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Role of State in the Market

The state has presided over the decision-making processes that are business oriented towards economic growth, in a rapid and sustainable way. Formulation of the ideas is infused not only with traditional ideas about the importance of the state in creating economic policy but also, with the importance of realizing that the actions of the state are critical in such solving problems matters as pursuing a good development strategy. The state, naturally, has an important role in the development and functioning of a modern economy and most importantly in the case economies that are in transition (M.: TEIS, 2005). It promotes its market by creating institutions that are aimed at enhancing the market and address issues that affect the market. However, there is a main issue facing the policy maker; and this is how such a position can be expressed in a good way. An example is the socio-economic functions, in which the state is involved in at the moment (Kinsella, 2001).

In creating market reforms, the state acts as the midwife of emerging market institutions. It forms policies between the agents of the state and intervenes in creating an institutional framework in the economy, allowing the business to offer a greater role in economic coordination. This effort requires the state to give specifications and enforce a new structure of property rights, allowing transaction costs that integrate market and bureaucratic mechanisms of cooperation in a mixed economy (Kuznets, 1996). Transaction costs increase because of high profits that middlemen and political actors, whose broker lucrative transactions involve the state and market sectors in the transition market.

After periods of allocation of funds by the state, the return to the economy of the market contained major institutional transitions. In the first place, the reformers must get support and compliance of the state bureaucracy in the implementation of reform measures. As the state initiates the market reforms, there is a voluntary involvement of middle and lower level state officials for the successful implementaton of reforms (McNally, 1993). Secondly, the state can create new market structures and expand old market structures, as well as making them modern. Legal codes that regulate entrepreneurs and market transactions are instituted and enforced.

Besides, the usage public properties need to be instituted and enforced promptly. The state ensures that they put strict rule that must be followed, hence promoting the market, since it reduces the misuse of funds.

In addition, the state has to get on with the formation of a system and begins to exclude economic groups from political decision-making and can also reduce politicians in getting involved in the embezzlement of public funds. On the review, this process disallows the ability of big business to use the state funds for the satisfaction of their narrow self-interest (M.: TEIS, 2005). On the other hand, the process may lead to confrontations that are not necessary involving the state authorities and business and the failure of the state to give an action, as it should undertake the function of fostering conditions that are favorable to the entrepreneurial activity (Kinsella, 2001).

Private property, which is gainful for the private sectors, and the profits, which are got in businesses needs, has to be given good security in various communities, because in the recent past, the pursuit of income generating activities had their political and social practice (Paul, 2004). The state renews their markets, construct structures that are favorable for the implementation of business activities, ensuring that state funds are available to make them implement their ideas (Altvater, 1993).

Market reforms, imposed by the state, encourage households to give outputs for the market, rather than producing for the state after meeting their state production quota that is instructed. Many households can specialize in single cash crop, but can also concentrate on the production of other commodities that can make enterprises that are in the rural areas to spring up through joint initiatives inn capital and labor.

In the rural area’s economy, where marketing is slow, the rise of private entrepreneurial activities has risen and created the widespread uncertainty and confusion. Through state intervention, by the creation of public ideology, they support entrepreneurship that is private in nature. Through promotion of market reforms, reformers create an environment that can favor the development of businesses in rural areas (M.: TEIS, 2005).

Consequently, the state has a great task in ensuring that it creates a favorable environment, in order to promote the market. It extends and offers credit to aspiring entrepreneurs; and this can be achieved by advising peasants that the new policies created are market-oriented and effective. Moreover, safeguards also should be provided by the state for the private investors in public properties, mainly in areas that are no productive agriculture wise. Also, the state compensates households on the investments and improvements, made on their agricultural land, in case it is taken from them and given to other households, who are also interested in improving and making developments on the land.

The state can also play a very important role in the market, by creating modern systems consisting of political, economic and social organizations that can face the challenges that may arise in the market sector and address them promptly (McNally, 1993).

The state can be associated with enforcing civil and rights of citizens, especially those that are involved in various economic activities of the individuals. Next thing to do is the institution that is involved in the development of the capital of humans, such as educational facilities, quality health cares, and provision of good housing. However, despite the fact that this could be ineffective, it is extremely expensive (Kuznets, 1996). The state can also form an economic institution that guarantees the performance of the economy and checks the structural modernization of the market sectors to improve with the economy.

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