In
most developing countries, there are three main models of economic growth that
have been implemented in varying levels. Among these are import-substitution
industrialization (ISI), structural adjustment programs (SAPs), and the
developmental state. These economic policies differ in a diverse number of
ways, and this is especially in the manner through which they are implemented. ISI
involves countries seeking to ensure that there is the imposition of import
restrictions in order to bring about the promotion and protection of domestic
industries. This economic policy aims at making sure that there is the
establishment of measures aimed at advancing domestic consumption of locally
made goods and services. SAPs, on the other hand, essentially promote a liberal
economic policy in which governments are not directly involved in any economic
activities and the economy is left in the hands of the free market (Orvis and Drogus 532). The free market ensures that
only the strongest and most viable industries are able to survive while the
weaker ones, because of the competition from international businesses, are
forced towards improving their performance to ensure their survival. The
developmental state is a situation where the government makes a direct
intervention in those industries that it considers critical to the economy. It
ensures that these industries are protected to further their growth, but take
the necessary steps to remove the protective measures as soon as possible.
The
developmental state has been the most successful economic model because it
involves government support for industries until such a time that they are
ready to stand on their own feet. This model is fundamentally important because
it ensures that the economy has the necessary freedoms it needs to compete with
others while at the same time allowing individuals to undertake their business
activities without government interference. The implementation of this policy
has especially been successful in Japan and South Korea, both of which rose
from the economic devastation of the Second World War to become among the
greatest success stories of the twentieth century. Both of these countries,
especially the latter adopted export oriented policies, which sought to
encourage the growth of local industries that were able to produce high demand
goods that could be exported to other countries. A consequence is that the
countries that have adopted the developmental state model have been successful
in the achievement of rapid economic growth to such an extent that it has
become possible for them to achieve the status of developed states. Thus, while
South Korea and Ghana were essentially at the same economic level in the 1960s,
the former has been able to achieve a per capita gross domestic income of
$22,670 in comparison to the latter’s $1550 today (Orvis and Drogus 536). This achievement by South
Korea shows the considerable success that can be brought about by the
developmental state model as well as the need to balance between government
intervention and the free market. Without the interventions undertaken in the
developmental state model, the system becomes highly unstable to such an extent
that critical sectors become subservient to international competition.
In
most cases, regime type often has a lot to do with economic outcomes. This is
especially the case when it comes to the manner through which the regime makes
decisions concerning how the economy should be managed. In stable democracies,
for example, there are often greater economic freedoms to such an extent that
they end up in a situation where markets are freer and different sectors are
forced to improve themselves in order to remain competitive. Authoritarian
regimes, on the other hand, tend to have a tighter grip on the economy to such an
extent that it is the state, rather than private businesses, that are major
players in the economy (Orvis and Drogus 432). This situation can be
considered to be the reason behind such a country as North Korea is having considerable
economic problems that are essentially unsustainable. The communist regime
within this country, because of lack of competition for the domestic industry,
has essentially made its economy quite weak because there are hardly ever any
improvements in the locally produced products.
In
conclusion, the North Korean economic situation can be contrasted with that of
Japan, which has achieved considerable growth over the years because it has
adopted a developmental state model where the government only intervenes when
the sector involved is critical to the economy and lets it go as soon as it
achieves a level of stability. Japan is a democratic state with all the
freedoms that come with it; ensuring that its people in the private sector,
rather than the government, are the main drivers of the economy.
Work
Cited
Orvis, Stephen, and Carol Ann Drogus. Introducing Comparative Politics: Concepts
and Cases in Context. CQ Press, 2013. Print.
