Custom «Role of Government in Industrialization» Essay Paper Sample

Role of Government in Industrialization

Industrialization considerably contributes to the economic advancement of any state. Notably, governments play a critical role in this evolution. In the past, however, the contribution of a government to the growth of the country has not received enough attention. In practice, in many industrialized nations, the government became a key factor in facilitating this process. Nevertheless, some of these nations are not big exporters. However, by creating favorable conditions for industrial development, such countries became prominent economies in the world. Therefore, the government is crucial in the industrialization due to the actions and policies it adopts, which affect the industrial expansion.

Market availability of the manufactured products is fundamental to the success of industrialization. When the debate on the role of the government in economic growth started in England, the scholars claimed that it was only after the government had eliminated regulations and constraints in the market that the country forged ahead (Cypher & Dietz, 2004). The argument emphasizes that nations appear to be miserable because of too much government interference. In many countries, the government manifests its intervention by overextending the public sector in the economy. The degree of market failures determines the size of the government. The latter, therefore, has a legitimate role in improving the overall operations of the economy (Cypher & Dietz, 2004). In regulating the market, the government should try as much as possible not to favor one sector of the economy over another. While market failures such as that of monopoly are considered insignificant, the government failure in the form of corruption and power centralization is the main factor, which induces the market failure. Some researchers argue that those forces are different even though the market forces operate in a social and political environment. Therefore, an interaction of both social and political factors leads to the market failures. If the government intervenes with market forces, it hinders the growth of industries.

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For efficient operation of the economy, every society requires particular regulations. According to the neoliberalism, markets thrive on efficiency, and the government is the source of all market inefficiencies (Cypher & Dietz, 2004). When the government interferes in market operations for various interests, then all markets capabilities break inhibiting successful operations. Nevertheless, the government can exert its influence by implementing favorable policies. In the early 19th century, the agricultural revolution in many European nations was successful because of successful government policies (Cypher & Dietz, 2004). In the Asian markets, the government introduced free-market policies to advocate for exports. Hence, they introduced their domestic economies to the world markets thereby promoting economic and industrial growth in those states. The governments, which control exports and imports for the benefits of their countries, offer a justification why decisive intervention facilitates industrial advancement. Therefore, the working market mechanisms of the Third World are not a result of imperfect completion, rather a consequence of reduced government interference. Moreover, governments are responsible for infrastructural development for their citizens. Besides, infrastructure availability is crucial for industrial expansion. The governments are also ready for rent via subsidies, exceptions and through public policy. When such rents capture the wrong attention, the consumers are obliged to pay increased production costs, as the state fails to differentiate vested interests. Consequently, strategic interference facilitates industrial growth.

 
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Social interactions determine the distribution of gains between participants while the division in turn influences individuals’ incentives and their contribution to the economy. Thus, the process of economic development is a result of social and innovative interactions (Lazonick, 2004). Hence, the economic advancement largely depends on the innovativeness of society as well as their ability to manufacture and offer goods at lower prices and of higher quality than of those commodities in the market. In China, the social structures established in the planning stage played a paramount role in the success of technological innovations in the country (Lazonick, 2004). Though innovation nations develop their industries; nevertheless, such efforts are efficient only when the government employs the right strategies. In case of the Stone Company, the government significantly influenced their success. The state did not interfere with the operations of the firm and even offered tax subsidy to facilitate its growth. Moreover, the authorities supported the firm’s small production by purchasing printers from the corporation (Lazonick, 2004). However, the action of the government resulted in the Tiananmen massacre, the organization suffered, as Stone Company could not be listed in the stock market and the managers had to go to exile (Lazonick, 2004). Later, the venture benefited from the state introduction of tax added value. Consequently, government noninterference paved the way for the enterprise’s success.

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Similarly, Legend flourished due to favorable governmental support. At its inception, the corporation was a governmental institute since the founders got resources and financial assistance from the government (Lazonick, 2004). Like Legend and Stone, Great Wall was also a state-owned company. However, unlike the former whose management enjoyed freedom, Great Wall was a state-run firm thus giving the latter tremendous advantage, which led to its domination in the PC industry in China (Lazonick, 2004). The government provided a substantial grant for the establishment of the company. Additionally, it got financial support early during the period of their creation that allowed the venture to compete with other emerging Chinese organizations. Moreover, when they faced a financial crisis, they took loans from the state-owned banks. Similar to other businesses, the Electronic Publishing System Company experienced positive government involvement (Lazonick, 2004). The corporation had its foundation under state ownership but the management enjoyed decision-making autonomy. Given that back then China faced challenges in printing in Chinese, the government offered an initial grant to the venture, approved the printing technology and added an extra grant to facilitate the renovation of the state-owned newspaper. Over the years, the role of government in technology was changing from direct involvement in promoting research to providing infrastructure for scientific technology advancement. Therefore, rational governmental decisions promoted the success of various organizations.

The initial stage of industrialization includes boosting production of goods for local consumption. Besides, this stage of industrial growth requires non-reversible changes not only in the economic but also in social structures of the society (Cypher & Dietz, 2004). For instance, in China, the state supported the companies in manufacturing products for the domestic market, which would be later expanded to the international level (Lazonick, 2004). For a domestic industry to thrive, the government must be willing to support this business and promote local trade. Startups face tremendous financial challenges; hence, the Chinese government offered grants, loans, and infrastructural support to the technology corporations when they were launched (Lazonick, 2004). Without government-sponsored industrial initiatives, such establishments are bound to fail given the ever-rising competition, especially with international companies. Therefore, the government needs to implement measures such as import tariffs to protect their infant and developing industry (Cypher & Dietz, 2004). For the former to thrive, particular incentives are required, namely tax subsidies, to enable them to charge their products at the current market price or even lower.

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In the Chinese technology business, their corporations quickly dominated the local market, as the products from international companies were quite expensive. In the Great Wall case, the firm successfully concluded a contract with IBM as IBM efficiently handled problems penetrating to the Chinese market (Lazonick, 2004). Moreover, the cost of production in China is relatively low, and it has allowed the country rise to become one of the strongest economies in the world. The nation supported their infant industries promoting their development until they are the giants of the technology industry that may successfully compete with other international ventures. The state achieved this by offering financial support, tax subsidies and having little interference in the corporate operation (Lazonick, 2004). Eventually, the government even shifted its role to facilitating research and providing the necessary infrastructure. Furthermore, strategically the government is seen to withdraw this support once the companies establish themselves. Therefore, though state intervention may affect industrialization negatively, when done effectively, this control can induce the industrial growth.

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In conclusion, the state plays a critical role in the establishment and advancement of industries in their respective countries. Government interference in market operations is central to the industrialization debate. Scholars observe that for a country to develop, the government must minimize market control and its intervention. While market forces are insignificant hindrances in market operation, the contribution of the government is crucial. The industrial growth depends on market availability. Thus, prosperity of markets depends on efficient reciprocity. However, the government is regarded as the source of all market inefficiencies thereby impeding significant industrial advancement. Though state involvement may be harmful, the successful running of any society requires some regulations. Therefore, instead of complete refusal from doing away with government control, the state should exert the latter strategically. For example, in the Chinese technological companies, the governmental involvement in Stone, Founder, Great Wall and Legend led to positive development. The government offered these firms financial and infrastructural support as well as tax subsidies while allowing decision-making autonomy. Hence, the corporations were able to follow individual paths of progress that ultimately made them giants in the technology industry. Consequently, the government performs an essential role in industrialization. While favorable involvement facilitates this process, excessive interference and lack of state support initiatives hinder this necessary growth.

 

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