A Middle Ground

State plans fail miserably, yet without state actions markets and economic development will not take place. This narrow path of industrial policy–but not too much–is what remains after contrasting Jim Scott’s Seeing Like a State with Joe Studwell’s new book, How Asia Works. The former focuses on the disasters of state planning’s “high modernist” era–famines, empty gargantuan squares, bulldozed cities and people. The latter work, on the other hand, rails against the Washington Consensus and points to the important role that state agriculture and industrial policy plans played in the development of the East Asian miracle countries (Japan, Korea, Taiwan, and China). While Southeast Asian countries grew quickly for a time period (and are often lumped in with those above), they did not transform themselves as radically and so were vulnerable to financial crises and collapses in the late 1990s.

Allowing the market to rule tramples infant industries with international competition before they can stand up to the challenge, but too rigid of plans can produce disaster. Finding this middle ground and understanding the dangers on either side is the complex problem that the people and leaders of developing countries face as they try to improve their economies.

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