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date: 21 October 2020

Abstract and Keywords

France and Japan have long incarnated the possibilities of state-led economic development, which supporters heralded as superior to the free-market approach of the United States. Beginning in the 1970s, however, France and then Japan experienced growing economic difficulties, and the key institutions and policies associated with the statist model were dismantled. This reorientation of French and Japanese policy cannot be reduced to a movement from state to market: To spare workers from the harshest consequences of economic reform, France created one of the most expensive welfare states in the world, while Japan contained unemployment by spending massively on public works and bailouts of loss-making enterprises. Thus, the road away from voluntarist industrial policy has been paved with substantial new state spending, much of it social in nature. The challenge ahead is to curtail and redeploy this spending in ways that are more supportive of economic development.

Keywords: economic development, state transformations, the statist model, welfare state, France, Japan

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