State Capitalism

May 15, 2012 • Volume 6, Issue 10
Can state-run economies sustain their success?
By Jason McLure


The landmark, 1,483-foot-high Petronas Twin Towers (AFP/Getty Images/Saeed Kahn)
The landmark, 1,483-foot-high Petronas Twin Towers, built by Malaysia's state-owned oil company in the capital, Kuala Lumpur, are the world's tallest twin skyscrapers. Petronas takes in more revenue than Google, McDonald's and Xerox combined. The rise of such state-owned giants in East Asia, Russia and the Middle East highlights the growing role of governments in the global economy. (AFP/Getty Images/Saeed Kahn)

Since the 2008 financial crisis China, Russia and Saudi Arabia have been among the best-performing economies in the world. All three countries practice so-called state capitalism, in which the government plays a dominant role in the economy and owns a large share of the nation's companies. As economic growth in the United States and Japan remains tepid, and parts of the European Union are mired in a double-dip recession, many developing world governments are questioning whether Western market capitalism is the best path for growth. Many also blame the excesses of unfettered Western-style capitalism for the recent global financial crisis and the ensuing worldwide recession. China, on the other hand, has lifted 600 million people out of poverty in three decades, and Russia's economy has doubled in size since Vladimir Putin began rolling back post-Soviet free-market reforms. Some economists see trouble ahead, however, because when governments manipulate markets for political purposes it can lead to inefficiencies, corruption and political tensions over time.

ISSUE TRACKER for Related Reports
Federal Budget and National Debt
Sep. 01, 2017  National Debt
Jul. 12, 2013  Government Spending
May 15, 2012  State Capitalism
Mar. 18, 2011  National Debt
Nov. 14, 2008  The National Debt
Dec. 09, 2005  Budget Deficit
Apr. 13, 2001  Budget Surplus
Feb. 01, 1991  Recession's Regional Impact
Jan. 20, 1984  Federal Budget Deficit
Sep. 09, 1977  Federal Reorganization and Budget Reform
Nov. 24, 1972  Limits on Federal Spending
Jan. 08, 1969  Federal Budget Making
Dec. 06, 1967  National Debt Management
Aug. 01, 1962  Fiscal and Budget Policy
Nov. 27, 1957  National Debt Limit
Mar. 20, 1957  Spending Controls
Dec. 24, 1953  Public Debt Limit
Feb. 13, 1952  Tax and Debt Limitation
Nov. 30, 1949  Government Spending
Jan. 06, 1948  Legislative Budget-Making
May 23, 1944  The National Debt
Feb. 01, 1943  The Executive Budget and Appropriations by Congress
Dec. 27, 1939  Revision of the Federal Budget System
Oct. 10, 1938  The Outstanding Government Debt
Nov. 20, 1937  Budget Balancing vs. Pump Priming
May 02, 1936  The Deficit and the Public Debt
Oct. 19, 1934  The Federal Budget and the Public Debt
Feb. 10, 1933  Extraordinary Budgeting of Federal Finances
Dec. 01, 1932  Reduction of Federal Expenditures
Dec. 01, 1930  The National Budget System
Oct. 02, 1930  Federal Revenues and Expenditures
Nov. 02, 1927  The Public Debt and Foreign Loans
Nov. 15, 1926  Rising Cost of Government in the United States
Feb. 05, 1925  Four Years Under the Budget System
Economic Analyses, Forecasts, and Statistics