32
The Economic Logic of State Interventionism

The economic ideas that permit a positive interpretation of the successful late industrializers' experiences include the modern ideas of externalities and endogenous growth on the one hand and the theories of distributional conflicts in corporatist economies on the other. Supposing that one is willing to buy the set of assumptions of modern theories of endogenous growth, there are important implications for positive and normative theories of politics and political economy. Modern theories of growth are based on assumed externalities related to the returns of investment in education or to the spread of technical innovations. These assumptions contradict the usual neoclassical assumptions and lead to the conclusion that an economy's growth performance can be enhanced by, say, subsidized education or public support for investment in new technologies. They also lead to models of non-convex growth and increasing returns to scale.

There is of course no ultimate proof that this new 'view' of the economy is more correct than the one associated with the traditional neoclassical assumptions. Yet these theories, to some authors, seem to make better sense of the different countries' growth performances than the neoclassical growth model.7 They also seem more in tune with many classical, empirically oriented discussions of economic development. As early as in 1960, W. W. Rostow presented his theory of the stages of economic growth where each 'stage' of growth was characterized by various self- enforcing mechanisms. Other, similar accounts of growth and development include Erik Dahmén ( 1951) idea of a 'developmental bloc' and the notion of 'linkages' suggested by Albert Hirschman. Similarly, Michael Porter ( 1990) outlines the idea of industrial 'clusters' which generate an environment and a system

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7
For a contrasting view, see e.g. Crafts ( 1992).

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