State intervention in the industrialization of developing countries : selected issues
CHOKSI, A.
Many developing countries have attempted to promote industrial growth using the discretionary powers of the state, with significant curbs on the private sector. This paper, using the experience of several countries, attempts to clarify the issues and analyze the economic implications of state intervention in three specific areas: public sector enterprises, industrial licensing and price controls, and industrial planning. The paper concludes that the issue for developing countries is not whether the private or the public sector should be the vehicle for industrial growth, but that there is a selective role to be played by the state and the private sector in the process of industrialization. Many countries have, however, erred on the side of too much state intervention. On the basis of the analysis, this paper suggests some policy options that developing countries may follow to permit a greater interaction of the state with market forces, thus creating an economic environment that is conducive to the cooperation between the private and the public sectors.
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