Sustainable Economics: Understanding Market and Government Roles

Abstract

There has always been a debate on the roles of government and market for economic growth and development. Economic development encompasses more than just growth; it seeks the betterment of the standard of living and higher Human Development Index. There is no single strategy that would be considered the best solution for economic development. Market role and government intervention are both necessary for economic development. Since the economy is dynamic, then the policies adopted need to change according to the circumstances. It is argued that government intervention is sometimes necessary to ensure basic economic development, even if it essentially fails in economic growth in the short-term. Nonetheless, a good solution between the roles of market and government is through finding a dynamic equilibrium point between them. Therefore, the best policy is a policy that is resilient to change.

Keywords: government failure, market failure, public policy, regulation

JEL Classification: H10, L50, O20, O40, O50, P00, P10, P20, P30, P40, P50, Z10