The Developmental State: Dead or Alive?

Before the 1980s, the mainstream Western prescription for developing countries to catch up with the West assigned the state a leading role in governing the market. In the 1980s, this shifted to a framework-providing role in a largely deregulated and maximally open economy. Also in the 1980s, it became apparent that some East Asian capitalist economies were growing so fast that they would become 'developed' in the foreseeable future, marking them out as completely exceptional. Mainstream economists explained their success as the result of following the Western prescription, while other scholars attributed this rapid growth to 'the developmental state'. This essay compares these two explanations of successful economic development, concluding in favour of the latter - with respect to the catch-up decades. But what happened subsequently? Several scholars who accept the key role of the developmental state in the early period of fast industrialization in East Asia now argue that South Korea, Taiwan and Singapore have transformed from developmental to close-to-neoliberal states. This contribution argues that the erstwhile East Asian developmental states have indeed changed, but they have not transformed into neoliberal states. Rather they have adapted and evolved, but still undertake market-steering, 'societal mission' roles well beyond neoliberal limits. The essay also suggests how other developing countries can learn lessons from their experience.