The government role in business is very crucial to the development of an economy.
The following are major reasons for government involvement in business:
1. To promote general welfare of the public.
The well being of the country is a major concern of the government. To safeguard the welfare of the general public, the government must get involved in business activities to promote health, safety or general welfare of the public.
2. Prevent exploitation.
The government prevents producers from exploiting consumers in terms of wrong pricing, poor quality products and unethical business practices. Kenya Bureau of Standards (KEBS) ensure that consumers are not exploited.
3. Provision of essential goods and services.
The government offers some essential goods and services even if they are not profitable. Some of these services include provision of water and electricity.
4. Provision of sensitive goods and services.
The government provide sensitive goods and services which cannot be left to the private sgoods . Such business activities include manufacturing of firearms and security equipment.
5. High initial capital
The government may decide to offer essential goods and services that require high initial capital and take long to generate profits. For example building of international airports, airline and research undertakings.
6. Prevent monopolies.
Monopoly is a situation in which there is a single producer of goods or services. The government participates in business activities in order to prevent development of monopolies, which lead to unfair pricing.
7. Regulate of business.
The government may get involved in business activities to regulate the market.
8. Low profit undertakings.
A low profit business may not be very attractive to the businesspeople. The government sometimes must offer some of these services if they are very important to the citizen. These services may include sewerage management services.
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