engleski

Role of the government in promoting development in the weaker regions

Contrary to the doctrine of neo-classical economy, markets are not selfregulating systems. Supply and demand for products and production factors are not automatically balanced by way of the market mechanism of prices and wages. Human beings have different social functions other than working ones, and they participate in the production process with only one of their characteristics – their capability to work and manage. This process takes place in a competitive society, along with other social processes. After all, working and development capabilities are not exclusively individual. They have a strong collective dimension, which again depends on the systematic efforts of upgrading and the quality of the institutional framework. Furthermore, social processes do not take place outside the economic sphere. They are crucial for the reproduction of work, knowledge, private ownership, exchange of goods, regulation of economic conflicts, and similar. Government institutions do not stand apart from the process of market economy development, but at the same time they cannot be its mere infrastructure. Regardless of how active a participant they are in this process, governmental institutions must retain their autonomy as an arbitrator in conflicts between social actors and suppliers of non-market services. The state is interested in successful economic development since this is crucial for the well-being and maintenance of it own institutions. The right to control and direct, as well as the consequent income redistribution, will again be the consequence of this function (Baletic 1998). This does not, of course, imply that the role of the state should be idealized. Its institutions often follow contradictory goals and programmes of social action, and it is difficult to secure complete consistency, or at least a balance of its functions. This is the reason why this is often an area of division and confrontation, in which particular social groups try to optimize their own interests. The possibilities for social conflicts and growing disparities are usually greater at the time of major changes and slow economic growth. The need for intervention is then greater, and the available resources are smaller. In such circumstances it is difficult to obtain a social consensus. Nevertheless, then again the main criterion of state redistribution should be the strengthening of social solidarity, which is obtained by supporting the threatened parts of society and improving efficiency as well as fair social transfers.

weaker regions

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