In this essay, the concentration of economic growth in the public sector will be taken to mean the proportion of the economy that is governed by public ownership in the production of goods and services. Foundations of economic growth refer to the potential for the economy to expand, and hence this would be represented by an outward shift of the Production Possibility Curve. Therefore we shall discuss how a higher proportion of the economy that the government is directly involved in leads to a diminishing potential for future progress of the economy.

How can the public sector hinder economic growth? Economic growth is determined by the potential of the country to produce additional outputs of goods and services. This is in turn dependent on two factors- availability of resources and productivity. Therefore if the public sector influences these two factors negatively, then it would undermine the foundations of...