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From Poverty to Power Green, Oxfam 2008 - weman

From Poverty to Power Green, Oxfam 2008 - weman

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3 POVERTY AND WEALTH GOING FOR GROWTHhas followed many of the same principles since the second half of the1980s (see Box 3.8 on page 187).Success has required a combination of effective states and politicalleadership. <strong>From</strong> the his<strong>to</strong>rical record, it appears that there are noshortcuts: the private sec<strong>to</strong>r on its own has never achieved growthwith equity. Furthermore, effective state intervention appears <strong>to</strong> becrucial for the development of the private sec<strong>to</strong>r itself. All take-offcountries gave priority <strong>to</strong> general economic goals such as macroeconomicstability, integration in<strong>to</strong> the world economy, high levels ofsavings and public and private investment, and rapid diversification,while at the same time striving <strong>to</strong> maintain social cohesion, solidarity,and political stability. 177Successful governments have invested in roads, power supplies,and people. Agricultural take-off has generally been an essential firststep on the ladder of economic growth, followed by a move in<strong>to</strong> clothingproduction, then up the value chain in<strong>to</strong> manufacturing and exportingmore complex products such as electronics. When trying <strong>to</strong> achievethis shift, successful economies in South Korea, Taiwan,Viet Nam, andChina developed key sec<strong>to</strong>rs behind protective tariff barriers, with ahands-on role for the state in guiding the take-off:• Governments invested heavily in education and training,ensuring that they had skilled workforces able <strong>to</strong> produceever more sophisticated goods.• Governments led the way in encouraging industry <strong>to</strong> upgradefrom low-tech manufacturing, such as garments, <strong>to</strong> highertechmanufactures and high-skilled services.• Governments forced industries <strong>to</strong> become competitive,not least by obliging them <strong>to</strong> compete in export markets.Protection, for example via tariffs, was used frequently butfor limited time periods, so that industries knew how longthey had <strong>to</strong> become competitive.• Governments insisted on letting failures go out of business,whereas unsuccessful ones became ‘captured’ by industriallobbies and accumulated white elephant industries dependen<strong>to</strong>n continued state support for their survival.• Governments decided relatively early on whether they wouldpursue industrialisation by setting up national leader183

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