Public Administration & Economics

The Relationship Between Both Social Sciences

There is so much in common between Public administration and economics. EconomicsOpens in new window is concerned with people and the choices they make. It is concerned with the problem of choice—the reality we are confronted with as a result of our meagre resources compared with our unlimited wants.

Economics, therefore, deals with that aspects of human behaviour which arises from the scarcity of means to achieve a given end. Adam SmithOpens in new window’s definition of economics as the art of managing the resources of the people and of the government clearly brings out the close relationship between Public administration and economics.

A variety of areas covered in Public administration are economic based. For instance, the common areas of study include such matters as public finance, Planning, Programming and Budgeting SystemOpens in new window (PPBS), economic planning, management of public enterprises — and the like.

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The formulation and implementation of government’s development plans and policies are to be evaluated in terms of their economic consequences. Thus, economic planning brings Public administration and economics closer.

Participation of the state in the economic development is also extensive. In many developing nations economic planning has become a pillar of government’s social and economic policies.

With growing population, and emergence of complexities of trade and commerce, public enterprises—state owned and state-managed industries—are increasingly gaining ground. For proper management of these public enterprises, a new administrative device called public corporation and a new economic civil service have emerged. Their management requires knowledge of economics relating to pricing policyOpens in new window, marketing, sales, purchasing (to mention but a few).

The goal of socio-economic justiceOpens in new window forces state to regulate the private business enterprises also. As a result of the increasing economic function of Public administration, the administrators are urged to run factories, handle agriculture, banking, insurance etc.

In today’s administrative setting, Public administration is confronted with an avalanche of economic problems such as unemployment, poverty, inflation, depression (to mention but a few). Therefore, today’s administrators must have a full comprehension of the economic problems of the country. They gain much by having knowledge of economics in solving the economic problems.

Notwithstanding the closeness, economics differs from Public administration in certain respects. Economics deals with material things—how they are produced, distributed, exchanged and consumed. Whereas, Public administration deals with the management of human affairs in society.

Economics can be neutral between ends, while Public administration cannot maintain such neutrality. Public administration is concerned with values. Despite these differences, Public administration and economics—as we have already seen—interact with each other in many areas of common interest.