State Intervention and the Economy Essay

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It is widely believed by scholars that many of the varying levels of economic development between states are the direct result of a negative correlation between the aforementioned and the varying degrees of state intervention. In most cases it is evident that the more a state intervenes in its economy, the less the country will develop. While, at the same time, a country whose intervention exists at a minimal level will tend to have a stronger economy and a more rapid rate of development. However, it is also important to understand that as with many concepts there will always be extreme cases where the states may not strictly follow this model; in some cases they may even behave completely opposite. These extreme cases are often due to the …show more content…
However, an advocate for government failure would argue that were this to occur the market would be worse off due to the fact that bureaucrats often pursue their best interests which may not necessarily coincide with those of the public. In support of this belief it can be argued that since bureaucratic agents are not elected officials they are able to implement various policies without fear of any negative consequences such as not winning a reelection.
As can be inferred from the concepts of market and government failure; government intervention is not necessarily always a bad thing. In fact, sometimes it can lead to the advancement of a nation. Governments whose bureaucracies act in such a way can also be referenced as "developmental states"; which means that although the government is interfering with the economy, the bureaucracy is focusing on the long-term interest of the country versus the personal gain of a select few in the short-term. Amsden writes about this concept in his article, Getting Relative Prices "Wrong": A Summary, by bringing up the idea that, "...it promises industrial expansion if the state is strong enough merely to provide enough political stability for a long term investments, to point prices in the right direction, and then to exit" (Amsden 147). Amsden argues that governments such as Korea, although not necessarily perfect or free of…