As is well known, a nation's development is closely related to state-society relations. Nevertheless, the relations between state and society has always been difficult to define, especially in developing countries. Since the conventional approaches - state-centered and society-centered - are inadequate to deal with this problem, this paper presents an alternative approach - the mutual interaction model - begining with an assertation that paying equal attention to the state and society where the policy is made and affected is critical in understanding the development process. The main theme of this paper is to expose the policy process through three propositions. It suggests that a nation's political and economic development strategies are shaped through the interaction between state and society.