The following is a summary of Jane Kabubo-Mariara's keynote address to attendees at the Sixth Annual Conference of Government and Economics held at Tsinghua University, Beijing, on April 27, 2024. Dr. Kabubo-Mariara is the Executive Director of the Partnership for Economic Policy (PEP) and Professor of Economics at the University of Nairobi.
On April 27, 2024, the Sixth Annual Conference of Government and Economics, co-hosted by the Society for the Analysis of Government and Economics (SAGE) along with Tsinghua University's School of Social Sciences and the Academic Center for Chinese Economic Practice and Thinking (ACCEPT), was convened on campus at Tsinghua University. Jane Kabubo-Mariara, Executive Director of the Partnership for Economic Policy (PEP) and Professor of Economics at the University of Nairobi, addressed attendees at the conference by discussing the rationales and mechanisms for government intervention in a market economy in a keynote speech delivered online via video presentation.
According to Jane Kabubo-Mariara, there are at least two rationales for governments to intervene in the market economy: one is to reduce market failures, such as countering monopolies and protecting resources; and the second is to deal with the issue of inequality, including addressing concerns regarding equity and the distribution of resources, responding to crises, and ensuring that the country can escape low-level equilibrium traps. However, there are also government failures to keep in mind as well, such as the negative incentives that governments generate vis-à-vis the market economy: with rent-seeking behavior being a primary example. Under such circumstances, government subsidies do not reach their intended targets, e.g., the poor and farmers, but instead become siphoned off as private gains for other actors. Clientelism is yet another example, including in the case of protectionism, wherein government decision-makers selectively intervene in favor of select individuals, groups or companies in exchange for their political support or economic benefits. A third example is state predation, which occurs when the awarding of career promotions and material benefits to the ruling elite within a given system of government becomes institutionalized.
Kabubo-Mariara also pointed out that government interventions based on misinformation can have a negative impact on the economy. For instance, subsidies for petroleum products in Nigeria have benefited high-income households relatively more than low-income households, which is contrary to the policy's intended purpose. Favorable outcomes can only be produced through well-intentioned, well-informed and evidence-based government decisions. For example, legislation in Cameroon permitting women to independently use their own wealth or property as collateral to borrow money has boosted the country's GDP growth, while shifting government investments from subsidizing fertilizers and tractors to the construction of priority roads in landlocked production areas led to increased agricultural production and higher incomes for rural populations.