Earlier quoted context omitted.
Check out Slovenia for a counterexample. You can do either approach badly or well.
sorry I don't get it: what is Slovenia a counterexample of? It seems to be a fairly wealthy country now, with a market economy and liberalised services.
A huge chunk of their economy are state owned companies. They didn't privatize everything like most other post communist countries and they are still doing rather well. They are quite small, so not directly comparable to bigger countries but still interesting.