Relation of public administration with economics are given below:
Today there is a close relationship between Economics and Public Administration. Economic Policy is the greatest task before the public administration to carry out and implement. During the 18th and the early 19th century when the state followed a policy of laissez faire, public administration was not so much dominated by economic problems as is the case today.
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With the industrial revolution the state has been confronted with the economic and industrial matters for a numbers of reasons. International economic and industrial matters for a numbers of reasons. International economic competitions made it necessary for the state to protect home industries and encourage foreign trade.
Later in the interest of social justice the state directly entered the field of business and began to run its own enterprises with the result that it has become one of the foremost duties of an administration to understand the economic problems of the country fully. Every administrative policy had to be evaluated in terms of its economic consequences.
Governments are directly responsible for the improvement in the standard of living of the people. The administration must fight adverse business cycles and depressions, secure employment for all, maintain a favourable balance of trade and project the financial stability of the country.
The entry of the government into the field of business enterprise has led to a new form of the administration organization-the public corporation. In public administration we find chapters devoted to various corporations viz. Damodar Valley Corporation, Industrial Finance Corporations, Life Insurance Corporation, etc.
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The increasing pre-occupation of the state with economic matters has led to the ideas of the economic and industrial service distinct from the traditional civil service in the methods of recruitment, promotion and tenure.
There is clamour for introducing more and more business methods in the functioning of the Government. Besides, Public Finance, Budgeting and Fiscal administration are topics common to both economics and public administration.