Government intervention can lead to positive outcomes from "summary" of The Industrial Policy Revolution II by J. Esteban,J. Stiglitz,Justin Lin Yifu
Government intervention can lead to positive outcomes in various ways. One key aspect is the ability of governments to correct market failures. Markets do not always allocate resources efficiently or fairly. There may be externalities, such as pollution, that are not accounted for in market transactions. In such cases, government intervention can help internalize these externalities and ensure a more socially optimal allocation of resources. Furthermore, governments can play a crucial role in providing public goods that are essential for economic development. Public goods, such as infrastructure and basic research, are often underprovided by the private sector due to free-rider problems. By investing in these areas, governments can create the necessary conditions for long-term growth and innovation. Government intervention can also address issues of inequality and social exclusion. In many cases, markets may exacerbate inequal...
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