Public Finance in Developing Economies

Most developing countries often implement policies that have aggravated rather than corrected the free market failures. So it is argued that market failures ought to be corrected by the government by implementing policies that can be proved to be more successful and realistic on long term economic sustainability. Experience has shown that public finance policy reforms in most developing economies have not the corrected the free market failures. In real terms public finance policies should be designed on the basis of promoting a stable economic growth and development. It can be argued that there is a greater desire among the developing countries to increase their productivity so that the people can attain substantially a better quality of life. Public finance affects developing economies in many different ways. However also public finance policies do affect key sectors of the economy in many different ways. This is true especially that the economic problems facing the developing countries are extremely difficult to address due to the declining fiscal capacity. It can be highlighted that the developing economies should shape their development within overall macroeconomic balance.