The Role of the State in the New Economy

Keith Griffin

Chapter 3 in Economic Reform in Vietnam, 1998, pp 37-55 from Palgrave Macmillan

Abstract: Abstract The role of the state in a centrally planned economy is very different from that in a market oriented economy. In a planned economy resources are allocated by administrative mechanisms, not by the price mechanism. Indeed prices of factors of production (labour, capital, land) and of goods and services play no role in ensuring efficiency in the use of resources Similarly, the rate of investment in a planned economy reflects planners’ preferences whereas in a market economy the rate of investment is strongly influenced by profit expectations of individuals and privately owned enterprises. Finally, the distribution of income in a planned economy reflects administratively determined wage and salary scales in the industrial sector, the operation of compulsory quota delivery schemes in the agricultural sector and the distribution of free or nearly free public goods and services. In a market economy, in contrast, the distribution of income depends upon the distribution of productive wealth and market generated factor rewards (wages, interest rates, profits, rents). The role of the state thus is much more pervasive in a centrally planned economy than in a market oriented economy.

Keywords: Market Economy; Poverty Line; Market Failure; State Owned Enterprise; State Enterprise (search for similar items in EconPapers)
Date: 1998
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-333-99521-1_3

Ordering information: This item can be ordered from
http://www.palgrave.com/9780333995211

DOI: 10.1007/978-0-333-99521-1_3

Access Statistics for this chapter

More chapters in Palgrave Macmillan Books from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().