Economic policies are the actions undertaken by governments in directing how different economic sectors will run. They are blueprints to attaining the overall economic growth and development aspired by the government. Economic policies depend on the government regimes and constitution stipulations of each country. The government policies are aimed at promoting and protecting the social economic well-being of the citizens. This paper compares the principles that drive policy making and implementation between welfare states such as Germany and Sweden and developmental states such as Korea and Japan. It highlights the significant features of health and social policies in the two policy systems. In addition, it elucidates the advantages and limitations of the two approaches to economic systems.
Comparison and contrasts between welfare and developmental states and their economic approach
Economic policy formulation in the welfare states approach thrives from the urge for equitable wealth distribution, equal access to opportunity and public duty to those who cannot afford least provisions for a good life. The economic policies in welfare states such as Germany and Sweden are developed to sustain the population from the national budget. In these nations especially Sweden, the model used involves the transfer of funds from state to the services provided such as health, education and security. Social welfare is the principle in crafting different economic policies in these states. Taxation is the principal source of funds in welfare states to redistribute the wealth to the citizens. It involves setting up a progressive tax system where one is liable for higher tax as his earnings increase (Drogus, & Orvis, 2012).
Development states are characterized by stringent government controls over the economic policies. These involve strong government intervention through extensive planning and regulation. The government is not directly involved but through state agencies headed by technocrats empowered to carry out policy formulation and implementation. They are not politically elected, which makes them not easily compromised by the corporate or working class population. Japan’s development model shows that the government has little industry ownership, but the private sector is firmly guided by bureaucratic state agencies. Economic policies in developmental states are geared toward economic development with public welfare lagging. The models thrived well in Japan as the country embarked on rebuilding in the post world war formulated policies. South Korea borrows heavily from Japan in the formulation of economic policies despite having a different government system (Drogus, & Orvis, 2012).
Health and social policies in welfare and developmental policy systems
Welfare policy approach, formulates policies that cater for the social well-being of all the citizens despite their economic output in the economy. This policy system basis its principals from equality and equity distribution of wealth as well as ensuring all citizens enjoy sufficient basic needs. The countries where welfare approach took effect, such as, Germany, essential social amenities are guaranteed to the public through schemes that entitle individuals access to basic amenities. This approach believes in providing social needs in a universal manner. Germany, for example, is portrayed as the oldest welfare state and from the provision of social services like health; education and security cover the whole population. Social services are provided for through funding from collected taxes and redistributed to the different government ministries involved like the ministry of health (Drogus, & Orvis, 2012). All citizens are provided for the basic social services in public facilities as they are covered with the scheme funds. This universal approach to providing social and health services to the citizens covers all without discrimination on the amount one earns, whether employed or unemployed.
Developmental approach to providing health and other social amenities is embedded in the notion of working to enjoy services. The development states have schemes on different social amenities where workers contribute to enjoy the services. The main theme is to work for the service making providence of healthcare and other social services not to be available to all. The principal of working for driving economic growth from the post war policies did little to include universal providence of social services. The government acted as a regulator and contributed less in social spending from the exchequer. The governments of Korea and Japan shifted social responsibility to the companies with regulations forcing the private sector into providing certain social amenities (Drogus, & Orvis, 2012). The other form of providing health care was to encourage family welfare encouraged by Confucian cultural ideology. The developmental approach main focus on working for development claims that through private health schemes would realize universal healthcare for all. This is because the real income in the labor market would result in high economic growth and low unemployment. This would lead to all citizens being in positions able to contribute towards social service schemes.
There are advantages to these two approaches to policy development systems. The welfare system caters for the population and provides all basic social services to every citizen. These are catalysts to productive society for the citizens have a guarantee of minimum living standards, including income, healthcare and security. It enhances social and economic growth especially with universal education and security which relates to economic development. The welfare approach enhances decentralization of services, which enhance economic growth (Drogus, & Orvis, 2012). It also promotes equitable distribution of resources and wealth, which help in the development of the nation. Although welfare approach is fast growing in adaptation among the early developmental states, it has some limitations including; it weakens the charitable gestures of families, non-governmental organizations and friends as well as makes the citizens dependent on government help and periodic minimum payments. Welfare states have economic policies guided by elected politicians who would make populists policies appealing to the electorate. This erodes the need to focus on long-term policies that would set the economy on growth patterns. It also tends to condone unemployment and laziness as the non-working are well catered for thus have no pressures to find jobs.
The developmental approach to economic policy making has advantages including; increase in economic growth from work for services theme as well as focused implementation of economic policies. This is evident with the pace at which Japan and South Korea’s economies have expanded from the 1980’s (Drogus, & Orvis, 2012). It enhances innovation to the private sector to increase their revenues as they are tasked with maintain the social service systems. It enhances harmonious living as it promotes charitable activities among the citizens. The major disadvantage of the developmental approach is bureaucracies involved in enhancing business growth. This is a result of centralization of authority and resources. It also does not ensure universal social service provision making some economic areas lag in development.
Countries economic policy formulation depends on the approach they choose to guide them in economic development. Welfare and developmental approaches have their respective advantages and limitations. As the world, gears towards ensuring universal social development welfare approach is fast taking shape even in the developmental states. The paper notes that for effective achievement of universal social services there has to be significant economic growth.