Politics of Development

Politics of development
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Introduction
Various theories have been advanced to explain why some countries in the third world are still underdeveloped. The competing theories typically focus on a Marxist approach or neoliberal approach to explain underdevelopment (Nafziger, 2012). The case of the four Asian Tigers where the countries experienced rapid industrialization and high economic growth rates from the 1960’s, highlights on different strategies to achieve development based on improved competitiveness and capital accumulation. Globalization and disintegration of the Soviet Union renewed debate on the role of state intervention towards improving economic growth. This paper argues for the case of free market policies as the basis for economic development in the East Asia nics of Hong Kong, Singapore, South Korea, and Taiwan. It also compares the failure of Latin America to replicate economic development through government intervention, and it also highlights on lessons for developers in other regions.
Free market policies and the success of the "east Asian nics"
The introduction of free market policies in East Asia, even when the countries did not practice democracy was vital to economic growth and capital accumulation. Since, the East Asian nics depended on exports to improve their balance of trade, reforms undertaken highlighted on the benefits of free trade, with policies geared towards improving specialization and comparative advantage of having abundant cheap labor. Openness to trade has also meant that foreign direct investment increased as investors expectations improved abound the viability of these economies (Nafziger, 2012). Capital accumulation and technological have played an important role towards improving the economic outlook of these countries. However, openness to investment has enabled the Asian tigers to mobilize resources.
There were divergent policies in the four countries, with state intervention being more prominent compared to the West. Even though, supporters of free market economics, state that government interventions are counterproductive, the government can facilitate an enabling environment. The notion that government in the four countries facilitated trade at the macroeconomic level, highlights on the benefits of improving macroeconomic stability and the financial system to facilitate open markets (Sarel, 1996). This approach differs from the dominant free market thought that markets are efficient on their own, but rather the need for selective intervention given the need to change an economic structure.
Lessons learnt by comparing East Asian nics to Latin America
Even though, state intervention in Latin America and East Asia was meant to improve economic outcomes, the Asian Tigers have used state intervention more effectively. The main features distinguish intervention between the two regions is flexibility, coherence and highlighting on promotion compared to regulation. The East Asian region countries were more adaptable depending on the outcome of their policies because of flexibility. The countries have also exercised selection protectionism in specific industries unlike Latin America where there was indiscriminate protection. ...