Questions around the role of the state in the economy are as old as the economics discipline itself. Standard economic theory prescribes that governments maintain an arms-length relationship with businesses. However, in most developing countries, 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 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.
But questions remain:
- What form should government involvement take?
- Should the government focus on being a regulator, purchaser, promoter, partner, or shareholder?
- How should governments be involved without crowding out private sector initiatives?
- Does a higher level of government involvement in business help or hinder a country’s development?
- How can governments develop commercial capabilities without wasting precious resources or creating incentives for rent-seeking and corruption?
- When should they exit?
The LKY School offers a five-day programme that takes a pragmatic approach to understanding the role of government in business.