Should governments be in business? What is the proper role of the state in the economy? How can governments best foster growth and development without being too intrusive? These questions are as old as the economics discipline itself. However, they are as relevant to both developed and developing countries as ever. While standard economic theory often prescribes that governments should maintain an arms-length relationship with businesses, the reality in most developing countries is that financial markets are not sufficiently mature, private sector capacity is often weak, and the state may be the only actor that can mobilise resources for national development, and often for the long haul. The experience of the East Asian Tiger economies in the second half of the 20th century, as well as China’s rapid development in the last thirty years, suggests that government activism and involvement are often prerequisites for successful development. If nothing else, they are catalytic in purpose.
How then should governments be involved without crowding out private sector initiative? How can governments develop commercial capabilities without wastage of precious resources or creating incentives for rent-seeking and corruption? When should governments be involved and when should they exit? And, if it is to be involved, what form should that involvement take? Should the government focus on being a regulator? Or, should it also be a purchaser, a promoter, a partner, and a shareholder? Does a higher level of government involvement in business help or hinder a country’s development?
This five-day programme at the LKY School for senior officials involved in regulating, governing or managing state-owned and government-linked enterprises takes a pragmatic, rather than ideological, approach to understanding the role of government in business. This programme, taught mostly by former senior practitioners of the Singapore government, suggests that there are few universal or one-size-fits-all answers to the complex questions above. Instead, a sensitivity to context, a willingness to question economic orthodoxy, and the ability to adapt the economic policies of a country to changing circumstances are key to managing the relationship between government and business in a way that advances a country’s economic development.