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? North American Free Trade Agreement Defense Spending and Economic Growth ?

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There is a need for any government in any sovereign state to pursue an active role in its economic growth and development. The government in this case plays a central role in determining the course taken by its economy. A caring government takes every opportunity at its disposal to see to it that it assists its people in establishing a sound economy. There are numerous ways in which the government plays a part in economic growth and development. This paper thus attempts to look at the various dimensions that the government gets involved to see to it that its economy experiences positive growth. The various ways looked at emphasize the need for any government to play an active role in establishing its economy.

Government’s Involvement in the Economy

Policy Making

Any responsible government is  responsibile of structuring appropriate policies that provide favourable condition for its economy to thrive. A country’s legislates, whether the federal government or the senate, need to come up with economic, friendly policies. For instance, the government needs to come up with rules that help private investors thrive easily and enjoy the working environment in that economy (Conte). The government can achieve this by advising commercial banks to lower interest rates on loans taken by people with an aim of investing. To add to this, policies that encourage commercial banks to lend more to its customers should be practiced.

The government has the responsibility of encouraging local companies and local investors to grow. To achieve this, there is the need to come up with policies that prevent extensive penetration of multinational companies into a country’s economy. The multinational companies pose unbearable pressure on local companies in terms of market share. This threatens collapse of local industries predicting fatal economic consequences on a given country. Such policies could be strict operating rules for multinational companies as well as inflated taxation with the view of discouraging multinational companies. (Conte)

Resource Allocation

It is up to the government to carry out an extensive pilot study, on how  efficiently allocate its resources across the whole economy, with a view of propelling the economy forward. Having acquainted itself with the sensitive sectors of the economy, the government then channels its resources to these sectors to see that they attain substantial growth. This is a complex approach that calls for economic expertise to advice the government appropriately. If not well implemented, the government risks allocating resources in a biased manner. This, in turn, has severe consequences on the economy as some sectors or regions will benefit more than others.


The government of any given nation should see to it that there is sound infrastructure that will promote economic growth. Excellent transport network comprising of passable roads, airports, and ports need establishment by the government to allow ease transport by business people and goods. This promotes business that plays a vital role in economic growth. The social infrastructure as well requires close attention by the government. Working hospitals, schools and other social amenities need to be put up to offer quality services to citizens. A functioning health sector ensures quality health for citizens and hence their improved welfare. Such a population engages fully in activities that help promote the economy. Quality education from the government, on the other hand, guarantees development of human expertise whose innovations promotes economic growth.

Government Rescue Program

The government needs to monitor how its economy performs. This entails monitoring any form of economic recession or financial crisis within the country. This can also help evaluate how crucial stakeholders of the economy are performing. In case there arises economic crisis in a country the government needs to come up with a rescue program to salvage it from devastating effects. One such program is the issuance of grants to outstanding stakeholders of the economy in case they face the threat of going out of market.due to financial crisis. In so doing, the government reserves job opportunities offered to its citizens by these firms. If the government looks aside and ignores such occurrences then its economy might collapse any time.,

International Marketing

The government has an obligation to market potential of its country globally. The ministry of foreign affairs ensures that this objective comes true. Governments use International forums such as International Trade Fairs, Olympic Games among others to market potential of their countries with an aim of attracting investors or competing in the International market. (Conte) This approach by the government helps it increase the market share and foster economic growth.

National Security

It is the government's role to ensure that there is adequate security and peace in the country. These two factors provide a conducive environment for administration of economic activities. Countries that have issues with national security suffer economic drawbacks. Therefore, to enjoy economic growth and development in any given country the government must be fully committed to ensuring national security and peace.

Public Awareness

The government needs to carry out public education and awareness on which sectors of the economy need investment. Once the citizens have this knowledge, they can invest wisely in the economy and thus boost its growth.


In conclusion, it is clear that the government needs extensive involvement in the economy to promote its growth. This ranges from policy structure, resource allocation, infrastructure, government rescue program, national security, public awareness to international marketing. In a nutshell, the government’s role in economic growth cannot be ignored.

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