The role of the state in economic development
Yet this in fact represents a sea change in the assessment of the contribution made by the state in East Asian development. In the 1970s, when world-wide attention first focused on the economic success of the East Asian newly industrialized economies (NIEs), these states were hailed as models par excellence of a growth strategy based on an unfettered market mechanism. Against the contemporary Keynesian orthodoxy in development economics, some neo-classical economists argued that the East Asian NIEs' high speed growth came about only after the state dismantled restrictive, protective industries policies and set prices (interest rates, wages and exchange rates) correctly (see also Chapter 3). Into the 1980s, however, a new orthodoxy in development economics and a different interpretation of the East Asian experience emerged. Studies began emphasizing the idea of the 'developmental state' itself as responsible for East Asia's success.