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By the 1970s and early 1980s, governments in most developing countries were mired down in economic policies that were manifestly unworkable. Whether market failures had been present or not, most knowledgeable observers concluded that there had been colossal government failures. In many countries, there could be little question but that government failure significantly outweighed market failure. This essay focuses on insights relating directly to government behavior affecting economic activity and economic growth in developing countries. It briefly examines each of the following questions: 1) What is “the government”? 2) What is the comparative advantage of government? 3) What are the dynamics of government intervention? 4) Can a positive theory of political behavior be formulated that will help explain when and how alternative policies will evolve in the political arena?
Anne O. Krueger (Wed,) studied this question.