Entrepreneurial State: The Role of Government in the Economic Development of the Asian Newly Industrialising Economies

The 1980s are often regarded as a triumphant period for the free market economists. In many socialist countries 1989 saw the end of communism as a legitimate ideology (Boettke, 1991). Even Mainland China, though maintaining its socialist intonation, has in reality made drastic moves towards a market economy. The increasing popularity of Western liberal economic ideologies in these countries cannot be denied. 1 The 1980s also witnessed massive deregulation, liberalisation and privatisation in the OECD countries and in developing countries, largely promoted by the World Bank and the IMF (Chia, 1993: 7). Observing these changes, James Fallows, an economic writer on the Wall Street Journal , claimed, ‘With a few exceptions , . . . it seems that the ideas of Adam Smith, of Alfred Marshall, of Milton Friedman, have triumphed. We are all capitalists now’ (Fallows, 1994: 192). However, the experiences of the Asian Newly Industrialising Economies (NIEs), namely Singapore, Taiwan, South Korea and Hong Kong, have embarrassed the free market economists. With the active intervention of their governments in economic affairs, they have created what the World Bank (1993) has called the East Asian ‘miracle’. In response, the neo-classical free market economists contend that government intervention policies in the Asian NIEs were in general market-conforming or market-sustaining (World Bank, 1993; Chia, 1993). Furthermore, they insist that these NIEs were able to grow