Question

There have been a lot of debates among Ghanaian taxpayers as to whether there is any need for state involvement in economic activities in Ghana because governments do nothing right. (a) Explain four (4) reasons that may account for the inability of Ghanaian public sector businesses or enterprises to ensure efficient allocation of scarce resources to maximize the welfare of the citizenry. 8 marks (b) Does the inability of most public enterprises to ensure efficient allocation of scarce resources provide any basis for state withdrawal from economic activities? Explain? (Note: only three (3) points are required)? 6 marks (c) Suggest two (2) possible ways through which such state institutions could be saved from eminent collapse and to fulfill their economic responsibilities to the state. 6 marks

Answer 1

(a)

The Ghanaian public sectors face the below problems to ensure the lack of efficient allocation of scarce resources to maximize the citizen of welfare-:

Government failure would happen due to various reasons, such as

Lack of profit incentive within the public sector-: In here the people part of the government venture may not have the same profit motive to cut costs / work hard/ increase efficiency. It results in the causes of the government sector to be suffering due to the inefficient compared to the private sector.

Bureaucracy-: there is a higher power vested in the government structure. It has caused the higher unsettled bureaucracy and has disrupted the power.

Conflicts-: there is a constant conflict between economic power and social power. It has caused mismanagement and inefficient resource allocations. lack of decisions, lack of structure, and even the authority to follow have caused conflicts and inconsistencies in the system.

Decision making and Prioritization-: The government lacks the decision to decide, whether to have the well-defined power within the hierarchy or to decide, whether to align the decision powers vested best for the interest of the consumers or the producers. The decision power vests in the interest of the government to decide, whether to build more hospitals, bridges, or offices. But lack of consistency and inefficiency leads to a lack of decision making and low inference drawn.

(b)

Profit incentive and performance targets-: The decision vests in the interests of the profit motive into many areas that can focus on the public sector. For example, deciding on education and healthcare which would potentially not lend with performance targets along with holding the profit motives. While each of the profits motives and the goals would be different, it is best to infer a decision. The government should decide how to allocate resources and how profit incentives can be drawn.

Competition

The competition is low and the private and the public sectors look out for their welfare. Each of the sectors lacks the future low vision and the consumer's welfare interests lack. The private sectors focus on the profit gaining but the public sectors sufferers from low decision making and high bureaucracy power

Public-private partnerships

The public and private partnerships lack a low scope of the ideas, visions, and aggression to change following future scopes. Each of the parties lacks inconsistent decisions and low scope of tie-ups.

(c)

Competition

Through consistent competition and participation from foreign ventures, from the governments or the small retailers, it would help to increase efficiencies and even bring in the better command to allocate resources and welfare.

Rely on the goodwill

The good wills would be based on how the companies are dependent on the public sector or private and how much they can earn revenues and profits. The commitment, consistency, and the futuristic vision can help to bring in a better command and better decision power making.