Around the world, the 1990s have seen greater attention being given to the role of markets as an instrument of economic development. Responding to new thinking and changed economic circumstances, governments perceptions of their own role in the management of their economies have shifted. As a result, many have withdrawn from direct involvement in certain sectors of the economy and have reduced their intervention and control in others. The reorientation has been most dramatic in the former centrally planned economies, but governments in developing countries, as well as in advanced countries where markets are already pre-eminent, have profoundly reconsidered their development role and the means of fulfilling it.
In this process, it has been recognised that, left entirely to their own devices, markets may be either inadequate or inappropriate for a country's overall economic and social development. Government has a vital role to play even in facilitating the effective functioning of markets--to ensure the necessary infrastructure is in place, to sustain macroeconomic stability, to provide a framework for effective interaction with the international economy. It also has a responsibility to correct the market's inclinations in certain directions, in particular to provide a fuller perspective on the future, to give direction in critical sectors and, importantly, to fulfil a number of social objectives. The challenges lie in identifying policies and selecting instruments that enable the government to fulfil these roles complementing the contribution of markets.
In this era of transition and experimentation in economic management, the Department of Economic and Social Information and Policy Analysis of the United Nations convened a group of economists to distil their thinking and experience on the changing role of government in the development process. The first volume in this two volume set contains the views of the members of the group on critical dimensions of the management of market economies. The second volume contains some of the companion papers that were prepared as a compliment to the work of the group.

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