Role Of Government In Market Economy

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II. Discussion of findings 1. The role of the government in a market economy The current market economy has been facing with various fluctuation causing from both inside and outside forces. In every situation, it is immediately necessary to make correct policies to guide the economy out of dangerous positions, and prevent it from falling into a long period of stagnation, recession or high inflation. The famous theory “invisible hand” of Adam Smith, on the one hand, highly appreciates the market management through supply and demand. On the other hand, precisely, it can not be ignorable the very important role of government in managing the whole economy. In theory, the government can serve five main functions in a market economy. The negative…show more content…
Conducting equitization contributes to improvement of production efficiency of enterprises, which can creat conditions for SOEs to compete with businesses of other economic fields after equitization. Additionally, equitization will contribute to accelerate the process of establishing the stock market. The stock market equiped with advantageous operational conditions will be good to promote the equitization, which is considered as a way of attracting domestic and foreign…show more content…
Before equitization, the Board of Directors was in charge of making financial decisions. After equitization, all major decisions about financial matters are discussed and voted at the meeting of shareholders theorically. Equitization can help enterprises to overcome financial matters, the increase in the amount of equity makes the charter capital no longer be the intimidating facotr now. Besides, enterprises after equitization do not have to face with much problems in term of bad debts and loans. The financial bottlenecks, cost management, and operating expenses also decreased. Moreover, the businesses also find it more proactive in making financial decisions and financial managementIn reality, however, many decisions are still made by the Board of Directors because there is little change in business mechanism of the enterprises. 80 percent of surveyed businesses revealed that they kept no change in senior positions in the Board and chief accountants, which limited the creativity and did not bring much change in the financial management policies. Regarding to the structure of the charter capital, so far, 77 percent of businesses equitized possess capital size of under 10 billion VND. Those equitized enterprises are mostly small and the state does not hold much proportion in charter capital. There are about 33

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