Role of The State
The large-scale programme of industrialization advocated by this model requires huge investments which are beyond the means of the private sector. The investment in infrastructure and basic industries (like power, transport and communications) is 'lumpy' and has long gestation periods. The role of the state in this theory is therefore critical for investment in social overhead capital. Even if the private sector had the requisite resources to invest in such a programme, it would not do so since it is driven by profit motives. Many investments are profitable in terms of social marginal net product but not in terms of private marginal net product. Due to this there is no incentive for individual entrepreneurs to invest and take advantage of external economies.
Read more about this topic: Big Push Model
Famous quotes containing the words role of the, role and/or state:
“The role of the intelligence—that part of us which affirms and denies and formulates opinions—is merely to submit.”
—Simone Weil (1909–1943)
“Certainly parents play a crucial role in the lives of individuals who are intellectually gifted or creatively talented. But this role is not one of active instruction, of teaching children skills,... rather, it is support and encouragement parents give children and the intellectual climate that they create in the home which seem to be the critical factors.”
—David Elkind (20th century)
“Men judge by the complexion of the sky
The state and inclination of the day.”
—William Shakespeare (1564–1616)