The Techno-Bureaucratic Elite and the Entrepreneurial State in Dependent Industrialization

A common characteristic of dependent industrializing countries is a substantial direct entrepreneurial role for the state. One explanation for this is that in dependent industrializing countries the system of allocation and production has been captured by a key group, the techno-bureaucratic elite. The argument is that this elite lends its political support to the state, in return for the state substituting as entrepreneur in the industrialization process. In this article we analyze the theoretical implications of this explanation of the entrepreneurial state. A formal model is constructed of the relationship between state entrepreneurship, material consequences for the techno-bureaucratic elite, and important domestic and international constraints. We then use deductive methods to analyze the logic of state entrepreneurship. Among other things, we show how cyclical fluctuations in the global economy are reflected in constantly changing levels of state entrepreneurship, and we investigate the consequences of alternative kinds of dependency syndromes for histories of entrepreneurial substitution and for streams of benefits to the techno-bureaucratic elite. It is demonstrated that there is an inverse relationship between the tendencies to reach stable levels of state entrepreneurship and the long-term potential for economic growth.