Social Scientist. v 16, no. 180 (May 1988) p. 61.


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REVIEW ARTICLE

State Intervention and IndustrialChange:

Towards a Synthesis

AMIYA KUMAR BAGCHI, Public Intervention and Industrial Restructuring in China, India and Republic of Korea, International Labour Organization, Asian Employment Programme (ARTEP), New Delhi, 1987, pp. xii + 162.

The debate over the relative merits of State intervention and market forces as agents of change, notwithstanding the experience with economic development over the last century and a half suggests that a key feature of capitalist development among late industrializers has been intervention by the State. Though aimed at hastening the process of structural change and industrialization, the nature of such intervention has varied across countries, with results that have also been vastly different. While in some countries intervention of a kind has been eminently successful in providing the spur for rapid and efficient industrialization, there has been an accumulation of evidence that in many centrally planned and market economies, intervention has provided the basis for inefficiencies of various kinds, including uneconomic scales of production, low rates of innovation, low rates of utilization and high input-output ratios. Thus, even an impressionistic survey would suggest that, while intervention is a necessary factor for development, certain kinds of intervention appear both insufficient and counter-productive.

This experience has naturally provided a rather wide agenda for research, resulting in a proliferation of academic treatises on the nature, impact and implications of State intervention among late industrializers. The dominant tendency ^n this rather prolific area of post-war research has been the view that more often than not, intervention has proved counter-productive and a bad substitute for an imperfect market. Armed with inadequate information and ineffective tools, policy-makers have only been successful in distorting patterns of resource allocation, encouraging monopoly and perpetuating inefficiency—all of which are telling on the level of costs and prices and on the pace of industrialization in these economies. Hence, any process of structural'adjustment aimed at restoring a ,senriblance -of



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