ghts to tariff protection and subsidies that lead to Import Substitution which makes the country not only self sufficient, but also an exporter- which in turn leads to gain of foreign exchange and growth in GDP, can only be done by the State. However, there are some problems that come hand in hand with increase in state power in any country.
Corruption in the government is the biggest one that needs to be tackled for any sort of results to be seen. We could apply all the said industrial policies, yet with corruption, there could be no positive results. State could indulge in rent seeking behavior, which benefits elites at the expense of the general taxpayer public.
To tackle this cardinal problem, the State must separate the judiciary from the executive body. The judiciary must be a very solid one, not affiliated to the State, but only in service to protect the ideals of policy execution. Another design that could be implemented is to have a separate Commission, which tackles corruption in the State. Hong Kong’s ‘Independent Commission Against Corruption’ is one such example. The ICAC was formed to fight corruption in the government using a three-pronged approach of law enforcement, prevention and community education.
To keep the rent-seeking attitude of the State in check, late developing countries need ‘Development Banks’ or some other marketing body with ‘sector experts’ who can determine and regulate the financing. The appointment of the experts, of course depends on the sectors the country is channeling it’s capital into.
Excess power in the hands of State, raises the concern of Authoritarianism. Which means, the suppression of labor rights as well as human rights. In my view, the scale always lies between human rights and human needs. In late developing countries, the scale tips towards human needs, more than human rights. After all, what point does the right to vote serve, if one cannot eat three square meals in a day? Government power that is kept under check in developing countries can bring industrial prosperity, yet it should definitely not be at the expense of human rights, but should be able to provide basic human needs. That is the first step of development.
Having established that State Owned Enterprises are the best way for lat
