Role of Government in Economic Development

The role of the government to the economy and economic development is comparative to the bones in human body. In every nation, the government is the backbone of the people and its future. In economy, the government is the one in control of the country and its economy. The uphill or downfall of economy of every nation depends on the institutional framework of its government.

     In application, the government has the sole responsibility in building the economy of the country, including its maintenance and development, for the people and the sovereign lands.  It is being directed by the leader of the state and guided by the state policies.

     Let me site an example on how the government influences the economy and promotes economic development.  It all starts by creation of economic policies. The objective of this is to establish implementing rules and guidelines on how to create programs in promoting economic stability and development. The economic policies are created by the government (that has three major branches- Legislative, Judiciary and executive). A policy proposal in terms of Bills will be submitted to the legislative branch of the government (Senate and the House of Representatives) for study, discussions, amendments and votations to become a rule of law. Thereafter, the bill will be submitted to the Executive branch (the President) for approval.  Is the bill becomes a law; it will serve as a basis in creation of programs of the government. For instance, industrial policies in the Philippines play a significant influence on the environmental character of industrial growth and thereby on the sustainability of economic growth as a whole. By virtue of the industrial policies, the government can take control of country’s economy. That is taking control of the businesses, imports and exports, labor force, foreign currencies, etc. This is what they call industrialization.  In most of the developing and industrialized countries like India, UAE, KSA, Qatar and Oman, most of the leaders believed that industrialization is the key to economic development. These beliefs was all the more convincing in India because of the country’s large size, substantial natural resources, and desire to develop its own defense industries, so most of their economic policies focus on industrialization of the country. The same way with the Gulf Countries like where natural resources like oils is very abundant and critical economic policies must be created to enhance the economy of the country through the proper usage and development of the resources, therefore promoting economic development.