The Meaning of a Strong State?

There is an on-going debate among development practitioners about the optimal extent of state intervention. Although few disagree with the idea that the state should provide a reasonable legal framework and rule of law, the debate intensifies when the discussion gets to the provision of goods and/or services.  Moreover, there are strong disagreements about the state’s capacity to effectively regulate specific economic sectors.

In Latin America, the United Nations Economic Commission for Latin America and the Caribbean (ECLAC) has long been a supporter of a “strong state”, since its first years, when renowned Argentine economist Raúl Prebisch ruled the day.

Granted, the meaning and methods of identifying what a strong state means have changed substantially in the last fifty years.  Still, sometimes the calls for strong state may have a different meaning for different reformers.    The issue was brought up recently at adiscussion by ECLAC’s current Executive Secretary Alicia Bárcena at an event held at the Woodrow Wilson International Center for Scholars. In his presentation, Ms. Bárcena recommended “public-private partnerships” and “institutional coordination” to improve innovation and competitiveness in Latin American economies. 

Meanwhile, ECLAC’s recent Latin America and the Caribbean in the World Economy 2008 – 2009 report called for bringing the “visible hand” of government to play a stronger role in the economy. Without getting too much into the semantics of the debate, it is necessary to consider the the underlying perceptions that terms such as “strong state” have in Latin America.

The scope for abuse of the term is certainly large. From one perspective, the calls for stronger states in Latin America implicitly assume that states are weak.  The fact remains that Latin American states are ubiquitous in all economic areas, fully involved in the old and new “commanding heights.”  It remains to be seen whether Latin American politicians and bureaucrats can effectively design or redeploy a strong state to bolster long-term economic growth.

Maybe it’s time to start thinking at the margin, taking small steps to improve government effectiveness rather than focusing on the general scheme aiming to make the state as a whole stronger.

  1. Frank Fukuyama has done some good work on this issue. His argument is that there two measures of state’s effectiveness – its scope and its strength. Scope refers to the number of areas the state gets involved it, while strength refers to its ability to meet its obligations (such as enforcement of laws). Fukuyama argues that in many countries the two terms are confused, and while people talk about increasing the strength of the state, they actually increase the scope.

  2. I think this is an excellent debate. I think that Fukuyama is absolutely right in that it is important to have a state that has enough strength to enforce laws but does not necessarily get into a lot of activities. Unfortunately, in Latin America most of the calls for strengthening the state are also calls for increasing the size (scope) of the state. This is definitely a return to what we used to have: states that produce everything from soap to tires. If ECLAC (CEPAL) and other leaders would follow Fukuyama’s advice it would mean that they are working to strengthen Latin American states while also trying to reducing its scope. Somehow this message has not yet resonated in the region where we are going back to publicly managed pension funds and state controlled media.

  3. Ricardo Lagos, former president of Chile, spoke here at Vanderbilt last week, and one of the things he mentioned really hit on this topic. He wanted to point out that there was a role for the market and a role for the government. So, for many things the market is much more efficient than the state, but there are other areas where the State must get involved because there is no profit or incentive for the private sector to intervene. His example of a situation where the State needed to step in was providing drinkable water to those in rural areas, which is very costly, and not something the private sector would step into provide. He was very clear that the roles of the private sector and the public sector need to be clearly understood and delineated, while at the same time public-private partnerships are also sometimes the best solution – for example in highway construction. I think Martin hit the nail on the head mentioning States that produce everything from soap to tires aren’t the solution. They probably even weaken the state in the long run. So definitely, the scope is key here in my understanding of what Lagos was saying. I think a clearly defined scope would be a way to effectively strengthen the ability of the State to meet its obligations. That would be refreshing to hear more often from Latin American leaders right now, which is definitely not the case.