Session 2
Atul Kohli, et al., States, Markets, and Just Growth, 2003, pp. 1-6
Kerry Griffin
Pages 1-6 are the Introduction to this edited volume. This Introduction is written by
Kohli himself.
The first few paragraphs explain the global and temporal contexts within which the book
is written. The purpose of the book is to lay out where developing countries have been in
the recent past, and where they are likely to be in the near future.
Most developing countries by now have had 5 to 6 decades of practice with development,
with varying success. The goal of these developing countries going forward should be to
work toward the goal of “just growth” which is the goal of growth with distribution and
democracy. In the 21st c. “the pursuit of just growth not only will raise the old and
enduring issues of roles of states versus markets and of potential trade-offs between
growth and distribution but also important new issues will include the changing global
parameters within which development efforts will unfold in the near future.”
By now that developing countries exhibit development patterns that are distinctive by
regions:
Country/Region
Development Pattern (pp. 2)
East Asia


sub-Saharan Africa


Latin America



Middle East


South Asia

“Strong” states
rapid, export oriented
economic growth
Failed states
Poor economic performance
Move through political and
economic transitions in unison
Democracy to authoritarianism
back to democracy
Severe debt crisis to modest
economic growth
Security threats
“Rentier” states
Common path of fragmented
polities and middling
economic performance.
Needs/Prescription (pp.
2-3)
Maintain high growth
rates under conditions of
“globalization”
Coherent states and
resumption of economic
growth
Manage international
economic links under
conditions of low
domestic savings, sharp
income-inequalities, and
fragile democracies
Reform antiquated state
systems for more
inclusionary pattern of
development
“insulate” their economies
from nearly excessive
politics so challenges of
growth and poverty can be
met head on
The Introduction tells us that the book proceeds to explore common concerns of all
developing countries, while emphasizing special regional needs. Each chapter addresses
each of the following topics:
States, markets, and growth (pp. 3-4)
To what extent states should intervene in markets to promote growth is the master debate.
The scholarly and policy communities have swung back and forth on this issue:

1950s-1960s – general consensus that pervasive “market imperfections”
necessitate state intervention for growth promotion.

1980s – shift to “state imperfections”. The “Washington Consensus” argues for
“getting prices right, openness and minimal state intervention”

Today – continued recognition of the importance of macroeconomic stability and
of getting some prices right. Also, growing recognition that sound policy requires
an effective state and effective state intervention is needed to promote economic
growth (to build infrastructure, for an educated and healthy workforce, and
technological know-how)
States, markets and distribution (pp. 4)
“How much emphasis should be placed by development strategies on deliberate
redistribution and/or on poverty alleviation are, again, old and enduring questions.
Tolerance of poverty and inequality also appears to wax and wane in the scholarly and
policy communities, not to mention within regions and countries.”

Evidence linking poverty levels with economic growth is stronger than evidence
linking inequality with economic growth.

Steady growth helps alleviate poverty, with some exceptions, highlighted by the
Human Development Report of the UNDP.

This suggests that patterns of growth also matter, and

Public policy intervention for structuring growth patterns will remain significant
in translating gains in national production into better living conditions for all.
Globalization (pp. 4-5)
This is a new buzzword in development discussions and has taken on an idealogical
quality. There are some idealogical claims that globalization is pervasive, inevitable, and
offers benign opportunities for all but those who refuse to accept it.
The truly significant changes in globalization have come about recently in the realm of
international finance and rapid movement of money through portfolio investments. Some
regions of the developing world – Latin Amer. and Asia – are more likely to be able to
take advantage of this than sub-Saharan Africa or South Asia.
Given globalization, developing countries are constrained in choosing their own
development paths to the extent that well-organized states may feel less constrained than
states with poorly functioning states, low domestic-savings rates, or both.
Democracy (pp. 5-6)
Democracy is a valued end in the process of development, but its contributions to growth
remain unclear. Democracy’s value is mainly political, facilitating freedom of
expression, minimizing arbitrary and dictatorial rule, and holding the ruling elite
accountable. “The “third wave” of democracy has thus been fuelled by the political urge
of citizens worldwide to have some say in how they are governed.”
However, the Middle East has not shared the spread of democracy, and some new
democracies set up in other developing countries have not provided good government and
some countries – such as Pakistan – have reverted to authoritarian rule.
Democracy cannot reconcile growth and distribution any better than non-democratic
forms of government. Democracy creates secure property rights and a favorable
investment climate, however new democracies are not always stable, and more important,
they allow interest groups to mold policy that may not be the best for economic growth.
We are referred to chapter 2 for a discussion, given the importance of democracy in the
pursuit of just growth. A theme of special importance here is the role of political parties
in stabilizing new democratic governments and in facilitating economic development.