State-Capitalism and People’s Welfare: A Review of Prerequisitesto Succeed

Abstract

State-capitalist models are increasingly recognized for their potential to influence public welfare, yet the conditions under which they succeed remain insufficiently understood. This study systematically reviews and synthesizes empirical evidence to identify the key prerequisites enabling state-capitalist systems to achieve measurable improvements in people’s welfare. The research aims to clarify how institutional quality, state capacity, strategic management of state-owned enterprises (SOEs), industrial policy, and redistribution mechanisms interact to shape welfare outcomes across diverse governance contexts. This research employs a qualitative, systematic literature review (SLR) methodology. Data were collected through a structured search of the Scopus database, which initially yielded 1,428 articles using the keywords “State Capitalism” and “Welfare”. Refinement with targeted terms focusing on governance, institutional quality, policy effectiveness, and state capacity reduced the corpus to 129 articles. Further screening of the publication period 2019–2025 and open-access availability identified 37 peer-reviewed studies eligible for inclusion. The review identifies five major thematic clusters: (1) Institutional Quality and Governance Integrity, (2) Strategic SOE Performance and Welfare Spillovers, (3) State Capacity, Policy Coherence, and Bureaucratic Competence, (4) Industrial Policy, Economic Diversification, and Inclusive Structural Transformation, and (5) Redistribution, Welfare Regimes, and Social Protection
Effectiveness. Collectively, these factors explain variations in welfare outcomes, highlighting that state ownership alone is insufficient without strong governance, coherent policies, and effective redistributive systems. In conclusion, state-capitalist systems deliver meaningful welfare improvements when these prerequisites converge, underscoring the need for multidimensional policy design. Future research should examine the longitudinal impacts of statecapitalist strategies and explore sector-specific SOE contributions to welfare to deepen understanding of causal mechanisms.