Government Intervention

Topics: Government, World Trade Organization, Economics Pages: 9 (2431 words) Published: October 31, 2001
The purpose of this report is to exemplify the role of government with the focus on the developing countries by answering the proposed question of Why do we need government intervention? and Why government intervention is necessary for the new economy? The first part of this report illustrates the essential roles of government in social, business, and the future of country aspects. Then, Thailand was chosen as an example of a country entering into the new economy, while using the other countries in East Asia to illustrate the successful government action in transferring the countries to new economy.

1. To provide social welfare for the whole country Education Environment Health care Basic infrastructure Ideally, the government should bear the cost of high-risk or long-term payback project, or even the project that is difficult to finance as a trade-off for the national interest and benefit of its people and, in a way, attracting private sector to invest in the underdeveloped region later on.

2. To set up fair-games, fair competition, rules, laws and regulations, and trade agreements for business sector 3. To determine the future direction of the country Provide information and guidelines for firms to follow Develop strategy for the nation's economic growth 1. Social contexts: 1.1. Environmental protection Waste management: company cannot hold the idea of "more production, more pollution" any longer as it creates externalities (social cost), which in turns will impose a negative impact on the company's reputation.

Government must enforce regulations, inspections, and control on environmental aspect. This is for the social interest so that the firms cannot take advantage from the society. Furthermore, by having regulations, not only the society will benefit from it; it also raises an issue of long-term sustainable development for the business sector to consider upon.

Cons of free-enterprise Only aimed at generating profit and production, while disregarding the environment as it is considered an "unnecessary' cost for the company. This in turn, the environment would be destroyed (e.g. Waste from production, a vicious cycle, will hurt everyone if there are no regulations enforced.) Environmentalist vs. Government: for developing countries, the environmentalist plays a minor role in protecting the environment comparing to government intervention. Although the voices of environmentalist are significant when it comes to making changes, the government regulations are better suited in preventing and solving the problem on the national level. This is because the environmental problems have to be solved simultaneously, since the effects from decaying environment can create chain-reactions affecting the whole country or even the world (e.g. air pollution or destruction of rain forest). The environmentalist is important, as it is able to create awareness for the society, at the same time the government intervention is necessary in order to support healthier environment for its people.

1.2. Education Quality of the human resource is the driven force to push economic growth. Without basic education, it limits the opportunity for the entire nation to grow and foster new innovated ideas, while limiting the improvement in quality of life among population.

1.3. Health care The basic need for life. There shouldn't be perceived as privilege for someone to obtain.

Recent development on Thailand's health care: Ministry of Public Health's campaign on the "30 Baht-Health for All" demonstrating that equal access to health care is important for the growth of recovering economy.

1.4. Infrastructure For a nation to propel into the future, decentralization of development to regional and local levels rather than concentrated on specific metropolitan areas is significant, as it needs involvement from everyone.

2. Business contexts: 2.1. Laws and Regulations (Thailand) Trade Competition Act (1999): This is to eliminate unfair...
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