[PDF Notes] World Development Report 1997: “The State in a Changing World”

Around the globe, the state is in the spotlight. Far-reaching developments in the global economy have us revisiting basic questions about government: what its role should be, what it can and cannot do, and how best to do it.

The last fifty years have shown clearly both the benefits and the limitations of state action, especially in the promotion of development.

Governments have helped to deliver substantial improvements in education and health and reductions in social inequality. But government actions have also led to some very poor outcomes. And even where governments have done a good job in the past, many worry that they will not be able to adapt to the demands of a globalizing world economy.

The new worries and questions about the state’s role are many and various, but four recent developments have given them particular impetus:

» The collapse of command-and-control economies in the former Soviet Union and Central and Eastern Europe

» The fiscal crisis of the welfare state in most of the established industrial countries » The important role of the state in the “miracle” economies of East Asia

» The collapse of states and the explosion in humanitarian emergencies in several parts of the world this Report shows that the determining factor behind these contrasting developments is the effectiveness of the state. An effective state is vital for the provision of the goods and services-and the rules and institutions-that allow markets to flourish and people to lead healthier, happier lives.

Without it, sustainable development, both economic and social, is impossible. Many said much the same thing fifty years ago, but then they tended to mean that development had to be state-provided. The message of experience since then is rather different: that the state is central to economic and social development, not as a direct provider of growth but as a partner, catalyst, and facilitator.

What makes for an effective state differs enormously across countries at different stages of development. What works in the Netherlands or New Zealand, say, may not work in Nepal. Even among countries at the same level of income, differences in size, ethnic makeup, culture, and political systems make every state unique. But this very diversity enriches this Report’s inquiry into why and how some states do better than others at sustaining development, eradicating poverty, and responding to change.

Rethinking the State-the World Over

The world is changing, and with it our ideas about the state’s role in economic and social development. Today’s intense focus on the state’s role is reminiscent of an earlier era, when the world was emerging from the. Ravages of World War II, and much of the developing world was just gaining its independence.

Then development seemed a more easily surmountable-and largely technical-challenge. Good advisers and technical experts would formulate good policies, which good governments would then implement for the good of society.

State-led intervention emphasized market failures and accorded the state a central role in correcting them. But the institutional assumptions implicit in this world view were, as we all realize today, too simplistic. Flexibility to implement the policies devised by technocrats was acc pride of place. Accountability through checks and balances was regarded as an encumbrance.

In a few countries, things have indeed worked out more or less as the technocrats expected. B many countries outcomes were very different. Governments embarked on fanciful schemes. Pr investors, lacking confidence in public policies or in the steadfastness of leaders, held back. Po rulers acted arbitrarily. Corruption became endemic. Development faltered, and poverty endured.

Over the last century the size and scope of government have expanded enormously, particular the industrial countries. The pre-World War II expansion was driven by, among other factors, the need’ address the heavy toll on economic and social systems brought on by the Great Depression.

The confidence in government bred demands for it to do more. Industrial economies expanded welfare state, and much of the developing world embraced state-dominated development.

The result was a tremendous expansion in the size and reach of government worldwide. State spend now constitutes almost half of total income in the established industrial countries, and around an in developing countries. But this very increase in the state’s influence has also shifted the from the quantitative to the qualitative, from the sheer size of the state and the scope of its interment: to its effectiveness in meeting people’s needs.

As in the 1940s, today’s renewed focus on the state has been inspired by dramatic events the global economy, which have fundamentally changed the environment in which states operate, global integration of economies and the spread of democracy have narrowed the scope for and capricious behavior.

Taxes, investment rules, and economic policies must be ever more response to the parameters of a globalized world economy. Technological change has opened new opportunity for unbundling services and allowing a larger role for markets.

These changes have meant new different roles for government-no longer as sole provider but as facilitator and regulator. States h come under pressure even where governments have previously seemed to perform well.

Many countries find themselves grappling with a welfare state that has grown unwieldy, and having to ma difficult choices about the services and benefits that people should expect government to provide Markets-domestic and global-and citizens vexed by state weaknesses have come to insist, often through grassroots and other nongovernmental organizations, on transparency in the conduct of government and on other changes to strengthen the ability of the state to meet its assigned objectives.

The clamor for greater government effectiveness has reached crisis proportions in many developing countries where the state has failed to deliver even such fundamental public goods as property high roads, and basic health and education.

There a vicious circle has taken hold: people and businesses response” to deteriorating public services by avoiding taxation, which leads to further deterioration in services. In the former Soviet Union and Central and Eastern Europe, it was the state’s long-term failure to deliver on promises that led, finally, to its overthrow.

But the collapse of central planning has created problems of i own. In the resulting vacuum, citizens are sometimes deprived of basic public goods such as law and order at the limit, as in Afghanistan, Liberia, and Somalia, the state has sometimes crumbled entirely, leaving individuals and international agencies trying desperately to pick up the pieces.

Leave a Reply

Your email address will not be published. Required fields are marked *