4.1 - The Role of Government
4.1.1 - The Role of Government
Government (public sector)
● A government is a group of people with the authority to rule over the country
by using different policies and legislations
● They correct failures of free markets to produce socially and economically
desirable outcomes
● Play a larger role in mixed economy than market economy
Role of the government in a mixed economy
● Government has to be an employer, producer, consumer and regular in the
economy
● Level of intervention influenced by:
○ Perceived extent of market failure
○ How effective government policy measures are
1) To protect the citizens that live in the country to achieve economic growth
and development
2) To ensure the private sector can operate fairly (competitive market)
a) Prevent market failure (e.g monopolies)
3) To control and regulate the factors of production
4) To correct market failure
Governments
A government has different functions, depending on different levels:
1) Government at a local level
2) Government at a national level
3) Government at international level (NATO, UN, WHO)
Partnership between public and private sectors
● More popular than before, there is now a partnership between the public
sector (government) and the private sector
● E.g Gleneagle hospital
● Public sector e.g: Ocean park
● Private sector e.g: Disneyland (51% private, 49% public)
1) Example: Operation of a hospital
a) Private sector: finance, build and maintain it for a number of years
b) Public sector: Buys it over time to become a public hospital
4.1.1 - The Role of Government
Government (public sector)
● A government is a group of people with the authority to rule over the country
by using different policies and legislations
● They correct failures of free markets to produce socially and economically
desirable outcomes
● Play a larger role in mixed economy than market economy
Role of the government in a mixed economy
● Government has to be an employer, producer, consumer and regular in the
economy
● Level of intervention influenced by:
○ Perceived extent of market failure
○ How effective government policy measures are
1) To protect the citizens that live in the country to achieve economic growth
and development
2) To ensure the private sector can operate fairly (competitive market)
a) Prevent market failure (e.g monopolies)
3) To control and regulate the factors of production
4) To correct market failure
Governments
A government has different functions, depending on different levels:
1) Government at a local level
2) Government at a national level
3) Government at international level (NATO, UN, WHO)
Partnership between public and private sectors
● More popular than before, there is now a partnership between the public
sector (government) and the private sector
● E.g Gleneagle hospital
● Public sector e.g: Ocean park
● Private sector e.g: Disneyland (51% private, 49% public)
1) Example: Operation of a hospital
a) Private sector: finance, build and maintain it for a number of years
b) Public sector: Buys it over time to become a public hospital
