Question

(Private Sector and Caribbean Development) The private sector has been referred to as the “engine of growth” for Caribbean economies; implying that this sector is expected to play a leading role in generating output and employment. Do you see a role for government in this environment? If so, please state your reasons and give specific examples of areas of government involvement.

Provide References

Answer 1

Private sector in the economy:-The private sector is the part of a national economy that is possed, controlled, and managed by private individuals or enterprises. The private sector has a aim of making money and hires more workers than the public sector. A private sector organization is created by creating a new enterprise or privatizing a public sector organization.

The private sector has a key role to play, mainly through public-private partnerships to improve core infrastructure as a pillar for economic growth and development.

Government role in the private sector:-

The private sector has been called the engine of growth. Government plays a main role in supporting economic growth and decreasing poverty. It requires to provide good policy, strong institutions and profitable public goods and services to ensure the private sector can develop and the benefits of growth reach all citizens.

The roles of a government, is divided into two categories, namely, regulatory roles and promotional or development roles.

The regulatory role of the government involves formulating and executing different direct and indirect methods to monitor and control the economic activities of the private region. These measures are needed for forbid the socially restrictive activities of businesses and concentration of economic power and enhance private businesses to work towards the growth of the economy.

The regulatory methods taken by a government include the following:

a. Industrial and licensing schemes,

b. Schemes related to taxation

c. Monetary and credit schemes

d. Schemes related to income and wages

e. Technology and employment schemes

f. Import and export schemes

g. Foreign exchange schemes

On the other hand, the promotional role of the government associates with the policies and measures taken for the progress of development infrastructure of an economy. The development infrastructure of an economy contains economic and social overhead capital that is compulsory for the growth of industries and excellent utilization of resources. In addition, it is needed to improve the production capacity of an economy.

a. Development and creation of transport and communication capabilities,

b. Construction of irrigation capabilities, such as dams, canals, and tube wells,

c. Production and a

proper distribution of electricity and various other resources of energy, such as coal and natural gas

d. Enlargement of businesses having strategic significance,

e. Evolution and Execution of advanced technology.