The most optimistic view says that the state is a benevolent leader in development, a force that maximizes social welfare. The pessimistic view states that the government is an obstacle to development because it represents the interests of a narrow group and acts against the majority. A third view says that there is a wide possible range of relationships between the state and development, and each case must be assessed as to whether the state can formulate and implement policy without corruption. It is this middle road that many scholars have supported, and in so doing, they have found that there is indeed a role for the state in economic development. This role has waxed and waned over time, being high in the aftermath of World War II (or LDC independence), dropping somewhat in the market oriented 1980s, and rising once again in the twenty-fi rst century. As Peter Calvert noted, the role of the state was under attack during the 1980s and 1990s when the Washington Consensus orthodoxy reigned, according to which the role of the government should be kept to a minimum. Due to frequent market failures, the state is being brought back in.
This re-emergence of government has been highlighted by scholars. Sinclair and Stabler noted that, “in contrast to traditional neoclassical theory, new growth theory provides a possible role for government.” Mittelman and Pasha also identifi ed the role of the state, especially with respect to capital accumulation in the less developed countries. Similar views have been voiced outside scholarly circles, from international organizations and policy makers. According to the UNWTO, “It is widely recognized that the market alone cannot be relied upon to deliver sustainable development.”6 Similarly, Trevor Manuel, South Africa’s Minister of Finance, argued that African states need to expand, not to contract, their public sectors. The arguments are in favor of bringing the state back in to the development effort.
In what way can government jump-start the economy and sustain national growth that the private sector cannot do better? It can take legislative measures; it can provide an institutional framework. It can have a commercial and industrial policy, together with fiscal and monetary policy, to ensure sustainable growth. Government can make direct expenditures and investments (especially in strategic sectors or public goods, or when local private capital lacks suffi cient strength to sponsor the required investment, and foreign capital has associated problems). Government can encourage the private sector directly, with liberalizing laws and subsidies. It can also encourage it indirectly by investing in infrastructure.
The World Economic Forum’s Global Competitiveness Report contains indicators of public sector involvement. This report ranks countries with respect to numerous economic indicators that are not found in offi cial statistics, but rather are based on opinion surveys of top business executives across a broad range of industries. The World Economic Forum, in conjunction with Harvard University, recognizes that “there exist intangible factors that cannot be found in offi cial statistics but that may play an important role for a country’s competitiveness and hence its long term prospects for economic growth.” It is these intangible factors, as described by opinion surveys, that are used throughout this book to supplement official statistics when they are available and substitute for them when they are not. Only 59 countries are included in the survey (the high- and middleincome countries).
Medical Tourism and a New National Revenue for the Developing Countries
