Contending Theoretical Perspectives on the Role of the State in the Economy

Abstract

This study examined the contending theoretical perspectives on the role of the state in the economy. The study is based on qualitative data, which is generated through extensive review of literature from secondary sources such as books, articles, symposiums, newspapers and other anecdotal data on the theoretical perspectives of the role of the state in the economy. The available literature revealed theoretical perspectives such as mercantilists, classical liberalists, neoliberal perspective, laissez-faireists and Marxists perspectives. Using these perspectives, the study argued that the state performs critical roles in the economy, which are synthesized thus: the state as guarantor, regulator, architect of national economy, owners of public enterprises and provider of public goods and services. Through these ways, the state provides stable macroeconomic environment, a reliable legal framework to the conduct of the market, control and promote domestic and international competition, and provide market friendly strategies that would ensure adequate investments in people. Based on the findings, the study recommended among others that the state should continue to partner with the private sector through support, loans, subsidies and friendly tax policies to enable the private sector participants to engage fully in economic activities.