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State and Economy -WPS Office
State and Economy -WPS Office
The states in
Europe were forged as a result of war while that of Africa were forged as a result of negotiations and
constitutional treaties(colonialism and the fight for independence).
Types of state
1. Colonial state
3. Minimalist state
4. Development state
5. Autocratic state
6. Federal state
7. Unitary state
Economy is a system of interaction of exchange of goods and services whose primary aim and objective
is to meet the philosophical foundation of the state. What is the philosophical foundation of the state?
To provide a better life for the citizens.
According to Adam Smith, economy is the wealth of the nation. Karl max believed that the economy is a
substructure on which other sectors of the state are built on. They believed economy is all about class
struggle. Economy is the system of interaction.
Theories of economy
Liberalist theory
Marxist theory : according to Karl Marx, the intervention of the state in the economy is a bad thing. He
believes government control of the economy leads to more class struggle and the state actors are just
committee members of the rich.
A state that is planning to attain development must complete the three phrases of production which is
3. Tertiary (selling the visible and invisible goods to the final customer) and for the tertiary stage to be
fully attained, there must be a proper and effective distribution and consumption.
Components of economy
1. Production
2. Distribution
3. Consumption
4. Industrialization
5. Localization
Types of economy
2. Socialist economy
3. Mixed economy
4. Feudal economy
5. Traditional/communal economy
The state, in relation to the economy, refers to the role and involvement of government in managing
and regulating economic activities within a particular territory or jurisdiction. Scholars have varied
perspectives on the role of the state in the economy, but generally, there are three main views:
Interventionist or Keynesian view: Scholars who adhere to this view believe that the state should
actively intervene in the economy to promote economic growth and stability. They argue that the
government should use fiscal policies such as taxation and spending, as well as monetary policies such as
interest rates and money supply, to influence economic outcomes. The government may also provide
public goods and services, regulate markets, and protect consumers and workers to ensure a fair and
functioning economy.
Liberal or laissez-faire view: Scholars who adhere to this view believe that the state should have minimal
involvement in the economy, and that markets should be allowed to operate freely with little or no
government intervention. They argue that the invisible hand of the market, guided by supply and
demand forces, is the most efficient way to allocate resources and promote economic growth.
Government intervention is seen as unnecessary and potentially harmful to economic performance.
Institutional or developmental view: Scholars who adhere to this view emphasize the importance of
creating and maintaining supportive institutions and policies by the state to foster economic
development. They argue that the state should play a proactive role in building and maintaining
institutions such as legal frameworks, infrastructure, education systems, and social safety nets that
create a conducive environment for economic growth and development.
It's important to note that these views are not mutually exclusive, and there are various shades of
opinions among scholars regarding the role of the state in the economy. The actual role and function of
the state in the economy can also vary depending on the specific economic, social, and political context
of a country or region.