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Reading Summary - Pros and Cons of State Capitalism.docx


Department
Geography
Course Code
GEOG 3422A/B
Professor
Milford Green

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Pros and Cons of State Capitalism 4/7/2013 2:21:00 PM
Pros and Cons of State Capitalism
State capitalists like to set China's recent successes against
America's mounting failures
A balanced assessment of state capitalism has to allow for three
warnings
o First there is no clear dividing line between state-owned and
private companies
“Private” champions such as Huawei, the telecoms
giant, have repeatedly been given government help
makes it hard to produce precise calculations about the
productivity of the two sectors
o Second ownership isn't the only problem
Some of the problems, and successes, of state
capitalism have more to do with rapid development
than with state ownership
o Third everything depends on context
Its quite possible for state capitalism to work well in
some areas (infrastructure) and badly in others
(consumer goods)
Its also possible for it to boost growth at one stage of
development and impede it at another
Advantages:
o State capitalism's most obvious achievements are in
infrastructure
China has produced a large number of world
infrastructure records largest hydroelectric project
(the Three Gorges dam) and 6,400km of high-speed rail
o BCG, a consultancy, argues that this infrastructure boom will
continue
Chinese companies are building roads and railways in
Africa, power plants and bridges in South-East Asia and
schools and bridges in America
o State capitalism has also enjoyed some success in:
Tackling infrastructure problems such as building the
information superhighway
Mandating higher environmental standards
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