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Role of Consumer Sector in Modern Economies

Forces of demand and supply control prices in modern capitalist economies, administration intervention has been limited by provision of public services. Prices of goods and services as well as cost of creation are determined with minimal government intervention. A perfect capitalist economy can only exist in an ideal situation and since there is no ideal situation, there are always some authorities controls, regulations in an market (Pigou, 2006). Generally, government regulates the performance of overall economy through fiscal and economic policies. These plans are aimed at changing or managing certain factors throughout the market to improve or limit creation. Government participation ranges among countries were producing countries need a higher participation than developed countries (Ceccacci, Marchesiani and Pecchi, 2007) This paper discusses the role of the public sector in modern economies and factors general population sector consider when coming up with financial decision.

Political stability

The government comprises of political category, who control the economies of your country, they play the role of politicians and monetary drivers, and however, politics situation on earth is not stable. There were changes and doubt in several countries. A country like Kenya in East Africa underwent tribal crashes in 2007 after a disputed election. The problems affected the market of the country. In November 2010, Ivory Coast in Central Africa got disputed election a move that contain afflicted the country's economical performance. In civilized countries like the United States of America, which is the world's most significant market, the performance of the ruling school affects the economy positively and negatively. A country as China, which includes the highest monetary growth in the world, has a well balanced federal government (Dalton, 2003) from the above talk, it is clear that certain major functions of authorities is to ensure there is political stability in the country. If the political class maintains politics harmony in an economy then development and balance in the united states is possible. Perhaps one of the most surprising thing is the fact to destroy an economy that were built for many years may take a matter of weeks in case of political unrests. For example, Zimbabwe was among Africans best undertaking countries, when there have been disputed presidential economies in 2009 2009; the country is now positioned as the poorest on earth. Other than local politics, international politics impacts country economic, social and political shows. International procedures and relations affect how economies perform their business. There are occasions that goods from a certain countries have been limited by type in the international market through tariff and non-tariff barriers (Buchanan, 1987).

Maintaining good International relations

Foreign ministry in several countries is given the duty of retaining good international relations with different countries. Globalisation and international trade has exposed the international market, helped by transportation and communication networks (Quigley, 2000). To ensure that a country participates in international trade effectively and reduce chances of international rivalry, it will ensure that there are good international relationships. Switzerland has were able to be the earth largest tourism country due to its politics neutrality and maintaining of good relations with other countries. Sometime to compete, countries take part in inexpensive alliances to be able to work out for better groups on earth markets. Such integration includes European Union, East African Community, and Skillet African amongst others (Dietmar, 2000). Other than possessing a good international relationships, it is the role of the federal government to ensure that its country have a good reputation. It should not be known for negative things like poverty, problem and inequality. Such reputations are not built by person to person by through actions undertaken by the federal government.

Protection of citizens

The government gets the mandate of ensuring that the constitutional privileges of every individual are well known. These protection under the law include protection under the law to protection, where the administration provides security to its individuals. Security is from foreign and internal attackers. There are times that the government sets lowest or maximum prices of goods to ensure that consumers are not exploited. Alternatively, the government also sets criteria required in a country; this is in the proceed to ensure it has guarded its consumers against substandard goods and services provided by businesspersons. There is another move created by Chinese government, which includes been seen as a new administration move where in fact the government is aimed at reducing the pace of economic progress in the united states (Edward, McCaffery and Joel, 2006)


The government has the mandate of providing infrastructures like streets and communication sites, which cannot be left in the hands of people. These infrastructures ensure an economy has interpersonal resources that can be used by culture members without paying for them directly. With time of disaster, the general public sector is called upon to assist. This is in case there is terror problems, drought and floods. The government should have sufficient equipment and mechanisms to ensure that in case there is a disaster, it includes assisted its people and sometimes lengthen the help to other nations. Other social monetary factors have an impact on an economy. They include inflation and deflation. The federal government gets the mandate of ensuring that its market has neither excessive money (inflation) or has limited money (deflation) (Gabriele, 2009).

Leadership and strategic decision-making

The federal is expected to make proper decisions, which identify the pathway that the united states aims to follow more than a certain period. This can be yearly or take a year or two. Every year, government authorities make financial finances to be adopted when financing various tasks in the country. These costs contain yearly, every month or assignments that take several year. Such guidelines will be the ones, which draw in international investment funds in a country. In the 1990's, many countries possessed Vision 2000, that they wished to have accomplished certain economic, sociable and politics goals. In the current 20th century, there are phone calls to Vision 2020, Eye-sight 2015 and visi0n 2030 among others depending with a country and the goals they have for the overall economy (Wildasin, 2008)

Issues a federal need to take into consideration when financing the activities used to fulfil the role lay out in (a) above

The administration control an market using fiscal or monetary policies. They can be either immediate or indirect. The kind of financing adopted, is based with the goal and objective the government want to realize in a specific time. To regulate the overall economy effectively, factor must be made to ensure that the most likely measure is considered (Reed and Swain, 1997). Generally, there are factors that federal government need to consider when funding different projects throughout the market they are:

The degree of economic development in the united states or locations

The government has the role of establishing infrastructures to be utilized by the public and private areas in their attempts to grow the economy. Before certain infrastructures are made, the federal government need to analyse the job and ensure that it is economically viable. Concern should get to the people places that contain potential yet the exploitation of such potential is hindered by insufficient infrastructures like streets and communication sites. Assets in infrastructures is an expensive exercise where in fact the government spend public resources to make such infrastructures, they should thus benefit the best majority in the united states. In producing economies, the federal government has a far more lively role where it is likely to make a program that international and countrywide inventors can built on. Such infrastructures include electricity production plants, transport networks, taxation incentive and communication sites. Some countries like China experienced the government decrease its public finance expenses to ensure that the economic growth rate in the united states slows down. They have opted to have higher taxation to companies and individuals to ensure they have low income to invest in economic development (Schulte, 2000).

Countries competitive gain sectors

Different countries have different financial potentials; the sort of products that can be produced effectively with a nation can vary among different countries. You can find need to understand the potential that a country has and opportunities should be skewed compared to that direction. For instance is a country has a potential in natural resources like oil reserves or good climate, then the authorities should direct most of its finances to these sectors. This may ensure that high levels of efficiency have been accomplished for economical development. Utter and competitive advantages are important when deciding the countries to make economical integrations. There are occasions that countries produce the same goods, in such instances such countries can make good financial blocs to make a deal for better prices for their products. They though cannot make good trading associates since they make more the same products (Schumpeter, 1994).

The rate of inflation/deflation

The rate of inflation in country impacts expenditure decision by the government. When an current economic climate is facing high rate of inflation, then the government has the mandate of controlling the economy. Controlling inflation and deflation are monetary issues where in fact the government devises options to reduce profit circulation (regarding inflation) or increase money in circulation (regarding deflation). In inflation, the government can opt to sell authorities securities like bond and bills at an attractive interest rate where buyers will be attracted to get them and the amount of money in flow is reduced. Alternatively, it might opt to increase the lending rate to lenders through central loan company, which will be transmitted, to consumers making the cost of lending money expensive. This reduces the rate of money elegance thus, the development of profit the current economic climate reduces (Sheila, 2004).

In the truth of deflation, the government devises procedures to improve the flow of profit the overall economy. If the federal government decides to lessen central bank's lending rate, then finance institutions could be more willing to provide money. This escalates the money in blood circulation healing the deflation (Tresch, 2002).

Living standards

Different countries have different living requirements. It is the dream of leaders to have citizens who've high living specifications. To attain this need, the federal government takes deliberate procedures to improve the living requirements of its people. Such methods include extensive investment in social facilities like general population private hospitals, building of streets, communication sites and education facilities. There are countries, which have opted to offer free medical and universities to their residents in the move to have increased living benchmarks. Countries with high living requirements do not require much technology of the federal government in their affairs but those that are underdeveloped and also have reduced living requirements the government involvement is highly required (Shinnick, 2008).

Some federal have national libraries, some even mobile ones to ensure that its human population has access to information for personal empowerment. Adoption of technology in several sectors has allowed a countries populace have higher living requirements as people are more informed of these rights they can battle for (Shoup, 2006)

Resources distribution

Resources in a country aren't equally distributed; there are a few parts, which have higher allocation of natural and manmade resources in a country. The in-equally lead to difference in social, financial and sometimes politics. The federal government should ensure that its country have well sent out resources for a harmonious expansion in all regions of the united states. The differences make the federal government direct almost all of its resources to areas that are disadvantaged (Musgrave, 2008). They are given priorities in the attempts to see whether they can catch up with other areas. A country that has high degrees of inequality is most probably to maintain political disputes every once in awhile. That is when some people feel oppressed by the machine. In the past, cultural rivalry in countries for example in French trend, were brought about by inequality and oppression in the economy. In order to avoid a do it again of such things in an market, the government should ensure there exists equality throughout the market. Equality can be helped bring through indirect options like education, interpersonal amenities, and employment (Moore, 2009).

Unemployment level

Government has a role in creating occupation in its country. If the overall economy is facing high degrees of inflation, then the government must placed on steps to ensure that the economy produces job opportunities. For an elevated occupation creation in country, the government should create an atmosphere where local and international traders feel attracted (Minea and Villieu, 2009). Such procedures include reduce taxation, offer bonuses to buyers like tax holidays, investment funds deductions and offering land for factory settlements. Other than focusing on international and local major buyers, the government can embark on different options to help in small-scale ventures through small merchants and artisan. Money can be directed to the areas where the government offer loans to deserving populace to begins their own business. Apart from business, there are other specific talents that may be tapped and still create employment. This consists of sporting activities and entertainment industry where the authorities can support junior to activate in such activities (McGee, 2004).

Security situation

It is the role of the government to ensure that its people are secured from inner and external security threats. The point out of security in a country will determine the amount of investment which will be directed to the task. There are times that a country may be threatened of harm, or the security system in the country is not good. In such cases, the cover security should be increased appropriately. Different times require different security levels, for example, in times of political unrests, high security is necessary than in times of tranquility in a country, therefore the amount of investment a country makes in investment depends upon security level in the united states (Martin, 2005).

Global environment

The international community influences the trend of spending in a administration. There are times that international relation and trade may require a government to invest greater than in normal circumstances. Currently with globalisation, the earth is facing an elevated trade among countries. The trade calls for superior infrastructures, communication systems and security along edges. Although these factors profit an economy, they might need the federal government to commit in the economy. To assist in international trade, the federal government need to invest in good roads to move goods produced within the united states to the departure slots and those via abroad with their places (Kabelo, Khalo and Mafunisa, 2007). Communication is crucial to make trading discussions and contracts where in fact the government should lay down good communication systems. International trade does indeed not simply happen without administration intervention, there is need to regulate the flow of goods. Through customs department, the federal government imposes custom tasks and tariffs to some imports and exports in its move to collect revenue and protect inside industries. Through edges, some goods that are bad for a inhabitants can get their way; it's the role of the federal government to ensure that borders are clear of such goods. For border security, income collection and nationwide companies protection to work, the government must make large investment in detecting tools like scanners, personnel's to patrol the borders and income collection officers. Making of jacks is capital extensive and so before this investment is manufactured the government should ensure which it has analysed the monetary benefit of such a move. For instance, your choice to make Suez Canal was for trading purposes, it includes helped North African countries like Egypt, however, maintaining high benchmarks in this entry is an expensive practice (Jјrgen and Wagner, 2004)


Scientific technology and innovations have resulted to an increase in technology on earth. Efficient technology assists a county to create goods and services effectively with maximum utilisation of resources. The government has a role to try out in technological development and adoption in the economy. This is through its adoption of technology in its systems or it can be creating a host that enables companies to adopt technology. There are occasions that the government controls the pace of technical adoption in its market. For instance in Kenya, the government is opposing the use of tea plucking machines by tea growing factories since it is convinced that the amount of jobs that will be lost because of this are going to harm the economy. To improve adoption of technology, the federal government have sometimes offered bonuses to people companies with high technology like tax incentives to help in further technology use (Hyman, 2007)

Environmental concerns

The world is having increased concerns about environmental destruction. International systems have enacted rules and regulations to be adopted in its efforts to lessen environmental damage. Such international legislation include Kyoto standard protocol on green gas emission where signatories were expected to reduce their production of garden greenhouse gasses (Howard, 1992). To help in steps that protect the environment, the government is involved in several activities that purpose at corporate and also to individuals. They have put on solution that reduces the amount of emission from industry. Such measures include taxation on carbon emission, having national environmental control policies and programs, offering tax incentive and facilitating technology adoption (Bradford, Auerbach and Shaviro, 2000).

The rate of investment funds in a country

The investment environment in countries decides the speed of investment in a country. Once the environments are not attracting investments, then the government has to undertake strategic options to ensure which it has facilitated investments. This is through targeting certain establishments, which are necessary for investment decisions in a country, and improving their capabilities in attracting purchases (Gstoettner and Jensen, 2010). For example, the vitality sector is very important to monetary development and getting investment. The government can control prices in this industry and cover the deficit. This can make investors fascinated by the low rate of development cost proposed by such steps. In countries like China, the government have used this awareness to devise strategy that reduces the speed of investment. There are occasions that the federal government becomes the investor in come tactical industries, which are believed low income generating. This is in the move to ensure that all essential products and services are available in a country (Blanca and Wodon, 2006)

Economic deficits and Amounts of payments

There are times that a country may be facing financial and balance of payments deficits. The deficits damage an economy, the federal government requires to adopt proper decisions to ensure these deficits are treated. In situations of financial deficits, it means that a government will never be able to funding all budget activities in a specific year or intervals. It may be forces to provide some federal government bonds and expenses, which are offered at a price to the public. It may also decide to sell its products to raise money to financing its deficit. The proper thing to do in such circumstance is determines the decision made by the government (Bastable, 2003)

International trade results in balances of repayments (B. O. P. ). For a wholesome economy without a deficit in balance of repayment, then imports should be of a lower cost than exports. To help an increase export, or reduce importation, the government have a role that can be played. In facilitation of exports, the federal government offers incentives to exporters to increase their exportation. These incentives may be subsidies in production. To discourage importation, the federal government can increase taxes billed to imports and empower local companies to produce goods that were otherwise imported. Whenever a country has a wholesome balance of payment, its currency is strong making its goods and services competitive in the international marketplaces (Arye, 2003)


Modern economies are mainly capitalists, where pushes of demand and offer determine prices. Federal treatment in these economies is minimal but important. Government intervenes in economies to assist in an appropriate financial growth rate and protect residents from violation of these constitutional rights. It uses economic and fiscal regulations to regulate the economy. Before making an financial commitment, government consider economical, political, public, global and environmental implication of such decision. Maintain political steadiness in a region is an important role of the government. The right decision to make is one that results to increased welfare of bulk in the country.

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