Theorists and practitioners thought the state is the key to development, because the development after the Second World War was a strategy to seal the gap between the economies that were developed and those that were not developed. The West which was capitalized sealing the gap was to politically keep off the other countries from joining the communism side during the cold war. At some point the United States was in command of the west. The conflict which had arose in the Second World War concerning development was a political issue which was aimed at preventing countries to join communism in the cold war. Latin America, Africa and Asia struggle for independence was much characterized by politics and they hence needed development.
Development was always about socio economic issues which were affecting societies that were on rebellion so that they could be in a position to attain an independence that was formal. Development was about forming political ties with nations. This kind of development was viewed to be cheaper; it was to continue for a long time in the future, politically and financially. The regions that were underdeveloped had the developed regions access their raw material.
The regions that were being ruled by communism, The Soviet Union being one of them also decided to support development but by keeping the West away from the developing countries so that the West could not have the raw materials. The communist revolution was able to be administered in china. The Soviet Union backed by China decided to also sponsor the third world countries in development. This creation of relationships led to a movement that was not aligned. The state, whether it was sponsored by the communist or the West was the instrument that was to be used for development. The state was for nation building, which was the development of infrastructure that would help in the buildup of the state’s political structure and thus direct the economic change that was needed. Nation building had education as one of its activities so that personnel resources could be created in order to promote the development of the economy especially in areas related to technology. Education was also for the purpose of offering mental capacity and identity. This way education was meant to create a process of demand that was equal and also support modernization which would be of help when protecting the powers of the sponsors. The state had a central role which was aimed at national development especially in the third world. The United Nations came up with the Non-Governmental Organizations that would offer aid to countries who were allied to communists or not. The development state was created to act as an agent to offer national development in the United Nations (Poulantzas, 2000).
The state was the best suited to for socio-economic practice and theory that was neo- liberal. For example Bhutan had started on development before most of the developing countries in the third world had achieved their independence. Countries like Taiwan and Korea did benefit from the development policies that had been started after the Second World War. The state did indeed succeed with its policies and ideologies about development and this is what made most countries to come up economically because of the benefits that they had gained from the development state.
The drop in the spending on the military after the Second World War led the people of America to have feared that the times would become hard just like during the great depression. However, the economy grew with success being registered in the automobile industry, this helped electronic and aviation companies to be created. The United States felt the need to put in order arrangements concerning the international monetary; this is what led to the creation of the World Bank and the International Monetary Fund (IMF). The development of these institutions was to propagate the economy internationally. The United States has an infrastructure that is developed and hence the development in its economy. A country like Japan has an economy that is industrialized and it is ranked second large in the world. Moreover, it does so well in international trade. Japan has a reservoir in technicians and industrial leadership. The laborers are hardworking and educated, thus leading to the Industrial development being promoted intensively (Chang, 2003).
Majority of countries had quite a large number of airplanes; these airplanes had the technology that was latest. These airlines were used to commercially to promote economies and promote international trade. The United States in 1960 had a percentage of 58 percent in air traffic. The European airlines had 24 percent. The Soviet State which had a state owned airline helped to reconstruct the Soviet Union after the war. Germany has a large number of workers who work in the manufacturing industries, this number is high than in France, UK and U.S. The Portuguese migrated to the United States among other among other countries such as Germany and this explains the large numbers in its workers.The migration by the Portuguese was an international flow of labor and most of them moved to Brazil (Putchet, 2001).
Import substitution industrialization (ISI)
Import Substitution Industrialization (ISI) is an economic policy and trade which is based on the principle the country should try to cut off the dependency on foreign aid. Countries should do this by producing products that are localized. To do this they can use foreign or national investment, this investment can be for both foreign and domestic consumption. The states were advised to reduce the government spending. The Import Substitution Industrialization is based on the theory of dependency which was influenced by the thinking of Keynes. The import substitution industrialization has an objective of lifting trade for products that are value added (Tanimoto, 2006).
Import Substitution Industrialization promotes exports especially in Asia and South Korea. It also helps to link countries to markets in the world. It encourages the external competition for imports in the markets for industries that are targeted. They are however discouraged by currency devaluation, tariffs among other factors. The guiding principles to trail the Import Substitution Industrialization contain a protectionist that is strong. Its not preferential to the advocates to execute business in an open way. The Import Substitution Industrialization faced the limitation of the recession. It has been victorious in nations which have a big number of inhabitants with a high percentage of income which encourages the utilization of all the domestically manufacture goods and services (Philion, 2008).
Some of the advantages that were accrued to the Import Substitution Industrialization were the increase in the domestic employment which reduced labor dependence on industries that were non intensive during the extraction of raw materials and imports. It also reduced the distance for the transportation of the goods. The shortcomings were that the industries established were out of date and unproductive. This also contains the derailing of all the domestic producers (Forbes & Wield, 2002).
Export Oriented Industrialization (EOI)
Export Oriented Industrialization (EOI) is also referred to as export substitution industrialization. It is an economic policy and trade that aims to speed up the process of industrialization of a country by exportation of goods that the country has comparative advantage in. The growth in the economy is led by the exports which give an implication that the domestic markets are opening up. This leads to competition in the foreign markets and thus access to other countries. The reduction in tariffs and devaluation of currencies help to facilitate exportation of goods. The export oriented industrialization was a characteristic of development in the World Trade Organization, which was in favor of the strategies that had had been put in order to promote trade that was multilateral.
Export oriented substitution is said to be successful but it can become sensitive to the changes in the market. For example the economic crisis in 1998 jeopardized the economies of the countries that were using Export oriented industrialization; this industrialization faces criticism of not being able offer diversity of products, thus making the economies to become vulnerable to instability. Export Oriented Industrialization was able to grow because of the Import substitution Industrialization. The manufactured exports of East Asia cannot be compared to countries that are still developing who have low skills and the land ratios are also limited (Hayami, 2005).
State socialism has been practiced in countries such as the North Korea, and Vietnam among others. They are mostly referred to as communist. This is despite the fact they had small or insignificant communism ideology. Bureaucratic socialist is another term that was used to refer to these societies. They are also totalitarian in the making. The state has more powers under socialism compared to when it is under capitalism. These are powers that are vested on the police, education, military forces foreign relations and most important trade.the bureaucracies by the state are powerful (Cypher & Dietz, 2008).
Socialism has a very close connection to the war system because the state socialist regimes are often referred to as war economies that are permanent. The state socialist are very well organized politically whether there is a war or not just like the capitalist are organized during the times of war. Militarization of the revolution is driven by some internal forces in the socialism state. Marxist thought of bureaucracy as bad and said that it should not be allowed to expand. This is because bureaucracy leads to increase in state power and that is why after the Russian revolution the leaders have always aimed at capturing the power of the state. Some of the state socialists were known to heavily rely on violence in order to capture state power and hence be in a position to make a reconstruction of the economic relations. After the socialism was able to acquire Statism, challenges of promoting of self management came on board (Oishi, 2005).
The Socialist operates similarly to those of capitalists. Separating these two societies is hard because they seem to sometimes work hand in hand. Socialism did not lead to the abolition of war because after the Second World War there was only one socialism state. The soviet military forces were against the soviet people. Militarism is opposed to all societies and state socialism is included in order to prevent the occurrence of future wars and hence leading to stable economies (Bourguignon, 2008).
Industrialization has led to advancement in technology which makes the world we are living in better. The invention of new drugs that help to save lives boosts the economy and ensures that population is healthy. There are benefits which as associated with industrialization as well as its demerits. A good example is the decline in the life expectancy. The life expectancy largely depends on the lifestyles that people have due to their economic status. However this is not the case for third world countries that have high poverty levels. As much as the state spearheaded development, resources were drawn from third world countries to develop the now developed countries. It is ironical that the developed countries have established the NGO’s to give donations through them and yet they took the resources that could have made them develop. The state favored some countries and hence it brought about inequalities in the resources.
The growth in economy gives a country its independence and that is why the third world countries continue to be given directives by the developed nations even though they gained independence long ago. The industrialization was sustainable to an extent that it made economies of various nations in the West grows. However its objectives were dissolved by the political structure where the leaders became hungry for power and wanted to just dominate the developing nations.
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Chang, H, TitleRethinking development economics, Anthem Press, London, 2003.
Cypher, J & J Dietz, The process of economic development, Taylor & Francis, London, 2008.
Forbes, N & D Wield, From followers to leaders: managing technology and innovation in newly industrializing countries, Routledge, London, 2002.
Hayami, Y, Development economics: from the poverty to the wealth of nations, Oxford University Press, Oxford, 2005.
Oishi, N, Women in motion: globalization, state policies, and labor migration in Asia, Stanford University Press, London, 2005.
Philion, S, Workers’ democracy in China’s transition from state socialism, Taylor & Francis, London, 2008.
Poulantzas, N, State, power, socialism, Verso, London, 2000.
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Tanimoto, M, The role of tradition in Japan’s industrialization: another path to industrialization, Oxford University Press, Oxford, 2006.