Moving directly on from the general overview offered by the first chapter , this chapter looks closely at the issue of the appropriate role for government in promoting sustainable private sector-led economic development . Defining the role of the government in economic management will depend upon what line is drawn between the government 's role and that of the economy 's private sector . This contentious issue is traced back to the discussion over the feasibility of the socialist economic calculation during the early twentieth century ( originally initiated by Ludwig von Mises and Oscar Lange ) and has continued right through to the more recent debate on the desirability of government-led economic development strategy in the 1990s. In spite of the innumerable works of economists with radically varying viewpoints , the ongoing debate can ultimately be reduced down to the simple issues of market failure or government failure . Traditionally , market failures have been seen as the most justifiable reason for active government intervention . However , it should also be emphasized that market failures are in most cases reflection of institutional failure - which is in essence form of government failure.