Abstract
Analysts of development have long discussed the proper role of the government in promoting economic growth. Although nuances differ, in general, two distinct approaches have dominated, one emphasizing the role of the market, the other emphasizing the role of the state in promoting development. The Market Friendly View (World Bank, 1993) presumes that — in the absence of inefficient government intervention — the market generally functions efficiently, and so the government should act to ensure secure property rights and competition, but otherwise not interfere in economic activity. In contrast, the Developmental State View (Johnson, 1982; Amsden, 1989; Wade, 1990) presumes that market failure is pervasive and thus government intervention is necessary to mobilize savings, allocate resources efficiently and promote technological catch-up.
The discussant is Deputy Chief Executive of the Hong Kong Monetary Authority. I am grateful to John Hawkins of the Reserve Bank of Australia and Bertrand Renaud of the World Bank for helpful comments and suggestions. Dr Yoon Je Cho presented the paper at the above Conference. The views expressed in this paper are entirely those of the author and are not those of the Hong Kong Monetary Authority.
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Hellmann, T., Murdock, K., Stiglitz, J., Sheng, A. (1998). Financial Restraint and the Market Enhancing View. In: Hayami, Y., Aoki, M. (eds) The Institutional Foundations of East Asian Economic Development. International Economic Association Series. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-26928-0_9
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