Chapter 8 Chapter Summary

This chapter introduces the fundamentals of market- versus state-led views of development. A basic definition of the term state is provided and critiqued, and the problems faced when applying this definition to the developing world are explained. The legacy of colonialism, in particular the imposition of “artificial” states, is shown to have complicated and compromised the ability of countries to develop. Debates surrounding the role of the state in development are presented, focusing on capacity and autonomy.

Attention is next given to the role of the state in economic development. The push for early industrialization in the developing world is explained and differences in the levels of state involvement in this process are identified and discussed. The shift from state-led to market-led industrialization is then explored. The rise of, and justification for, neoliberalism is explained, and its focus on the state as an impairment of economic development is emphasized.

More recent views of development are presented, including the term governance, which describes the role of the state in economic development as being that of a manager. In this context, the issues of rent-seeking and clientelism are presented as obstacles to development and good governance. The relationship between globalization and the role of the state is explored, with a focus on whether or not the state will lose relevance as multinational corporations become more influential. Overall, those countries which are thought to have successfully integrated into the global market—China and India, for example—are shown to have done so with a great deal of strategic state intervention.