Governments in developmental states invest and mobilize the majority of capital into the most promising industrial sector that will have the maximum spillover effect for the society.
According to Alice Amsden's Getting the Price Wrong, the intervention of state in the market system such as grant of subsidy to improve competitiveness of firm, control of exchange rate, wage level and manipulation of inflation to lowered production cost for industries caused economic growth, that is mostly found in late industrializers countries but foreign to early developed countries.
[3][5] Japan, South Korea, China, Hong Kong, Singapore, India, Thailand, Taiwan, Vietnam, Malaysia, Philippines, and Indonesia are developing at high to moderate levels.
Research in the 1960s showed that 60 percent of the people in Thailand lived below a poverty level estimated with cost of basic necessities.
[7][8][9] When viewed through the lens of dependency theory, developmentalism is about countries such as Thailand, Taiwan, Malaysia, Japan, South Korea, and increasingly Vietnam, where the governments are able and willing to protect their people from the negative consequences of foreign corporate exploitation.
In the late 1990s a study was conducted in which the researchers interviewed people from 24 large factories in Thailand owned by Japanese and American corporations.
The researchers’ analysis of over 1,000 detailed questionnaires indicated that the employees rate their income and benefits significantly above average compared to Thai-owned factories.
These subcontractors remain more invisible, making it more easy to bribe local officials to maintain poor working conditions.
Only a development state can have the influence to enforce such a policy on rich multinational corporations (and their governments), and only a development state can have the influence to enforce such a policy against the demands of their own rich citizens who want the imported goods and want them then at a cheaper price, not waiting for infant industries to produce suitable products.
Countries such as Thailand have been able to keep foreign investors from leaving because the government has maintained more infrastructure investment to provide good transportation and a rather educated labor force, enhancing productivity.
Despite the fact that it has a lack of natural resources and an intensely competitive geographical environment, it has been growing its nation as a developmental state.
For example, in 1970, the Vocational and Industrial Training Board (VITB) was launched to provide technical education for workers who dropped out of secondary school.
However, the Singapore government has adopted a special view of new international division of labor; it has placed itself as a global city in the Southeast Asian region.
Park emulated MITI by establishing the Ministry of Trade and Industry (MTI) and the Economic Planning Board (EPB) that controlled and manipulated the market system, while organizing the private enterprises into massive export oriented conglomerates which came to be known as the Chaebol's.
Due to such subsidies on exports and manipulation by the government, the relative prices in Korean industry diverged from the free market equilibriums.
Big business groups in chosen industries were supported and invested by the government, thereby forming intimate economic and political ties.
After the Korean war, South Korea focused on exporting primary products such as crops, minerals while imported manufactured goods from US.
Korea has been called one of "Asia's four little dragons" or Four Asian Tigers with its prominent economic growth (The other three being Taiwan, Hong Kong and Singapore).
Such an event happened because the government plays the main role in promoting the economy by focusing on industrialization, making policy focusing on economy growth and others that are align with developmental theories[27] While the developmental state is associated with East Asia, it has been argued that after 30 years of many negative experiences with the Washington Consensus, similar structures began to appear in Latin America.
[28] However, the city also developed a program of cash grants called 'the Medellín Solidaria' programme that are very similar to Brazil's highly successful Bolsa Familia that provide support for poor families.
Additionally, the city developed the Cultura E programme that established a network of 14 publicly funded business support centres known as CEDEZO, Centros de Desarrollo Empresarial Zonal.
[28] Also, as part of Cultura E, there is Banco de las Opportunidades that provides microloans (up to $2,500 at a cheap interest rates 0.91% monthly).
[28] This has helped create more equal opportunities for all and overcome the barriers to entry to business for poor entrepreneurs with good ideas, but lacking capital, skills and connections.
[28] However, several mayoral candidates for the October 2011 elections have argued the Banco de las Opportunidades's interest rates are too high, loan maturity is too short and it should have grace periods.
[28] They therefore suggest a new small and medium-sized enterprise (SME) development bank to complement the Banco de las Opportunidades.