Institutions, the State, and Economic Development: An Analysis and Evaluation of Ha-Joon Chang's Critique of the Dominant Discourse and His Thoughts on State-Led Development Theory.

摘要

This paper examines two distinct schools of thought on how to best spur economic activity in developing economies. Mainstream economists, like Hernando De Soto and Douglass North, argue private property rights and free markets, and the institutions which nourish and protect them, are the primary driver of economic growth. Heterodox economists, led by prominent author and economist Ha-Joon Chang, acknowledge institutions play an important role in inducing economic activity but challenge the notion institutions are the primary driver of development. They argue targeted state-led investment and regulation are as important, if not more important, than protecting market freedom and private property rights in spurring economic growth in developing economies. Specifically, this paper provides a dispassionate global presentation/analysis of the mainstream/dominant discourse, Chang's critique of the mainstream discourse, as well as a thorough presentation of Chang's thoughts on state-led development theory. By analyzing the works of a broad cross-section of prominent mainstream and heterodox development economists in the context of Chang's challenge to mainstream thought, this paper sought to come to a better understanding of the significance of Chang's contribution to the literature on institutions and development.;This paper concludes that while Chang succeeds at exposing flaws in the mainstream's arguments, and while he presents a plausible case for state intervention, he is not one-pointedly hostile to the mainstream's view that property rights and institutions are primary drivers of growth. Indeed, the literature survey summarized above suggests Chang recognizes the importance of property rights but seeks to prod the mainstream into broadening the discussion to include the role of the state, thereby challenging the mainstream's emphasis on the importance of institutions, specifically private property rights.