Proliferation of public sector institutions


  • Proliferation of government programmes
  • Proliferation of state-controlled enterprises
  • Proliferation of parastatals

Nature

Slow growth, lagging private savings and investment, high inflation, balance of payments deficits, heavy debt burdens, continued poverty and unemployment are, in part, the result of excessive growth of the public sector. Even in those cases where external events beyond the control of individuals countries are the cause of many difficulties, the actions of governments are often inappropriate and fail to mobilize effectively the resources of a country in response to a crisis.

Incidence

In developing countries the urgent infrastructure needs, the low levels of savings and investment, the need to foster economic growth through modernization, and the availability of concessional funding for public projects have all served to encourage the rapid expansion of public sector programmes. It is only with the economic stagnation resulting from the debt crisis that the weaknesses of this approach have been acknowledged. The late 1970s also marked a turning point in the centrally planned economies, where reliance on direct command by government and the use of state-controlled enterprises was increasingly seen as a drag on economic growth. By the end of 1989 the inadequacies of this approach, and the need to harness private interest and initiative to stimulate economic growth, were widely recognized.

Claim

  1. Although the pursuit of private interests allocates resources efficiently in competitive markets, this generally does not occur when individuals use the monopolistic power of government to their own advantage. Politicians, bureaucrats, and many private interests gain from growing government involvement in society and greater government expenditure. Government's necessary role as a provider of public goods needs to be carefully circumscribed otherwise inefficient public and private provision of goods and services results.

Counter claim

  1. Since World War II the growing importance of the public sector is seen by many development economists and policy-makers as a natural and necessary ingredient of development. Governments need to intervene to foster development since the unmodified interaction of private agents does not achieve the goals of economic efficiency, growth, macroeconomic stability, and poverty alleviation. Imperfections in the action of free markets fail to meet these and other needs. Any mistakes made by government may indeed be a serious problem in practice, but are not inevitable or irreversible. Policy and administrative reforms can be elaborated to correct such inadequacies.

Aggravates

  1. Unethical practices of government leaders
  2. Unethical practices in the public sector
  3. Unethical practices in politics
  4. Undemocratic policy-making
  5. Unchecked power of government bureaucracy
  6. Overdependence on government
  7. Official evasion of complaints
  8. Official disregard for people as human beings
  9. Official apathy
  10. Jurisdictional conflict and antagonism between national government agencies
  11. Inefficient public administration
  12. Inefficiency of state-controlled enterprises
  13. Inappropriate public spending by government
  14. Inadequate system of political checks and balances
  15. Government insensitivity
  16. Government complacency
  17. Government arrogance
  18. Frustrated talent in government posts
  19. Fear of officialdom
  20. Excessive governmental spending
  21. Excessive government intervention in the private sector
  22. Distortion of international trade by state-trading and government monopoly practices
  23. Conflict between government and the news media
  24. Complex government bureaucracy
  25. Administrative delays
  26. Abuse of monopoly power of state-owned or state-controlled enterprises


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