Introduction

The word “government”, is defined as an organization or a political body that exercises political authority, controls and administers public policy. They are also responsible for controlling the actions of the government body and the entire nation itself.

“Economy”, the word means a systemic approach of correct and effective usage of available resources (taking into consideration of economic scarcity) in producing and distributing of goods and services in a particular geographic region.

This report will highlight on both the positive and negative aspect of government interference in the economy of an individual nation.

It is a known fact that the success of a nations’ Government body is closely related to the success of its’ economy. Nevertheless, we cannot neglect the fact that government interference does not only benefit a certain economy, it also does more damages than good.

Researches show that the country’s economic success seems operates best when government does not get involved in businesses and individuals to succeed or fail. The success or failure is merely on their own merits in open, competitive markets.

General Overview of Government interference in the economy

The question arises, “why does government intervene with an economy?” The main and the most common reason according to the government would be to “stabilize the economy”.

The role of the government in the country’s economy is mainly focused on three magnitude; these are namely allocation, redistribution and stabilization.

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It is believed that there are two types of government intervention, meaning the extent of government involvement in the economy. Namely they are Capitalist policies and Socialist policies. In capitalism there must be a little or no intervention of government in the economy of the country, and on the other hand in socialism believes in complete government intervention.

Some believe that the government is responsible in protecting the public good by systematic regulation of the private sector, while it is also believed that for a certain economy to survive there should be some government interference to ensure economic goals are achieved, freedom and individualism remains existing.

Should the government interfere in the economy? (Justification)

The next most common question that arises is “Does government intervention or interference causes more harm than good or vice- versa?”

As mentioned earlier, the answer is subjected depending on different cases and countries. However most scholars believe that in order for an economy to succeed it should be let free. Economies of countries are treated as business. Similar to a business economy of a country is supposed to make money. Like business in order to survive long term, generating income becomes compulsory one way or the other. If the economy fails to fulfill its needs and wants, it eventually fails. Likewise economy standing alone without interference from the government makes them more pressured in working towards their objectives.