In this chapter, the following content will be discussed: Give a brief overview of different views of the role of government in the economy, list key issues confronting Southern African governments regarding their role in the economy, distinguish between the main institutional categories of the public sector, discuss the salient features of and trends in the size and composition of the South African public sector, discuss various aspects of the relationship between the public sector and the rest of the economy.
Trang 2• Give a brief overview of different views of the role of
government in the economy
• List key issues confronting Southern African
governments regarding their role in the economy
• Distinguish between the main institutional
categories of the public sector
• Discuss the salient features of and trends in the size
and composition of the South African public sector
• Discuss various aspects of the relationship between
the public sector and the rest of the economy
Trang 3• Impact of the public sector (government) on
resource allocation and distribution
• Market system vs political system
– Price is the equilibrating mechanism
– Political process addresses needs not satisfied in the market system
• Political equilibrating mechanism: the ballot box
• Price: tax.
• Features of SA’s current democracy
• Legacy of the past
• Fiscal challenges
Trang 4The study of the nature, principles and economic
consequences of expenditure, taxation, financing, and the regulatory actions undertaken by the
non-profit making government sector of the economy
Trang 5• Procurement of private funds by the state
• Enacting a law to allocate private resources
• Positive economics
Trang 6Individualistic Public Interest Developmental
State Key
characteristic
Maximisation of individual
welfare
Maximisation of social welfare or national interest
Combination of individual &
social interests
Role of
Government
Correcting market failure
Distribution of income
Selective intervention
resource allocation and economic growth
Combating poverty and equity issues.
Way in which political &
economic control
is obtained & exercised
Trang 8• Taxes (direct & indirect)
– General government consumption
– Investment:
• General government
• Public corporations
– Interest on public debt
– Subsidies and current transfers
• Total public sector resource mobilisation
– General government
– Public corporations.
Trang 10• Supplier of public goods and services
• Privatisation
• Public-private partnerships
• Taxes and levies
• Impact of economy on government