Реферат: The government role in the market economy



EssayThe Government Role inThe Day Care Services Development in Latvia.

professorAndrejs Skaburskis

LaimaLīpace, 3SEA2, BizVB96018

                                                         EvitaNoriete, 3SEA2, BizVB96410

                                                         IldzeVoita, 3TVV2, BizVB96074

                                                         RodžersJānis Grigulis, 3SEA1, BizVB96062


Latvia is acountry that is moving from the Soviet style of socialism to a democraticgovernment and a market-based economy.  The country ratified its participationin the United Nations Convention on the Rights of the Child in 1992. Activitiesconnected to the ratification by the Latvian legislature has created animpressive database on current conditions for Latvian children. The change fromsocialism has been difficult when measured by the availability of servicesprovided to children in need. The following information is taken from the 1998Alternative Report to the United Nations by the Latvian Save The Childrenorganization.


The number offamilies below the minimum subsistence level has risen to 85% in 1996 comparedto 15% in 1991. This decrease in family incomes has affected the quality offamily life in Latvia. In 1996, only 20% of the children are in good health.Such diseases as tuberculosis, rheumatism, diphtheria and tick encephalitishave spread rapidly. Juvenile crime, alcoholism, narcotic drug addiction andprostitution have risen sharply. As a result, more and more children areabandoned, physically or sexually abused, become pregnant or homeless. 


Services tosupport children who are at risk are virtually non-existent. The government ofLatvia is under tremendous pressure to balance its budget. It is a struggle tomaintain existing human services and it is impossible for the government tofund new services. The existence of a sizable population of abandoned, abused,handicapped and homeless children is only now beginning to be officiallyrecognized.


The networkof social services that Canadians take for granted does simply not yet exist inLatvia. The government is working to develop these services, but the pressuresof the national budget and difficult economic situation have brought anyprogress to a standstill.

The governmentbudget is made from private sector taxes and it is diverted to municipal governmentsand then channeled to social services. Every year amount which is channeled tothe social services is different, because of pressures of the national budgetand difficult economic situation. These social services are merit goodwhen society members are refusing to have some amount of their own money forgiving it to preschool and other Latvia’s children. This leads to situationwhere people who are using private day care services instead of municipal arepaying again.

Also currentsituation in Latvia is that you have to wait on a line for a years to get officiallyin a municipal day care center, at the same time municipal government areabolishing existing day care services because of money shortage. This leads tosituation where people have to use their private money and they are having two choiceswhether send their children to private day care centers or have a baby-sitterto look after them. Practically it means that our social service system is notable to maintain existing amount of children who are in need for day care.

Customers of daycare services are parents that have preschool age children and that want towork in daytime and therefore or for other reasons want to leave their childrenin a professional care.

Output mix ofday care services is:

·    education and safety of the children;

·    less bother and “peace” for their parents.

As these socialservices are having technological externality effect and neighbourhood effectgovernment role is make people understand that solving day care services problemthey will have better environment and more educated people around. It alsoaffects crime because most criminals are those people who were left unattendedwhile they were kids. This also means that community has to be more informedabout current situation in the country and given more information about problemin day care services.

Also currentgovernment problem in this situation is whether they have to decide to makethese services into completely private social services or completely publicsocial services or maybe find something between them — make a mix of both. Thismeans that there is a market for each of production/distribution sectors.

·    Sector one — public production/publicdistribution will be forced to use those high risk families which should begiven with gift voucher which can be spend only for day care services.

·    Sector two — public production/privatedistribution is sector where market is families with an income more thanminimum, when they can afford to make choice themselves for taking theirchildren into public day care services

·    Sector three — private production/publicdistribution is sector where private day care service companies will provideday care services and government will enforce to use them through its channelsof distribution.

·    Sector four — private production/privatedistribution is sector which is most common for high income people who canafford to use private day care services with higher quality.

Private sectorin production can provide wider range of options (more specified preschooleducation including different sports, language and arts). Competition withinprivate sector can ensure higher quality of this service and faster response todemand change. At the same time government should be controlling day care servicesas proper children care is very important for society and the future of nation.

We can see thatall of these sectors have its specific market and government goal is todetermine through the analysis which of this market should be most supportedand what kind of support programs should be used.

Some solutionswhich government can be using for proper children care are given below:

1.  regulation — some kind of legislativeregulations which prescribe attend day care services for a certain agechildren. Here we can not forget cost factor which is very important. Toimplement this regulations government will have to have an institution whichhas 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 agift voucher which can be used for day care services. This has to be integratedwith an analysis of a regional day care services infrastructure imperfection.

3.  compensate those families which are usingprivate day care services instead of public day care services as they want tohave a greater quality. Municipalities should provide subsidies for childrenfrom high-risk families to attend those day care services free of charge or forpartly  payment.

4.  voluntary action

·    direct — when someone understands that he canhelp society with helping and educating these children at day care serviceinstitutions

·    indirect — this can also be brought undersection regulations where we mean by making appropriate legislation where onewill be completely tax deductible for amount of money which one donate to a daycare service field. We want to call this as voluntary action instead of tax orregulation action because those companies have to make their own voluntarydecision whether they will be using tax deduct or appropriate law.

And finally Ihave to mention that solving problem with day care services you have to alwayslook in overall situation in the country. Because you have to measure othersocial and financial factors of the country. Governments role is make decisionsconsidering overall situation and find the most suitable decisions.

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