Political Economy of Developmental State Strategies

Developmental state strategies refer to government-led approaches to economic growth that prioritise strategic intervention in key industries, infrastructure development and institutional capacity building. Unlike laissez-faire models, these strategies emphasise strong state institutions capable of formulating coherent industrial policies, directing investment and negotiating with domestic and foreign actors to foster technological upgrading and structural transformation. The political economy dimension examines how state–society relations, political settlements and global economic structures shape the design and implementation of such policies. Historically, East Asian economies exemplified effective developmental states through reciprocal state–business partnerships and meritocratic bureaucracies. In recent decades, varying global pressures—such as trade liberalisation, global value chains and multilateral institutions—have compelled developmental states to adapt, blending interventionist tools with market-friendly reforms. Contemporary research explores the resurgence of national planning, the role of state-owned enterprises, coordination mechanisms in multi-actor settings and the impact of ideological shifts away from neoliberal orthodoxy. Case studies from Latin America, Africa and the Middle East highlight how political settlements and governance capacities condition the efficacy and equity of developmental strategies. The global relevance of this field lies in its articulation of policy frameworks that balance economic sovereignty with integration into the world economy, offering practical lessons for countries aiming to accelerate industrialisation in an increasingly competitive landscape.

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Political Economy of Developmental State Strategies publication trend

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Technical terms

Developmental state: A model of economic governance characterised by proactive state intervention, bureaucratic coordination and strategic support for industrial and technological upgrading.

Industrial policy: Government measures, including subsidies, regulations and procurement, aimed at promoting specific sectors or technologies to achieve structural economic transformation.

Global value chains (GVCs): Fragmented production networks spanning multiple countries, wherein specific stages of production are located to optimise cost, expertise and market access.

Historical-structural analysis: An analytical framework that examines the interplay between domestic structures (state, capital, labour) and international economic institutions in shaping development trajectories.

Washington Consensus: A set of neoliberal policy prescriptions emphasising fiscal discipline, trade liberalisation and privatisation promoted by international financial institutions in the late 20th century.

References

1. The political economy of national development: A research agenda after neoliberal reform?. World Development (2023).
2. From hands off to hands on: the evolution of Bahrain's industrial policy during the 21st century. Journal of Business and Socio-economic Development (2024).
3. Industrial policy in the era of global value chains: Towards a developmentalist framework drawing on the industrialisation experiences of South Korea and Taiwan. World Economy (2020).