Yuen Yuen Ang Eldersveld Prize Talk: Does State Capacity Lead to Markets or Vice Versa?

Abstract:
How do poor and weak countries escape poverty traps? Does economic growth or state capacity come first in development? In a forthcoming book, I examine these enduring questions through China’s great transformation from a socialist backwater to a global powerhouse in the reform era. Challenging conventional linear theories, positing either that state capacity leads to capitalist prosperity or vice versa, I demonstrate that states and markets adapt to each other and coevolve. Hence, the key to escaping poverty traps lies not in copying the particular institutional forms of wealthy democracies, but rather in constructing an adaptive environment conducive to coevolutionary processes of radical change.