New Comparative Advantages: A Re-Evaluation of State-Led Development

By Park, Jeanette | Harvard International Review, Fall 2004 | Go to article overview

New Comparative Advantages: A Re-Evaluation of State-Led Development


Park, Jeanette, Harvard International Review


Both state-led and market-led approaches to development present substantial difficulties in implementation and costs. However, for a country striving for economic development and a better position in the international economy in the long run, the state-led approach seems more advisable. Admittedly, the state-led approach does present more risks in many ways, but the prudent implementation of state-led policies presents a rapid, more stable, and effective way to qualitatively change the economic position of a country, marking the transition from a "developing" to a "middle-income" or to a "newly industrialized" state. The neoclassical or market-led approach to development promises efficient allocation of resources, but does not necessarily facilitate the required industrial "catching up" that many developing states must do to truly join the ranks of the developed world. By locating the unique element of the state-led approach that was crucial to the success of economies such as those of South Korea and Singapore, countries can better formulate policies to minimize costs and maximize the potential for successful state-led development.

[ILLUSTRATION OMITTED]

When the state-led approach is advocated as the better policy for developing nations, the common objections are protests against "soft authoritarian" regimes that often accompany state-led development, inefficiencies created by state interference in the economy, and the too-close relationship that frequently develops between big business and state. For the most part, these objections are valid. Experiences of state-led development show that civil liberties such as the right to organize labor, to protest government policies, and sometimes even to execute regular changes of political power are curtailed for the sake of meeting production and development goals set by the government. Inefficiencies do occur in state-led development, as the primary economic goal becomes achieving industrial and technological capability and strength as quickly as possible and concerns about the potentially inefficient effects of state subsidies and tariffs become secondary. And as the series of scandals involving South Korean politicians bribed by chaebol executives demonstrated in the 1990s, no political body given such wide control over the economy can remain completely autonomous for long.

But how do these weaknesses of the state-led approach compare to those of the market-led? Although the supporters of the market-led approach champion it as a definite way to break the government's hold on the economy, in many instances, widespread redistribution of industries and market shares do not occur. For example, in Russia, where President Boris Yeltsin attempted to implement neoclassical economic reforms in the early 1990s, most of the new economic "oligarchs" who emerged were the same government officials who profited from the old regime. Using their insider knowledge, they were able to buy the state's monopolies in many industries for outrageously low sums in the midst of the simultaneous price liberalization and privatization that constituted the "shock therapy" policy. And while market-led approaches may eventually serve to establish a smaller and more autonomous government, the political, economic, and social chaos that often follows rapid liberalization and privatization undermines the ability of the state and of other institutions to provide the stability necessary for the functioning of a free market. Moreover, state-led development does not necessarily have to be implemented by a soft-authoritarian regime, although many examples of state-led policies have been. Other permutations are possible; for example, a nation may democratically choose a pro-state-led approach candidate. Additionally, as the crucial and unique element of the state-led approach is better understood, a dedicated group of bureaucratic elites may be sufficient for successful state-led development. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

New Comparative Advantages: A Re-Evaluation of State-Led Development
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.