E C O N O M I C R AT I O N A L E

FOR GOVERNMENT
——

INTERVENTION
R E P O RT E D B Y: R E N A LY N P. B A S I G
 GOVERNMENT

•The term GOVERNMENT refers to a

governing body that takes decisions
and implements policies to benefits
its population.
THE
GOVERNMENT
PERFORM THE
FOLLOWING
FUNCTIONS
 • The government is
responsible to maintain
peace and security
PROTECTIVE
FUNCTION
 •The government is
responsible for the
ADMINISTRATIVE administration of the
FUNCTION country.
 •The government
provides social
service to public.
SOCIAL FUNCTION
 • The development of
different sections of the
economy is not possible
DEVELOPMENT
without the state help.
FUNCTION
 • Makes policies and
laws and implement
MAKES them to promote
POLICIES development of
AND LAWS country.
 •Facilities trade
within and outside
TRADE
the country.
FUNCTION
 GOVERNMENT INTERVENTION

• The regulatory action taken by government

by that seek to change the decisions made
by individuals, groups, organization about
social and economic matters.
WHY GOVERNMENT
INTERVENE IN
INTERNATIONAL
TRADE?
 • The first political
reasons is to protect job
and overall industries
PO L I T I CAL G O VERNM ENT
I NT ERVE NT I O N
from international
business.
 • One of the biggest
reason is to protect new
industries from fierce
ECO NO M I C G O VE RNM ENT
I NT ERVE NT I O N
competition.
 WHY IS THERE
GOVERNMENT
INTERVENTION IN
MARKETS?
 • Market Failure may manifest in
different forms such as the

TO overproduction or demerit
goods, negative externalities,
CORRECT and imperfect information

MARKET access.
• Market failure results in a loss of
FAILURE net social welfare as it
negatively impacts third parties
and consumers.
 • In unregulated markets, thereis

TO arisk of organization operating with

monopoly power. This can be result

MAXIMIZE in the overpricing of products and a

lack of healthy competitions in the

SOCIAL msrket. All of this ultimately leads to

lower cconsumer supplies and

WELFARE deadweight welfare loss to society.

 • To minimize the damage
caused by naturally
occurring economic events
FOR
MACROECONOMIC such as recession on
FACTORS inflation, the government
would intervene to make
sure the market economy
is working efficiently.
 • In situation where there
inequity and inequality,
FOR the government would
SOCIOECONOMIC
FACTORS intervene to promote
general economic
fairness.
 • To ensure adequate food supplies;
• To protect / preserve small-scale
farming;
Reasons for • To maintain economic viability of
Government rural businesses and communities;
Intervention in
• To minimize dependence on
Agriculture
imports;
• To expand agricultural exports; and
• To respond to a food problem or a
farm problem.
 • The farm problem
consists of two quite
Agriculture and distinct problems:
Farm Problem • Production problems;
and
• Income problems.
 • Production problems stem from the
cyclical nature of production caused
primarily by physical and biological
factors.
Agriculture and • Income problems stem from (1) a
Farm Problem long-run tendency for farm incomes
to fall below urban incomes and (2)
fluctuations in agricultural prices
causing variability in farm incomes.
TYPES OF
GOVERNMENT
INTERVENTION IN
AGRICULTURE
 • The agriculture sector plays a

TAXES vital role in our economy;

thus, the government regularly
enacts laws and provides tax
incentives geared towards
supporting and increasing
agricultural production and
activity.
 • For example, tax systems can
incentivise farm investments by
reducing taxable income through
provisions for depreciation. In some
countries, the tax system allows farmers

EXAMPLE to smooth income variations over time

by using tax averaging. Taxes on
income, property and land, and capital
transfer may affect structural change,
while differential tax rates on specific
polluting activities, resources, or input
use may affect sustainability.
 • An agricultural subsidy (also called
an agricultural incentive) is a
government incentive paid to
SUBSIDIE agribusinesses, agricultural

S organizations and farms to

supplement their income, manage
the supply of agricultural
commodities, and influence the
cost and supply of such
commodities.
 • Wheat, feed grains (grain
used as fodder, such as
maize or corn, sorghum,
COMMODITIES barley and oats), cotton,
EXAMPLE
milk, rice, peanuts, sugar,
tobacco, oilseeds such as
soybeans and meat
products such as beef, pork,
 • Governments often seek to assist farmers by

PRICE
setting price floors in agricultural markets. A
minimum allowable price set above the
equilibrium price is a price floor. With a price

CONTROLS floor, the government forbids a price below

the minimum.
• Department of Agriculture who monitor or
the one who control the price in agriculture.
• Department of Trade and Industry It is
committed to protecting the rights and
interests of the consumers and is also
committed to developing policies and
programs aimed at sustaining the growth and
development of the Philippine economy.
REGULATIONS • All aspects of the crop protection
industry are regulated – production,
manufacturing, distribution and usage
instructions as well as the setting of
allowable residue levels in food
(known as maximum residue limits or
MRLs). Products are comprehensively
tested and evaluated before being
approved for registration and sale.
LITERATUTE CITED
• https://youtube.com/watch?v=sKipsvSSIxg&feature=share

• Greater London Authority. 2008. The Rationale for Public Sector in Economy.
https://www.london.gov.uk/media/34930/download

• Jelic, M., Durovic, J., Radojcic, S. and Jugoslav, P. 2014. REASONS FOR
GOVERNMENT INTERVENTION IN AGRICULTURE.
https://imt.uoradea.ro/auo.fmte/files-2014-v3/Miloje%20A.
%20JELIC,Jasminka%20M.%20DUROVIC,%20Srecko%20M.%20RADOJCIC,
%20PhD%20JUGOSLAV%20ANICiC-REASONS%20FOR%20GOVERNMENT
%20INTERVENTION%20IN%20AGRICULTURE.pdf

• Wright, V. 2009. Economic Rationales for Government Intervention.

https://rune.une.edu.au/web/handle/1959.11/6605
• Department of agriculture. Regulation in Agriculture.
https://www.da.gov.ph/laws-and-issuances/republic-act-and-proclamations/

• Arnott, R., “Time for Revisionism on Rent Control,” Journal of Economic

Perspectives 9(1) (Winter, 1995): 99–120.
Thank you
——