Government Policies Of Economic

To what extent have government policies been helpful or harmful in contributing to faster economic growth in developing countries during recent year? Discuss with reference to specific examples.


What extent the government policies will have positive or negative effects on faster economic growth, in particular, in developing countries. It is a controversial and complex problem to those experts and scholars who work in the international organizations and even the policymakers in every country who always encounter this kind of questions how to make a correct and appropriate policy to foster economic growth. Some researches consider that government policies have a minimal impact on economic growth rates, especially in the long term (John and Peter, 2003). However, the others insist that effectiveness of government policies can maintain sustainable economic growth. Personally, all of these two viewpoints can hold water because, perhaps, the different perspectives came from different angle. Before getting down to the substantive issues, I want to make a statement is about the relationship between government policies and growth which focuses on developing countries.

Generally speaking, government policies and economic growth are interrelated closely and interact on each other. Put another way, government policies which are separated from advantage and disadvantage impact on economic growth continuously, the plus one definitely and remarkably stimulate economic growth. On the contrary, the minus one, to a greater degree, slows down the speed of economic growth. On the other hand, whether faster economy is forwards or backwards could influence on policymakers what decisions they would make in reverse. Moreover, same policies are not suitable to different countries, such as developing countries and developed countries; meanwhile, they will bring a notable difference to impact on economic growth. In the following paragraphs, I will further illustrate the essay question which is to what extent have government policies been helpful or harmful in contributing to faster economic growth in developing countries during recent year? Simultaneously, some specific examples will circumstantiate the relationship between them.

Chinese miracle

In the last decade, the developing countries of East Asia have shown prominent economic growth. All the world appreciates what has been achieved in this region. Countries that were dirt poor not so long ago grew rapidly and achieved western living standards. Countries that used to rely on autarkic economic increasingly change into export-oriented economy. Chinese miracle is a best example to prove it all, enormous investments of many entrepreneurs who came from developed countries put into a majority of industries in China, such as banking, manufacturing and service industry. For the role of public policy in economic development remains controversial (World Bank 1993). The proponents of free market, like Helen Hughes (1995), insist that development of economy should not be intervened by public policy instead of adjusted by free market automatically. However, Robert Wade (1990), held opposite view, argue that a effective government policy could lead a stable and sustainable growth. I am deeply convinced that this series of economic growth and achievement are necessarily inseparable from the role of government policies.

Trade liberalization impact on Chinese economic growth

Before the late 1970s, the mode of China's commodity trade was a kind of planned economy which more than 90% of all imports were decided by the State Planning Commission's import plan. The commission designed the import plan to increase the supplies of equipment industrial raw materials and goods that were in short supply and needed to accomplish targets of production. The same situation also happened on export, meanwhile, in this kind of background, workers have been paid same salaries whatever they complete how much task or whether they completed or not. Thus, majority of workers lost their ambition led to reducing of production capability dramatically. There is a worse outcome which directly has an adverse influence on the rate of economic growth. However, since late 1970s when Deng Xiaoping suggested a policy of opening and reform until 2003, the enormous achievement China has achieved astonished all over the world. According to the World Trade Report (2003), China' s rank in global trade has risen steadily from the thirtieth largest trading country in 1977,prior to economic reform, to the 7th largest trading country in 2000. Since that time the performance of China's trade has become even more brilliant, in 2001 and 2002 China's trade first surpassed that of Canada and then that of the United Kingdom to become the 6th and 5th largest trading country separately. Even through in the 2003 when the global economy suffered from a number of negative economic shocks, including the Iraqi war, rapidly rising oil price, and the SARS epidemic, in such wretched global economic condition which most of counties only hope to keep the rate of economic growth constantly, yet, according to National Bureau of Statistics, China Statistical Yearbook 2004; National Bureau of Statistics plan reported that China has got amazing 10% of economic growth rate. Moreover, it is mentionable that by the time China accessed to the WTO in 2001, the import regime had been almost entirely transformed. Most obviously, tariff rate gradually decreased step by step in order to accord with the regulation of WTO which about trade protectionism, meanwhile, real annual growth rate remarkably increased from 8.3% in 2001 to 11.4% in 2007. Due to the above facts I displayed, it is easy to see that China is perhaps the best example of public policy has a positive influence on economic growth.

North Korea is isolated by the international society

Before talking about the government policy of North Korea, we have to mention its regime. Democratic People's Republic of Korea (DPRK or North Korea), which is one of sole two countries, another one is Cube has an totally state-owned economy government-planned economy and one of five socialist countries with autarkic and highly centralized command economy, is a single- party country lead by Korea Workers' Party, the exist form of others small parties is name only, compare with other socialist countries, it is more despotic and inflexible in its regime. In addition, cult of personality is prevalent at political atmosphere which propagate its belief of policy on a large scale, it is inevitable occur partial and even arbitrary situation when making some policies.

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