Developmental state
Topic: Schools of Economic Thought and Economic Laws · NCERT: Beyond NCERT
Meaning
A developmental state is a state that actively steers industrialisation. It uses planning, industrial policy and close work with business to push growth in chosen sectors. The key study is Chalmers Johnson's MITI and the Japanese Miracle (1982). South Korea and Taiwan are other cases.
Peter Evans called the right balance "embedded autonomy". The state works closely with business but is not captured by it.
Example
India's licence raj shows the opposite result. There, industrialists spent more time "trying to obtain a license or lobby" than improving their products. Industrial policy has since returned through India's PLI (production-linked incentive) schemes (2020) and the India Semiconductor Mission (2021).
Don't confuse with
- Welfare state: focuses on citizens' well-being through social security, health and education, not on directing industry.
- State capitalism: the state itself owns or controls big profit-making firms. A developmental state mainly guides private firms.
Related concepts
- Institutional economics
- New institutional economics
- Path dependence
- Creative destruction
- Development economics
- Structuralism (development economics)
- Dependency theory