcome results in an unfair distribution of income, so the government will
intervene to assure everyone has a sufficient income. This basic statement assumes that it is possible to arrive at
a collective judgment as to the desirable income distribution. In the absence of such an agreement, government
intervention may aim at several different targets including providing a floor to income, increasing equality of
opportunity, equalizing incomes and increasing incentives of individuals.

STABILISATION ROLE: The government intervenes in the market to ensure there is steady growth. It concerns the
use of budget deficits or surpluses to add to or subtract from aggregate demand in the economy, with the
intention of influencing the level of output and unemployment and the rate of inflation in the economy. They do
this through monetary and fiscal policy.

The relevance of government in the development of any society cannot be over emphasized due to the different
task they perform which ordinarily cannot be performed by individuals. A government which maintained law and
order, provide the basic amenities like building hospitals, schools, bore holes, roads, etc. In various sectors of the
society, the government’s role play starting from the law making, education, industrialization, technology,
transportation, job creation, health sector, and all these are necessary for the development and the advancement
of the society. In the dominant view concerning optimal role of government in development, the government
plays as a prime mover or viewed economic development as a growth process that requires systematic
reallocation of factors of production; as a problem solver which viewed that the government need to position an
economy on a sustained-growth path by removing barriers to international trade in commodities; and finally, as
a rehabilitating government that viewed an active role of the government in maintaining and improving the
development momentum.