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
One of the major issues in global affairs today consists of the supply of energy and other minerals and commodities. Michael Klare in “The End of Easy Everything” argues that the transformation from an effortless to a more resilient resource period will be expensive. Looking at the state of the supply of energy oil and natural gas today, I tend to agree with the findings as presented by Michael Klare.
Finally, the most internal-facing explanation for the resource curse is the propensity of government institutions to become corrupt or careless and mismanage the oil wealth. This is easily understood in Jerry Useem’s “The Devil’s Excrement.” In the text, Useem uses Venezuela as a prime example of a country that has mismanaged its own resource wealth and as a result, ended up in poor economic condition. “Showered with sudden windfalls, governments start spending like rock stars, creating programs that are hard to undo when oil prices fall.” (Useem). As I touched upon in the cognitive explanation, the fast and unprecedented generation of oil wealth often excites these resource-rich countries to the point that they establish costly programs and facilities without considering sustainability. Then, once the oil price falls due to the fluctuating global market referenced above, the country has no way of maintaining these new programs and facilities that were previously
Subsequently, the Federalist wanted to accomplish the opposite of Anti-federalist. Their mission was to ratify the constitution, but also establish a strong central government with separation of powers to help properly manage the debt and tensions resulting from the American Revolution. The Federalist proposed that the constitution was sufficient enough to protect the people rights. The Federalists supposed that a strong central government was essential to governor uncooperative states. They believed that a strong central government was compulsory if the states were going to group together to establish a nation. A strong central government could characterize the nation to other countries. It could also regulate individual states that would not collaborate with the rest.
Government efficacy to perform all of its current functions, and programs requires as large of a government as we have at present. The fact of the matter is that the federal government has overstepped its boundaries and has taken up tasks that are not meant for the government, but for the people. Issues such as health care, public education, and social security are prime examples of the government taking over tasks that are not innately for the government, but each citizen's responsibility. Many people do not see a problem with this, but there are several flaws that come with this including the requirement of a larger federal government, decreased individual freedom, and increased deficit, increased deficit spending, and increased taxes.
One of the major issues in global affairs today consists of the supply of energy and other minerals and commodities. Michael Klare in “The End of Easy Everything” argues that the transformation from an effortless to a more resilient resource period will be financially, environmentally, socially, and politically costly. Looking at the state of the supply of energy oil and natural gas today, I tend to agree with the findings as presented by Michael Klare.
The contemporary society poses quite a number of challenges to the social, environmental, economic and political front. Without the help of a governance system that is stable and bears direct impact on the individual citizens in practically the entire nation, it is very likely that the nation will suffer under the weight of these challenges named above.
This then relates into the fact that these resources in this area will be mishandled and used in non-beneficial ways. Poverty can be unruly and with these natural resources they can fall into the fight between using the responsibly r blowing it away in order to make the current moment better without thinking about the future. Surplus of resources is not always a good thing.
Planet Earth offers a plethora of natural resources that are used as key elements in ensuring economic growth within a nation’s borders. The United States is fortunate to be rich in resources and has the capability of capitalizing on their natural assets. There are some natural resources that are scarce, like oil and gas, which is causing global private firms and state backed companies a vast wave of competition in controlling the market share. Oil and natural gas have always been the predominant resources for economic growth. Without oil or natural gas, our factories will not function, our cars won’t turn on, and there will be an immense array of economic and social chaos. Countries in the Middles East, Africa, Europe, Asia, North and South
A developmental state is characterized by having strong state intervention, as well as extensive regulation and planning. There is little government ownership of industry, but the private sector is rigidly guided by bureaucratic government elites. These elites are not elected officials and are thus less subject to influence by either the corporate-class or working-class through the political process. The argument here is that a government can have the freedom to plan the economy and look to long-term national interests without having their economic policies disrupted by the short-term interests of the corporate-class or
When dealing with resources, it’s crucial to an economy that those resources are allocated to avoid any scarcities and rapid depletion. That why laws and regulations are implanted in our economic system to monitor the allocation of resources. In the United States, we run a market system, and the market system provides both pros and cons. One positive thing a market system provides it the freedom of business and freedom of capitalism. Any person can earn as much as they want and grow their business as large as they wish. Also, the market system benefits the production of resources, and allows for sufficient goods to circulate the economy. Producers are in competition with one another constantly, aiding the development and innovation of production
The concept of the developmental state has been crucial to the economic growth in East Asia. Combining Berger’s analysis on developmental state theory and Kalinowski’s investigation into VOCs (varieties of Capitalism), it can be seen that looking at developmental states through a structuralist lens helps to deconstruct the economic outcomes seen in East Asia. Through Berger’s in-depth analysis of developmental state theorist perspectives, it can be established that understanding the history, rise and fall of the developmental state theory is essential in understanding the capitalist transformation that has taken place in East Asia.
The developmental state has a strong and active central government. Policy instruments are formulated by a small group of qualified elites in economic policy bureaucracy;
Development processes is connected with environmental degradation and use of natural resources. Rudel et al. (2011) assumes the present of two distinct waves of development power which control environment. The first wave of political economy deals with the power of capitalism as the main agent for environmental degradation, while the second wave concern with the social power (community) to control the use of natural resources.
Underdeveloped countries display common characteristics: low levels of GNI per capita, large income inequalities and low productivity levels across sectors. Consequently, there is a lack of investors and entrepreneur’s, thus cash flows cannot be directed into various sectors that influenced balanced economic growth. In many developing countries it is therefore common to see a developmental policy to maintain tension, disproportions and disequilibrium in which Hirschman argued the case of a deliberate unbalancing of the economy. These policies dictate the need for more-developed industries to provide undeveloped industries an incentive to grow. Of course, these policies are decided by those with more power, thus typically seen in urban areas of an economy, in which many can argue this leading to urban bias, which I will unfold in this essay.
The original work in theoretical modeling of resource depletion was by Harold Hotelling (1931). Hotelling provided a method for analyzing producer behavior when extracting a scarce, non-renewable resource. In this modeling framework, the owners of a resource choose the extraction rate so as to maximize the present value of the profit. The main conclusion of Hotelling’s rule, in its straightforward form, is that the resource price rise over time at the rate of interest. Indeed, if the resource price increased faster than the interest rate, producers would choose to delay extracting and selling the resource till its price had arose, since the resource owners could make more profit by delaying the sale. If the resource price were declining or going up slower than the rate of interest, owners would decide to sell more of the resource early and invest their returns at the going rate of interest.