What is state capitalism? Why do you think state capitalism is becoming increasingly popular around the world?
Answer: State Capitalism is an economic system whereby the State decides how, when, and where assets will be valued and resources allocated. The State develops national champions, manages trade relations and exchange rates to promote exports and punish imports, leverages control of the financial system to provide low-cost capital to domestic industries, and maintains accommodative legal and regulatory systems. The global credit crisis has expanded the scale and scope of State Capitalism. Countries that favored a larger state presence, higher taxes, heavier regulation, tougher job-protection laws, and more generous social safety programs dealt more successfully with market disruptions than did their free-market counterparts. More fundamentally, State Capitalism professes to better protect protected social values, equalize income distribution, and prevent the accumulation of vast wealth and powerful self-interests that threaten social harmony.