A number of world economies that were at the same level with their neighbouringeconomies in terms of education, health, per capita income and natural resourcessome five decades ago, have been successful in attaining significantly higher levelof economic development because of the government’s role. Countries like SriLanka, Botswana, China, and South Africa have proved that significant progresscould be achieved even in a short period mainly due to the qualitativeimprovements in and effectiveness of the government's role. The HumanDevelopment Report 2003 highlights that Sri Lanka had increased life expectancyof her people from 46 years to 58 years during 1946 to 1953. Botswana was ableto increase the primary school enrolment rate from 46 percent to 89 percent during1970 through 1985. China successfully reduced the poverty rate from 33 percent to18 percent in the decade of 1990s. And South Africa was able to reduce thenumber of people lacking access to clean drinking water from 15 million to 7 milliononly in a period of 4 years during 1997 through 2001. In the background of thesetheories and instances, Nepal’s need of the hour is to develop a far-sighted visionto ensure an effective state mechanism, even taking into account the experiencesof other economies, that facilitates in attaining higher level of economic growth.
Source: David N. Weil, Economic Growth (2005) and UNDP Human Development Report (2003)
According to World Bank Report, 1988, government was involvement mainly onpublic goods, defence, diplomacy, macroeconomic management, justice, legalmatters and infrastructure like social, physical, education, health, transportation,and environment protection.
Regulatory and Promotional Role of the Government
Any country's the prosperity and obstacles of economic growth results fromactivities of government. That means, government plays important role in economicactivities. In free market economies government plays important activities. It has toperform role to prevent market failure. As we know that market does not yieldeconomically efficient outcome every time as the result market fails to operate. Infree market economy government has designed activities to stimulate and assistprivate enterprise and to regulate or control business practices so that their operations are consistent with the public interest. There are various forms of government regulation especially to regulate the activities of private firms.a) Industrial products are subject to operating regulations, governing plant andpollutant emission, product packaging and labelling, worker safety and healthetc.b) Financial Regulations; Banks and Financial Institutions are subject to both thegovernment as well as the control made by the Central Bank for financialsoundness.