Sample Paper: Economics_-_State_and_the_Economy.doc
Module: State and the Economy
The state and economy are two separate entities, which should ideally be independent from each other in order to avoid undue interference. However, some situations such as lawlessness demands for government intervention. Both entities must maintain their part of the contract in order for the ideal relationship between the state and economy to be achieved. This relationship is mutually beneficial since the government benefits from revenues from the accelerated economic growth while the businesses benefit from security, fairness and conducive business environment.
The major causes of friction between the state and the economy emanate from political interference in order to gain politically and financially. This affects businesses significantly and poses as a barrier to economic growth and development. The level of taxation and government control on financial institutions hinders business growth. State interference on financial institutions such as banks can increases economic risks. The state and the businesses should adhere to the rules, ethics and regulations that govern the society in order to build a positive relationship leading to a country’s economic growth and development.
The mixed economy principle used in the United States is ideal for economic growth since it calls for government responsibility towards the country’s economic well being. This responsibility helps in thinking revolution whereby the ideologies, terms, conditions and outcomes of the state and economy are significantly improved. Economic stability can be achieved through government support as this enhances economic growth. The responsibility of the state is to formulate and implement rules and regulations that support economic growth (Perry, p. 282). Both parties can reap mutual benefits from commonly agreed political and economic frameworks.
Perry J. Amanda (2002) The Relationship between Legal systems and Economic Development: Journal of Law and Society, Volume 29. Blackwell Publishers Ltd, USA. P.282.