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Should Government be Minimised as much as Possible in the Emerging Markets - Essay Example

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 This essay 'Should Government be Minimised as much as Possible in the Emerging Markets?" discusses public spending can both be seen as good and bad in these emerging markets with respect to the economic growth of any nation. During the old regime prior to transition, public spending was very high…
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Should Government be Minimised as much as Possible in the Emerging Markets
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Download file to see previous pages It includes spending on defense, education, infrastructure projects, and the healthcare sector (Berglof, and Bolton, 2002). The source of money or the finance that is used for public expenditure by the government is mostly from taxation.
One of the distinctive features of public spending in emerging markets is the use of social safety nets. According to Chu and Gupta (1998), safety nets basically mean transferring payments that are non- contributory which seek to prevent the people who are vulnerable to poverty and shocks from falling down to a given level of poverty. The providers of the safety nets are the private sector (charities, NGOs), and the public sector (donors and the government).
Another distinctive feature seen in the emerging markets is that the distribution of income during the pre-transition period in most Scandinavian countries had a Gini coefficient of 0.25 compared to that of the U. S which stood at 0.4. During the post-transition period, for example, the Gini coefficient was 0.2 in Slovakia and 0.5 in Ukraine (Keane and Prasad, 2000). This can be seen in figure 1 below
Poland experienced indeed a substantial rise in inequality of earnings in relation to labor. However social transfers were significant in the mitigation of the shift, and as a result, the increase in inequality of income was moderated. Interestingly, these transfers were mainly targeting individuals who stood a chance to lose more as a result of the transition. The intentions of these individuals were not to be poor but rather to be middle class (Gans, 2011). The figure 2 below shows the income distribution in Poland during the transition period.
The figure 3 below shows the overall distribution of income in the emerging markets. The general trend is that in most cases income distribution is normally not balanced among the countries. Analyzing the table found below, what is evident is that income disparity is greater in Russia as compared to Slovakia.
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