Reexamining Role of the State in Promoting Development
Reexamining Role of the State in Promoting Development

Summary/Abstract: The main topic of investigation in the article is role of the state in promoting development. This article argues that, during the 19th century and at the beginning of 20th century, liberalism had a positive impact on economic growth because liberal economy reduced predatory role of the state in the economy. However, the Great Depression showed limits of classical liberal capitalism. Therefore, the concept of developmental state replaced liberal economy. Empirical investigation shows that, during the last fifty years, almost all the countries that had fast growth of GDP per capita had very strong role of the state in promoting development. Nevertheless, at the beginning of 1980s, neoliberal concept prevailed once again. As a consequence, reduction of state interventionism has had a negative impact on development around the world. Hence, it is important to reexamine role of the state. After investigating role of the state from historical, empirical and theoretical prospective, this article concludes that a prudent and comprehensive state interventionism produces better developmental results than (neo)classical model of capitalism.

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