Countrys economy Essay

Published: 2019-11-06 00:11:54
338 words
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Category: Economics

Type of paper: Essay

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These are goods that cannot be provided by the private sector but are very essential to the development of a countrys economy. They are usually very expensive undertakings with fewer returns or take a long time for the investors to recoup their money back. This makes them to be less attractive to the private sector investors who are mainly driven by the profit motive and would thus be unwilling to invest their resources in such projects.

The government has the mandate of providing such goods that are very essential which have indivisible cost with a marginal cost of zero (Kaul, 2006). It is not possible to practically charge the public for the utilizing such goods. The government can therefore, only collect taxes from the public to enable it provide public goods. Public goods in this category include roads and state security provided by the policemen who are paid by the government.

There are other public goods that even though, they have high returns and the private sector can be able to invest in them, they cannot be allowed to do so by the government due to the amount of risk involved. Manufacturing or trading of weapons is a risky activity that no government can be willing to allow it to be done by the private sector as it would put the public into a lot of risk since the private sector investors in such an industry would mostly be guided by the profit motive and not whether or not ammunitions will be on the wrong hands or the right ones (Kaul, 2006).

The public goods are very important to everyone, including the private investors who shy away from investing their resources in such ventures. It is this importance that makes the government to be under obligation of providing such goods to its people since they are very essential and it is only the government that is best placed to provide them (Kaul, 2006). Reference: Kaul, I. (2006): What is a public good? Retrieved on 17th June 2009 from, http://mondediplo. com/2000/06/15publicgood.

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