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The Role Of Centralized Policies On The State Capacities

Decent Essays
This part explains the centralized policies with focus on the state capacities, which is the vital factor of developmental states model, and emphasizes on implications of the centralization for resource-rich developmental states. The initial stage of the extractive industry demands the centralization in which the government exerts the strong state capacities, such as abilities to autonomously have its policy ownership (e.g. design and implement industrial policies), to efficiently mobilize resources and to rationally allocate revenues from the resources to more productive sectors in a given society (Arellano-Yanguas and Mejía-Acosta, 2014). Such a state-led development often results from political leadership based on a strong ideology called ‘developmentalism’ and requires the trained and efficient bureaucracy to devise national development schemes and implement relevant legal frameworks (Reinert, 2010).
In addition to the capacities of setting up development plans, the successful development in resource-based economy depends on their ability to save all or part of the revenues from the extractive industries (Lewin, 2011). Since the non-renewable resources are destined to be depleted in the future, the mineral-wealth is limited, and it means the state should save the revenues as much as possible to prepare for the future depletion (Lange and Wright, 2002). Moreover, the natural resources tend to have volatile prices, so the countries need to stabilize the income, for
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