Recent years have seen greater attention being given to the role of markets as an instrument of economic development. Responding to new thinking and changed economic circumstances, governments' perceptions of their own role in the management of their economies have shifted. This volume distils the thinking and experience of an international group of eight distinguished economists on this changing function of government in the development process. Many governments have withdrawn from direct involvement in certain sectors of the economy and have reduced their intervention and control in othersDSmost dramatically in the former centrally planned economies, but also in developing countries, and in advanced countries where markets are already pre-eminent. In this process, it has been recognized that, left entirely to their own devices, markets may be either inadequate or inappropriate for a country's overall economic and social development. Government has a vital role to play even in facilitating the effective functioning of marketsDSto ensure the necessary infrastructure is in place, to sustain macroeconomic stability, to provide a framework for effective interaction with the international economy. It also has a responsibility to correct the market's inclinations in certain directions, in particular to provide a fuller perspective on the future, to give direction in critical sectors, and, importantly, to fulfil a number of social objectives. The challenges lie in identifying policies and selecting instruments that enable the government to fulfil these roles complementing the contribution of markets.
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