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Public Sector Activities

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Part of the Problems in Focus Series book series (PFS)

Abstract

The previous chapter has dealt with taxation and general government expenditure — i.e. with the financing of ‘public goods’ (defence, public administration, etc.) — so this chapter will confine itself to the remaining activities of the public sector. ‘Public goods’ are provided for the community as a whole, are indivisible, and cannot therefore be charged to individual users in proportion to their use. But in many countries the state also supplies goods and services which can be allocated to individual consumers, in which case the price the state charges for its activities can be a major source of finance, as well as a powerful instrument of government control over income distribution, sectoral balance, market structure, etc. Sometimes the prices charged by the public sector for its activities involve a tax element (e.g. individual ‘purshasers’ of social security benefits may be unable to escape payment if they decide the service costs them too much), but the fact that the state incurs a specific obligation to a particular customer, in exchange for his payment, differentiates this type of public sector transaction from general taxation. This chapter examines public enterprises and social security funds to see how their pricing policies contribute to financing development. It concludes by considering how public development banks raise loans on behalf of public enterprises.

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Notes

  1. 2.
    S. A. Mosk, Industrial Revolution in Mexico (1950), p. 61.Google Scholar
  2. 3.
    A. H. Hanson, Public Enterprise and Economic Development, 2nd ed. (1965), pp. 599–205.Google Scholar
  3. A more realistic account of the relations between public and private sectors is provided by Michael Kidron, Foreign Investment in India (1965).Google Scholar
  4. 8.
    Hugh Gaitskell, Socialism and Nationalisation (Fabian pamphlet, 1956), p. 33. Since this was written British public enterprises have reduced their deficits.Google Scholar
  5. 23.
    F. Reviglio, ‘Social Security: A Means of Savings Mobilization for Economic Development’, in I.M.F. Staff Papers (July 1967), 335.Google Scholar
  6. 33.
    F. Paukert, ‘Social Security and Income Redistribution’, in International Labour Review (Nov 1968), 448–9.Google Scholar
  7. 41.
    N. Leff, Economic Policy-Making and Development in Brazil 1947–64 (1968), pp. 39–40.Google Scholar
  8. 43.
    C. Blair, in Public Policy and Private Enterprise in Mexico, ed. Vernon (1964), p. 194.Google Scholar

Copyright information

© Keith Griffin, Lester C. Thurow, Jorge Arrate, Lucio Geller, Laurence Whitehead, Arthur L. Domike, Victor E. Tokman, Timothy King, Rosemary Thorp 1971

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