Economic Development in Historical Perspectives and the Role of the State

Abstract

The neoclassical economists generally advocate for a state with minimal economic functions or the so-called laissez-faire from the 19^th century as a response to failures in the 18th century due to heavy government distortions. On the other hand, due to the influence of Keynes, heterodox development economists argue strongly that the role of the state in the development process goes beyond the scope defined by neoclassical economists. They have challenged the literature by drawing on the empirical evidence particularly from East Asia. As the discord continues between the state and the markets, an attempt at tracing the history of economic development thoughts as well as the practice of development and the various factors that have shaped the thinking of actors to help broaden understanding of the interaction of the state in the business of development has severally been made. However, in almost all the discussions, it is clear that most arguments raised on the impossibility of developmental states in Africa are not firmly founded either in African historical experience or in the trajectories of the more successful "developmental states". Lessons from other parts of the world clearly suggest that appropriate institutional structures did not always exist. The experience elsewhere is that developmental states are social constructs consciously brought about by states and societies. As difficult as the political and economic task of establishing such states may be, it is within the reach of many countries including Nigeria struggling against the ravages of poverty and underdevelopment. This paper uses a historical-comparative methodology, to trace the history of economic development thoughts. It also discusses the development experiences of now developed countries in East Asia and through the comparison highlights important characteristics of the state-development relationship from the point of history.  The goal is to draw lessons and make policy recommendations for Nigeria as it strives to build a developmental state. The paper is aimed at contributing to the on-going debate on the subject matter.

Keywords: Economic Development, Markets, Developmental State, Historical Perspective