This study aims to review the global changes in the role of governments over time and to draw implications for the desirable future by shaping the roles that the Korean government should optimally play.
It was a global trend that during the early and mid-20th century governments expanded their roles with economic depressions and wars, while the market gained the upper hand toward the later part of the century. Market principles have been reflected in a variety of ways. Market-type mechanisms, such as privatization or contracting-out, were increasingly adopted in public service provision. For commodity and financial markets, both liberalization and a regulatory regime under an at-an-arm’s-length principle were introduced. Market-oriented social policies tend to stress individual responsibilities, pursuing division of labor between market and government through private insurance or a provider/purchaser split. This trend also manifests itself in macro-economic policy in the form of reduced discretion on the part of government in issues including money supply, exchange rate and finance. But governments are still maintaining their strong hold in areas where they assume basic responsibility, such as property rights protection, market failures correction, merit goods provision, income redistribution, and macroeconomic stabilization.
In Korea’s case, the country’s economic expansion and market sophistication are making it almost unnecessary to maintain its past government-driven, market-intervention growth strategy. The Korean government’s role must be reorganized toward less market intervention, more market competition, more efficient and effective redistribution policies, and macroeconomic stabilization. Active use of privation and contracting-out, and expansion of trade are required. Regulations on prices and market entry should be abolished while those on competition-harming factors should be reinforced. Redistribution policies must focus on lower income groups to maximize the redistributive effect with limited resources. Macroeconomic policies should aim for mid-and long-term price stability and fiscal soundness.
정부의 경제적 역할(Government’s economic role)
세계적 추세와 우리나라에 대한 시사점(Global trends and implications for Korea)
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < General
Government and Law < Public Administration
|Holding||KDI; KDI School|