Four factors that drive good economic performance

Why do states intervene in the economy to support productive sectors? Why do they choose particular policies and initiatives, and why do some interventions result in better outcomes than others?

Successful state interventions depend on four factors:
1) sustained political support by the government
2) the existence of an embedded and mediating bureaucracy
3) changing the 'rules of the game' which govern the distribution of economic benefits and resources
4) that industry actors are organised and that interaction between industrial actors and state actors is institutionalised.

In this paper, these four factors are used to explain why intervention is sometimes a success and sometimes not. The paper goes through four cases, demonstrating different degrees of successful intervention or political neglect - namely the case of the sugar industry in Mozambique, and of the cocoa, palm oil and horticulture export in Ghana. In concluding, the authors emphasize the political contexts which shape how ruling elites make policies and implement them.

The comparison of the cases is placed within a broader conceptual framework which has been presented in a previous working paper, 'What drives developing countries to support productive sectors? Ruling elites' strategies for political survival and their policy implications' by Ole Therkildsen and Lindsay Whitfield.

This working paper is based on research carried out under the Elites, Production and Poverty collaborative research program (2008-2011) based at DIIS, www.diis.dk/EPP.