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The Emergence of Developmental States from a New Institutionalist Perspective

A Comparative Analysis of East Asia and Central Asia

Series:

Manuel Stark

This book addresses the relevance of institutional arrangements in East Asian developmental states for the Central Asian countries. It is argued that the Central Asian transition countries share crucial similarities with the economies of East Asia. By a detailed analysis of historical developments in Northeast and Southeast Asia, a coherent and comprehensive model of the developmental state on the basis of the New Institutional Economics is developed in this book. This model is applied to Central Asia by a comparative study on the basis of semi-structured interviews that were carried out in Kazakhstan and Uzbekistan. Both Central Asian countries show notable similarities but also crucial differences to the East Asian developmental states.

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PART I: SETTING THE FRAMEWORK

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15 2 The state from the perspective of economic theory 2.1 NPE and NIE as extensions of neoclassical economics In economics and political science, the dominating view on the adequate role of the state in the economy has dramatically changed over the last few decades. In the 1950s and 60s, it was common that research in the field of economic policy focused on market failures and ways to correct them through state action, with- out paying much attention to the possibility of state failure (Krueger, 1993, p. 49). The presumed prevalence of market failures lead to an emphasis on infant- industry promotion and the support of physical capital accumulation, whereas possible gains from trade were deemed less important (Rodrik, 1996, p. 12). However, neoclassical economics, which introduced a radically different per- spective on the state, became more dominant in both research and economic pol- icy over the following decades. In contrast to their classical predecessors such as Adam Smith, early neo- classical economists, like William Stanley Jevons or León Walras, developed their economic theories while assuming an essentially institution-free environ- ment (Alesina, 2007, p. 2). Other important contributions to the neoclassical framework follow the same path. Nevertheless, economic policy and, conse- quently, the role of the state have always been a major topic for some econo- mists from both the Neoclassical/Monetarist and the Keynesian schools of thought. For most of the 20th century, however, mainstream economics mainly concentrated on quantitative economic policy and dealt with issues such as the...

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