Сочинение: The government role in the market economy
Course THE GOVERNMENT ROLE IN THE MARKET ECONOMY
Essay The Government Role in The Day Care Services Development in Latvia.
professor Andrejs Skaburskis
Laima Līpace, 3SEA2, BizVB96018
Evita Noriete, 3SEA2, BizVB96410
Ildze Voita, 3TVV2, BizVB96074
Rodžers Jānis Grigulis, 3SEA1, BizVB96062
Latvia is a country that is moving from the Soviet style of socialism to a
democratic government and a market-based economy. The country ratified its
participation in the United Nations Convention on the Rights of the Child in
1992. Activities connected to the ratification by the Latvian legislature has
created an impressive database on current conditions for Latvian children. The
change from socialism has been difficult when measured by the availability of
services provided to children in need. The following information is taken from
the 1998 Alternative Report to the United Nations by the Latvian Save The
The number of families below the minimum subsistence level has risen to 85%
in 1996 compared to 15% in 1991. This decrease in family incomes has affected
the quality of family life in Latvia. In 1996, only 20% of the children are in
good health. Such diseases as tuberculosis, rheumatism, diphtheria and tick
encephalitis have spread rapidly. Juvenile crime, alcoholism, narcotic drug
addiction and prostitution have risen sharply. As a result, more and more
children are abandoned, physically or sexually abused, become pregnant or
Services to support children who are at risk are virtually non-existent. The
government of Latvia is under tremendous pressure to balance its budget. It is
a struggle to maintain existing human services and it is impossible for the
government to fund new services. The existence of a sizable population of
abandoned, abused, handicapped and homeless children is only now beginning to
be officially recognized.
The network of social services that Canadians take for granted does simply
not yet exist in Latvia. The government is working to develop these services,
but the pressures of the national budget and difficult economic situation have
brought any progress to a standstill.
The government budget is made from private sector taxes and it is diverted to
municipal governments and then channeled to social services. Every year amount
which is channeled to the social services is different, because of pressures of
the national budget and difficult economic situation. These social services are
merit good when society members are refusing to have some amount of their
own money for giving it to preschool and other Latvia’s children. This leads to
situation where people who are using private day care services instead of
municipal are paying again.
Also current situation in Latvia is that you have to wait on a line for a
years to get officially in a municipal day care center, at the same time
municipal government are abolishing existing day care services because of
money shortage. This leads to situation where people have to use their
private money and they are having two choices whether send their children to
private day care centers or have a baby-sitter to look after them.
Practically it means that our social service system is not able to maintain
existing amount of children who are in need for day care.
Customers of day care services are parents that have preschool age children
and that want to work in daytime and therefore or for other reasons want to
leave their children in a professional care.
Output mix of day care services is:
· education and safety of the children;
· less bother and “peace” for their parents.
As these social services are having technological externality effect and
neighbourhood effect government role is make people understand that solving
day care services problem they will have better environment and more educated
people around. It also affects crime because most criminals are those people
who were left unattended while they were kids. This also means that community
has to be more informed about current situation in the country and given more
information about problem in day care services.
Also current government problem in this situation is whether they have to
decide to make these services into completely private social services or
completely public social services or maybe find something between them - make
a mix of both. This means that there is a market for each of
· Sector one - public production/public distribution will be forced to
use those high risk families which should be given with gift voucher which
can be spend only for day care services.
· Sector two - public production/private distribution is sector where
market is families with an income more than minimum, when they can afford to
make choice themselves for taking their children into public day care
· Sector three - private production/public distribution is sector
where private day care service companies will provide day care services and
government will enforce to use them through its channels of distribution.
· Sector four - private production/private distribution is sector
which is most common for high income people who can afford to use private day
care services with higher quality.
Private sector in production can provide wider range of options (more
specified preschool education including different sports, language and arts).
Competition within private sector can ensure higher quality of this service
and faster response to demand change. At the same time government should be
controlling day care services as proper children care is very important for
society and the future of nation.
We can see that all of these sectors have its specific market and government
goal is to determine through the analysis which of this market should be most
supported and what kind of support programs should be used.
Some solutions which government can be using for proper children care are
1. regulation - some kind of legislative regulations which prescribe
attend day care services for a certain age children. Here we can not forget
cost factor which is very important. To implement this regulations government
will have to have an institution which has to ensure correct implementation.
2. standards - setting up different kind of social standards, such as
income level at which one should be provided by a certain amount of a gift
voucher which can be used for day care services. This has to be integrated
with an analysis of a regional day care services infrastructure imperfection.
3. compensate those families which are using private day care services
instead of public day care services as they want to have a greater quality.
Municipalities should provide subsidies for children from high-risk families
to attend those day care services free of charge or for partly payment.
4. voluntary action
· direct - when someone understands that he can help society with
helping and educating these children at day care service institutions
· indirect - this can also be brought under section regulations where
we mean by making appropriate legislation where one will be completely tax
deductible for amount of money which one donate to a day care service field.
We want to call this as voluntary action instead of tax or regulation action
because those companies have to make their own voluntary decision whether
they will be using tax deduct or appropriate law.
And finally I have to mention that solving problem with day care services you
have to always look in overall situation in the country. Because you have to
measure other social and financial factors of the country. Governments role
is make decisions considering overall situation and find the most suitable