ABSTRACT
The main argument of this chapter is that the role of the state is fundamental to any country s comparative advantage and economic growth. Thus, Singapore s economic success is a manifestation of active participation by the state. By contrast, the neoclassical theory argues that government intervention distorts a country’s comparative advantage and therefore, contradicts economic rationality. Thus a country’s “openness” is equated with economic success and an unsuccessful economy is regarded as “closed” to international market forces. However, it is concluded that the active role of the state in Singapore’s economy has a major significance for other developing countries.
