Chapter

The Role of the State in Development

Nadia Ramsis Farah

in Egypt's Political Economy

Published by American University in Cairo Press

Published in print March 2009 | ISBN: 9789774162176
Published online September 2011 | e-ISBN: 9781617970337 | DOI: http://dx.doi.org/10.5743/cairo/9789774162176.003.0002
The Role of the State in Development

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This chapter examines the theoretical controversy raging between the proponents of neoliberalism, who advocate the complete withdrawal of the state from the economy, and the proponents of the “developmental state,” that is, a state that intervenes in underdeveloped economies to nurture a capitalist class that will later be able to carry out independently the functions of capital accumulation and development. An analysis of the economic role of the Egyptian state during the last two hundred years demonstrates that every time the state intervenes in the economy, the rate of economic growth increases rapidly. A reduction or cessation of state intervention usually results in a slower economy, high unemployment, and increasing poverty rates. Worth noting is the articulation of state intervention in the economy with periods of high state autonomy, that is, a situation in which the state is autonomous from the power of all social classes. This kind of state autonomy has occurred only twice in Egypt during the last two hundred years: under the Muhammad 'Ali state and during Nasser's time. State autonomy is not a permanent state of affairs, however, since eventually state autonomy erodes and diverse interest groups penetrate the state. In Egypt, erosion of state autonomy led ultimately to the domination of the system by special interest groups, a decline in the economic role of the state, and the deterioration of development.

Keywords: neoliberalism; state development; Egyptian state; state intervention; economic growth; state autonomy

Chapter.  14962 words. 

Subjects: Political Economy

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