ECONOMIC ROLE OF GOVERNMENT IN BUSINESS

Economics in business is basically defined as the studies of financial, organizational and market
environment faced by corporations in the field of applied economics. Government plays a very vital role
in economics. The development of economics is always depending upon government. Economics role is
basically concerned with the economic development of the nation but in the eye of government. There
are certain rules and regulations are imposed on businesses by government for smooth economy. .

Stability and growth are two major factors where government plays very important in economics. The
role of government in order to regulate the business is to ensure the private investment and production
in the industry which meets the economic objectives of the government. Government also ensures that
there are efficient use of resources and prevention of exploitation by the industry.

There is a role for government in a market economy. Government provides certain goods and services.
These services are paid for by taxes, and include such things as providing for the national defense,
protecting the environment, and protecting property rights. It is also the role of government to provide
those services that the private sector is either unwilling or unable to provide.

There are various factors which determine the nature of role of government in economics like how private
sector is behaving, what is the political aspects, social attitude of the country and also the administrative
behavior. The government provides certain public goods and services which the private sector fails to
provide because there exists no market for them . Example: National Defense , Public Parks and National
Highways etc. The reason of government providing such goods is the nature of public goods

. Government also helps in promoting and planning of entrepreneur in business economy that expand in
the form of employment in the country which stabilize the economy. Government always keep an eye on
big business activity which helps in the control of monopoly by any industry, it develops a public
enterprises as an alternative of to private enterprises which ensures the competitive dualism in the market
.

Government provide various schemes for encouraging the business activites infrastructure , airports ,
supply of water and power, bridges, communication and transportation system, banking and financial
systems, industrial training centres, marketing network etc

Regulatory policies are covered under the government. there is a considerable indirect area of
government control over the functioning of private sector business through budgetary and monetary
policies . But against it is also a rapidly expanding field of direct administrative or physical control through
which the government seeks to ensure that private investment in industry and production and use of
scarce resources is in line with the government's basic economic objectives .

Government helps in establishing District Industrial Centres for assisting the development of small
industries . It is aimed at providing all assistance and support to entrepreneurs in various states . These
centres are responsible for effective promotion of small scale industries at district level .

There is a planning role of government which involves several objectives for development and also
allocate the resources in the equal distribution manner . It indicates the priorities of sectoral allocation
which ensures the equal distribution of scare resources to all the sectors in order to avoid clashes .
The government's abilities to develop planning, coordination and execution are impaired, the result
can be a large government that hinders market development, and hinders overall economic growth .

as one philopher explains , the developmental state model has internal contradictions . The state
needs an alliance with the business elites of the market - to work with - in order to achieve its goals .
But , philospher argues , this kind of political alliance is what makes model weak economically . For
instance , the state may be targeting sectors with high social returns but which do not have high
private returns .

When the state engages in strategic protectionism , the coalition requires the provision of subsidies
or other forms of assistance to the capitalists to develop desired industries . But ultimatey , when
these industries develop , these industrialists acquire such political power that they are able to resist
the attempts of the state to ease into protectionist policies . So the nation is stuck with the ideal of
protectionism as the industries are not strong enough to face international competition as they now
have domestic monopolies .

The government always tries to manage the economy and its business activity through the exercise
of planning .

Also It is very necessary to have public sector due to its contribution to the economic development
under the role of government ;-

(a) It ensure rapid economic development .

(b) It promotes redistribution of income and wealth .
(c) It develops industries which require huge investments .
(d) It ensures balanced regional growth .
(e) It prevents concentration of economic power .
(f) It generates resources for development .
(g) It promote import substitution .
(h) It generates employement .
(i) It helps in development of small scale industries .

Providing health and education facilities , construction of roads , bridges , railways , harbours ,
generating electricity , providing irrigation through dams are some of the public sector activities.
These activities are the primary responsibility of the government . These activities need spending of
large sums of money , which is beyond the capacity of the private sector . also , collecting money
from thousands of people who use these facilities is not easy . even if they do provide these things
they would charge a high rate for their use . so government have to undertake heavy spending amd
ensure that these facilities are available to everyone .

 The main role which should be played by the government is to do things which is not presently done
by any another bodies .The government develop the country with efficient private participation
where allocation of resources in an efficient way . And not just making reforms , but implementing it
into the real practice . Finally investors is protected by the goverment and take up efficient taxation
policy due to which growth and stabilization of economy occur in the entire country .