QS Study

Importance of State Enterprises in the Economic Development

If the state gets the ownership on continual at any business directly or indirectly incest it that business is called as the state enterprise.¬†Private enterprises fail in doing social welfare that’s why state enterprises are established in present for public welfare. We can see state enterprises are important for the economic development. The importance state enterprises are stated below:

Abolition of monopoly: By establishing large size business combination, private owners want to create monopoly business, which is not good for any country. State enterprises are reducing the scope of monopoly business and involved in public welfare activities for preventing dishonest monopoly of private owners.

Operating public welfare activities: The main objective of state enterprises are providing public welfare services such as water and electric supply, sewerage systems, transportation systems which are provided by some authorized organization. For these reasons, people can get proper service facilities with less cost and contributes to the economy.

Balanced distribution of wealth: State enterprise plays a vital role in the balanced distribution of wealth through industrialization creating more employment opportunities, distribution of products at fair price etc. and it makes sure that resources are utilized in right way and economic growth is possible.

Creating more employment opportunities: Private industries play important roles in creating employment opportunities but that’s not enough to meet the demand that’s why state enterprises are established to solve the employment problem. Because of large size, state enterprise can provide lots of employment opportunities which can help in economic development.

Maintaining price stability: State enterprises prevent ups and downs of products price by producing and distributing products according to the demand of the public. So a price of products become stable and keep in purchase power. Private enterprises often increase the product price to make maximum profits that’s why government establishes state enterprises for directly controlling the price of the products.

Operating monetary and banking systems: Maintaining economic stability is the responsibility of government that’s why government-established central bank other banks and insurance companies as state enterprise so that government can control the money market and banking systems of the country.

Control of production and quality of special products: Some special products like penicillin, life-saving medicine etc should produce under the controlled of government-owned enterprises. State enterprise is very important for production and distribution of the quality products for the national economic benefit.

Research and development: Research is needed for invention, developing product quality expansion of technology etc. This research and development activities help in developing economic condition of the country. But their research activities are very costly private organizations cannot provide much money. State enterprise can give the facility of research and development activities for economic development.

From above discussion, we can say that state enterprise plays very important roles in public welfare and developing the economic condition. So government should try to increase acceptability of state enterprise by efficient management, proper planning, and effective supervision.