What is Fourfold Role of Government?
Fourfold role of government:
Traditionally the role of government was restricted to maintenance of law and order in the system, to protect social security, protect resources against external threats and attacks, maintain control over public utilities and ensure defence of the country. The government ensured that the environment is conducive for conducting business. It includes providing basic infrastructure and political stability.
However, after the Russian Revolution of 1917, Great Economic Depression (1929), Second World War, the need for planned economic development was felt. It was realized that business have social responsibility and it is the obligation of government must ensure that business discharge these social responsibilities. Thus government came to have an active role in business and economic regulation with an objective of economic growth and development.
Over the years, the role of government has shifted from conducting business to that of regulating the, business, The role of government in business has four dimensions:
- Regulatory.
- Promotional.
- Entrepreneurial.
- Planning
Besides these, the state also regulates and intervenes business to provide direct assistance in form of grants, tax holidays, research and development, consulting and advice, protection, industrial training and other forms of financial assistance. These are justified in light of loss due to external factors, technical complications, financial crisis, international competition etc.
