What risk accompanies PKP's state-led economic modernization?

• A. Debt buildup and inefficiencies.
• B. Immediate balanced budgets and no debt.
• C. No risk; guaranteed sustainable growth.
• D. No impact on economic performance.

Answer: (C)

State-led modernization usually involves large public investments financed by borrowing and government control over key sectors. That setup creates real risks of debt buildup and higher debt-servicing costs, especially if growth falls short or revenues don’t rise as planned. At the same time, centralized planning and political incentives can lead to inefficiencies—misallocated resources, slower response to market signals, and weaker productivity gains—because decisions are driven by policy goals rather than immediate market profitability. Taken together, debt pressures and inefficiencies are the most plausible risks accompanying state-led economic modernization. Claims of immediate balanced budgets, guaranteed sustainable growth, or no impact on performance overlook the fiscal and incentive constraints that typically accompany strong state intervention.