Question

Examine the five explantion for why the role of states is expanding . do you see any basis for predicting that any of those will change or produce different pressures? Which one seems to be most compelling to you?

Answer 1

State plays a major role in managing the economy, manage trade, taking care of sanitation/health/education in the society, so that everyone has a minimal standard of living. There are reasons why role of states is expanding.

Rate of Investment The process of development is accelerated by increasing the rate of investment. It becomes essential for government to accelerate the rate of capital formation in all countries. Government can help people in getting cheap loans which helps in increasing investment in the economy. Increasing investment level in the economy have many impacts with it, first is when rate of investment increases, Rate of Interest must be low because they are inversely related. Second, employment increases in the economy, people are more into effective things and less in non productive part. Third, level of income rises of people which helps in increasing standard of living. Increasing level of Investment through state helps in achieving many goals in the economy.

Reducing Inequality is the motive socially and economically of state. They try to reduce inequality be imposing huge taxes on rich and less on poor. Another method they use is they build as many opportunities in the economy so that there is minimal unemployment or the person who are Involutary unemployed are given subsidies to survive to get atleast the basic necessities. There are valid reasons for this because suicide rates are rising unemployment in the economy and to saving people from such kind of incident is the priority of a state.

Monetary(MP)/Fiscal Policy(FP), these are the tools of a state through which a state manages interest rate(MP), money supply(MP), collecting taxes(FP), expenditure in the economy(FP) by government. Sometimes these are sole tool which determine the growth rates of a economy and decide the path on which the economy will run.

Education helps in increasing Human Development Index as it increases. Increasing the level of education in economy raises literacy rates which helps in raising competitive index in the economy and helps in improving the productivity per person in the economy. When productivity increases, we can produce more goods at less point of time so there is more chances of trade in the economy, mainly the exports, which helps in raising the level of GDP in an economy.

Infrastructure which tells about development of roads, dams, bridges, buildings, MNCs, adequate water/electricity etc. These development are solely in hands of state because the level of funds they need is huge that no private institution can bear the cost of it. Its in the hands of states who provide such infrastructure because states takes tax from us and that amount of money they spend of building the infrastructure.

These all the basic supports which state provide and it is tough describe any one thing which is most compelling because every part is important than other, nothing can be left and nothing can be given more importance. Its all about giving equal importance and support to everything so that we can have a sustainable development. Investment level and policies raised be government can give us a different picture though.