CIRJE-J-13. Okuno-Fujiwara, Masahiro, "Economic Development and Role of the State: with an emphasis on the Market Enhancing View", April 1999.

In newly emerging industries, such as the Information Technology industry, and developing economies, market organization itself is not well established. In this paper, we define "market" as a set of "institutions" and/or "organizations" such as legal and regulatory system and transactional and other custom. By doing so, we clarify the differences between the "ideal Market" which the neo-classical economics assume to exist and the market organizations that exist in the real world. Further, we investigate the role of ideal markets, especially in view of their roles in coordination and motivation. We then explain the market enhancing view about the role of government (or the state). That is, the government may be able to intervene the governance structure of market organizations and, thereby, may be able to promote the effectiveness of markets' functioning, when markets lack efficient institutional structure.