ABSTRACT

This chapter examines the role of the state in development, and focuses on aid-receiving countries and reforming economies. It explores three historical views of the state in the developing world that evolved in the context of integration into the international economy. The first two views were part of the strategies constructed by the developmental agencies. The second view was born during the period of debt crises and socio-economic meltdowns that overwhelmed many poor countries during the 1980s. The third view sees the state as the primary agent of domestic economic policy making. The structural adjustment processes included comprehensive but hasty implemented reforms, which often meant a deterioration in the living standards in the affected countries. The economic transformations of several East Asian countries, however, also make it difficult to dismiss the virtues of state-directed development. State-directed development emphasizes an indigenous effort by the government to stimulate and provide rules for a growth oriented economy.