Discuss in detail the main objectives of the public sector in the economy (Public Sector). The public sector is a part of the economy that consists of government entities. It is responsible for providing services and managing resources to citizens, businesses, and other organizations. These activities are funded by taxes, grants, borrowing money, and other government-controlled sources
Discuss in detail the main objectives of the public sector in the economy (Public Sector)
INTRODUCTION:
The government provides goods and services that are under supplied by the market and therefore plays a major role in regulating economic activity and guiding and shaping the economy. 🗸🗸
[Max 2]
BODY: MAIN PART
Objectives:
Economic growth 🗸
- Refer to an increase in the production of goods and services 🗸🗸
- Measured in terms of Real GDP 🗸🗸
- For economic growth to occur, the economic growth rate must be higher than Population growth 🗸🗸
- Growth and development in a country benefit its citizens because it often leads to a higher standard of living 🗸🗸
Full employment 🗸
- It is when all the people who want to work, who are looking for a job must be able to get a job 🗸🗸
- High levels of employment is the most important economic objective of the government 🗸🗸
- The unemployment rate increased over the past few years 🗸🗸
- Informal sector activities must be promoted because it is an area where employment increase 🗸🗸
Exchange rate stability 🗸
- The economy must be manage effectively and effective Fiscal and monetary policy must be used to keep the exchange rate relatively stable 🗸🗸
- Depreciation and Appreciation of the currency create uncertainties for producers and traders and should be limited. These uncertainties must be limited 🗸🗸
- The SARB changed the Exchange rate from a Managed floating to a free floating exchange rate 🗸🗸
Price stability 🗸
- Stable price causes better results in terms of job creation and economic growth 🗸🗸
- The SARB inflation target is 3% – 6% and they are successful in keeping inflation within this target 🗸🗸
- Interest Rates, based on the Repo Rate are the main instruments used in the stabilisation policy 🗸🗸
- The stable budget deficit also has a stabilizing effect on the inflation rate 🗸🗸
Economic equity 🗸
- Redistribution of income and wealth is essential 🗸🗸
- South Africa uses a progressive income tax system – taxation on profits, taxation on wealth, capital gains tax and taxation on spending, are used to finance free services 🗸🗸
- Free social services are basic education; primary health and to finance basic economic services 🗸🗸
- E.g. Cash Grant to the poor, e.g. child grants and cash grants to vulnerable people, e.g. disability grants 🗸
- Progressive taxation means that the higher income earners pay higher/more taxation 🗸🗸
[Max 26]
BODY: ADDITIONAL PART
- Learner responses can be positive or negative.
- Follow the argument and see if the learner can produce enough evidence to support his/her answer.
Economic Growth:
- SA targets 4–5% economic growth. Previously SA had a 5% growth rate 🗸🗸
- In recent years the growth rate decreased steadily (presently below 3%) 🗸🗸
Full Employment:
- Compared to foreign countries unemployment is very high. (Expanded – over 30%) 🗸🗸
- Efforts by SA government to reduce these figures includes the GEAR strategy, focus on small business enterprises, Public Works Programme 🗸🗸
Exchange rate stability:
- SA now operates on a free floating exchange rate system in line with international benchmarks 🗸🗸
- Unfortunately our currency has lost its value, with a general trend of depreciation over the last few years 🗸🗸
Price stability:
- For the past few years South Africa has managed to remain within the 3–6% target 🗸🗸
- The current increase in the repo rate has put constraints on the inflation rate 🗸🗸
Economic equity:
- Economic equity has improved (BEE, affirmative action, gender equity) and led to an improvement in economic equity 🗸🗸
[Any 5 x 2]
[Max 10]
CONCLUSION:
While some successes have been achieved by government, the fulfilling of some of the objectives are compromised by factors like lack of accountability, corruption, budgeting, nepotism and incompetence. 🗸🗸
[Any relevant conclusion]
[Max 2]