Chapter

“The Rest” Will Rise Again

Alice H. Amsden

in The Rise of “The Rest”

Published in print February 2001 | ISBN: 9780195139693
Published online November 2003 | e-ISBN: 9780199832897 | DOI: http://dx.doi.org/10.1093/0195139690.003.0010
“The Rest” Will Rise Again

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One of the most controversial aspects of the rise of the successful late industrializing countries (the rest) was the role played by the government. As seen in this book, governments in the rest all intervened in markets in a deliberate and deep way because their economies had too few knowledge‐based assets to compete at world market prices even in modern labour‐intensive industries. But government failures were institutionally bounded: the set of institutions that framed the whole process of late industrialization was specifically designed to minimize the ill effects of interventionist policies. In this chapter the controversy over the role of the state is connected with the rise of the rest: first, a look is taken at Alexander Gerschenkron's theory on the process of catching up; then the underlying assumptions of the ‘assets approach’ taken are stated; next, a summary is made of what it means for market theory and its policy prescription of laissez‐faire to drop the assumption of perfect knowledge; and, finally, a few remarks are made about countries that have stumbled back and those that are (possibly) at the forefront in ‘the remainder’ (countries that have so far failed to industrialize).

Keywords: competition; government intervention; industrial development; institutions; knowledge‐based assets; laissez‐faire; late industrialization; Latin America; market theory; newly industrialized countries

Chapter.  4375 words. 

Subjects: Economic History

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