1963-2018 - 55 years of Research for Social Change

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Combating Poverty and Inequality: Structural Change, Social Policy and Politics

From Chapter 10 – Building State Capacity for Poverty Reduction

This chapter outlines how states that can deliver growth-oriented and welfare enhancing structural change need to be rule based, not beholden to patronage, knowledgeable about the economy and society, and staffed by adequately paid and trained individuals. They also need to be able to mobilize domestic resources and strengthen capacities to influence and discipline investor behaviour. Current international development policies that emphasize a standard set of market reforms pursued through various types of conditionality limit the policy space in which national actors can pursue alternative development strategies.

The chapter is organized as follows
  • Section 1 of the chapter examines the institutions, policies and dynamics that have enabled some states to build up developmental and welfare-enhancing capacities. It contrasts the experiences of successful and less successful states by examining three dimensions of state capacity: political capacity, resource mobilization capacity, and allocative and enforcement capacity.
  • Section 2 discusses the market-enhancing reforms of good governance, managerialism and decentralization. The key questions it seeks to answer are: if states are to play an active role in development, what kinds of institutions and policies are needed to make such states effective? What lessons of state building can be learned from successful developmental states? And how appropriate are current market-enhancing state reforms in sustaining growth and generating social outcomes that are beneficial to the poor?
  • Section 3 concludes the chapter with implications for policy.

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