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Government failure therefore became the new substitute for market failure in development (Mehmet, 1995:116) and state intervention was considered again as fundamental. For instance, New Institutionalist economics scholars attributed the East and South Asian “miracle” to the efficiency of the state organizations and regulations and therefore to state-led reforms that took place in those countries, rather than on private capitalists and market forces (Torquinist,
This theory held that underdeveloped countries would eventually catch up to the developed countries (Isbister, 2006). The mere catching up is called a linear direction of development (McMichael, 2008). The theorists of modernisation attempt to understand the roots of poverty, social, economic and political development usually focused in the deficiencies of poorer countries (Isbister, 2006). Theorists such as Rostow, think of today’s third world as living chiefly traditional, which seems to be primitive and complex to change. The task then of underdeveloped countries is to transform themselves from tradition to modernity with the aid of capitalist countries (Isbister, 2006).
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