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.