South Korea grew at 9% with an interventionist state. Doesn't that break the theory?
Not necessarily. South Korea and Taiwan achieved 7–9% growth with moderate spending (~18–20% GDP) alongside significant industrial policy. Their experience shows that total spending level and institutional quality — not the absence of all state intervention — are what cross-country regressions primarily capture. Targeted programs within a lean overall budget are different from broad high-spending welfare states.