Late Development

‘The role of the “developmental state” in the post-war period has been exaggerated.’ In

what ways and in which circumstances has government contributed to national economic

success?

-------------------------------------------------

While each country strives for the economic success of their nation, the approach and system that they use vary. Some countries like China support the idea of strong government intervention in the economy while others prefer the free market system namely US. The role of the state also comes in different forms and degrees. The variation arises because of the difference in history, tradition, culture and political system. This in return, affects the business system. However, since the last decades the role of state has been in a state of flux. The latter, is believed to be as a result the rapid increase in globalisation and demand for more flexibility to adapt with the vagaries in the external environment. Does this mean that the government contribution to the national competitiveness is in decline?

Albeit, the trend is moving more towards capitalism, the role of the state is still prominent especially after the 2008 economic crisis. However, the state’s presence manifests itself differently in different countries because the capitalism itself varies in types. Whilst US follow the liberal capitalism, Germany followed the social market capitalism. In both types the government only play secondary role especially in the former. On the other hand, in the East Asian countries like Japan the state plays a more central role because they follow the developmental capitalism; but the public ownership of assets is very minimal. Then, there is the authoritarian capitalism followed by Russia and China before the reform. Here the government is still in control although there is increasingly open market capitalist system.

All businesses around the world, irrelevant under which system they operate are somehow affected by the state. This is...