1. The rise and fall of the developmental state thesis:
rethinking the East Asian economic miracle
Discuss the theory and the role of the developmental state in the
rise of the East Asian Miracle.
Executive Summery
Development ideas and the developmental state thesis over time
has fallen in and out of fashion and the key indicators for their
economic growth are either hailed as a success, or, are at the
heart of criticisms. In the book Asian States: Beyond the
Developmental Perspective editors Boyd and Ngo put together a
collection of ideas from authors who have re-examined the
theoretical claims and the empirical foundations of the
developmental state theory. The authors of Asian states argue
that regardless of the merits of the developmental state theory as
an explanation of economic growth it falls far short of being an
adequate theory of the state of Asia (Boyd and Ngo, 2005, p. 1).
Boyd and Ngo are dissatisfied with growth and development
study in Asia. They believe there are problems and issues that are
not reducible to economic success and failure. According to Boyd
and Ngo particular questions of the state, politics, and power
cannot be captured in measures of efficiency and effectiveness.
(Boyd and Ngo, 2005, Preface)

2. In order to analyse the criticisms and successes you need find out
what has inspired different attempts to develop different regions,
and study what overall effects these interventions have (Williams,
Meth, Willis, 2009, p. 120). When comparing state-led
development to market-led development we also need to
measure the social and environmental costs and see if there has
been a more efficient use of resources, or if having greater
autonomy is a positive for development, the economy and
increasing the standard of living (Williams, Meth, Willis, 2009, p.
120).
Boyd and Ngo take issue with the projection onto Asia of a
simplified Weberian concept of the modern state (Boyd and Ngo,
2005, p. 4). Much of their conjecture emerges from the claims
about developmental states coming from supporters who have
mislabelled or misrepresented certain definitions, characterised
developmental states as developmental when they should not be,
and using western ideology, rationality, and logic to try and
understand Asian states (Boyd and Ngo, 2005, p. 4). While it is
evident the popularity of development state theory has reduced
the study of Asian political economy to a study about economic
growth, it is still an important theory. In some cases, like South

3. Korea, even in an increasingly globalised market and against
conventional wisdom, state-led development has still proven to
be successful. Critics argue state-led development can lead to
inefficiency and authoritarian power, while market-led economies
have the effect of concentrating resources, money, and power in
the hands of the few already powerful, while exacerbating
inequality and institutionalising poverty. The main issue here
seems to be a lack of good governance which underpins
developmental state theory, and the fact that development state
theory is unable to encapsulate the entire socio-political and
economic landscape of Asia.
Development State Theory
Developmental state theory is a 'state-led growth' theorem for
economic growth that emerged in response to the failure of both
neoclassical economics and dependency theory accounting for the
spectacular growth of Japan (Boyd and Ngo, 2005, p. 1).
Efficacious instrumentality is a core element in the developmental
theory of the state (A. Kohli, 1999, p. 93). Governments were
implementing policies that opened up their economies to foreign
investment by reducing tariffs, subsidised premises and

4. infrastructure, and by reducing levels of taxation page (Williams,
Meth, Willis, 2009, p. 118). Modernisation was a key perspective
in the field of development studies, however, Critics like Hoselitz
(1952) say it holds up a Western model of high mass consumption
as a universal goal and see traditional society as irrelevant to the
transformation (Williams, Meth, Willis, 2009, p. 287). Boyd and
Ngo claim the developmental state is contained in the Weberian
tradition that emphasises legitimacy, rationality, and
instrumentality at the expense of monopoly, violence, and
domination (Boyd and Ngo, 2005, p. 2). Boyd and Ngo cite Moon
and Prasad who they believe have rightly criticised this view of
the state because it fails to uncover the complex and dynamic
internal workings of the state structure by depicting the state as
an internally coherent, unitary entity (Moon and Prasad, 1994, pp.
360-86). The potential risk is a country can revert to
authoritarianism, corruption, and cronyism while neglecting the
environment and human rights (Boyd and Ngo, 2005, p. 3)
Cronyism is a system of political or economic relationships which
favours personal relationships, often hidden elites, over merit
(Williams, Meth, Willis, 2009, p. 368). A market-led economy like
the Laissez-faire is favoured by capitalist who argue for minimal
state intervention and maximum market freedom (Williams,

5. Meth, Willis, 2009, p. 371). Free market ideas like the Laissez-faire
approach, associated with Adam Smith (1979) called for a reduced
government intervention in economic affairs, free trade, and a
division of labour. Free trade was vital to allow all the nations to
get the goods they required for success (Smith, 1979, pp. 1-3).
Since the 1980s, market-led approaches to development have
become dominant. Proponents of market-led development have
argued that these approaches are more efficient and equitable
than state-led development policies because they provide
technical and rational solutions to problems rather than being
caught up in politics (Williams, Meth, Willis, 2009, pp. 120-50).
Underlying the ideas of a developmental state are sets of
assumptions and aspirations about the role of the state can and
should play in changing society.
The role of the developmental state in the rise of the
East Asian Miracle
The developmental state thesis hinges upon the claim that the
"plan rational" state with state-led technocrats enjoying a high
degree of political autonomy, government subsidies and
insulation from societal demands, can engineer economic growth

6. (Boyd and Ngo, 2005, p. 1). Advocates believe that this is precisely
what happened in East Asia and that the developmental state can
be a model for other developing regions in the world while critics
disagree pointing to the dangers and highlighting the substantial
risks. However, the Asian state is large and diverse and along with
the rise of newly industrialised countries the socio-political and
socio-economic landscape is much more complicated than simply
following both market-led or state-led theories and arguments.
This is because the Asian political economy encompasses a broad
spectrum of issues as well as the importance of economic growth
(Boyd and Ngo, 2005, p. 3). The East Asian experience also
exposes the risks of state-led development which can lead to
authoritarianism, corruption and a careless attitude toward the
environment and human rights.
Rapid economic growth, job creation, infrastructure development
and improved standards of living have been experienced by some
regions and social groups in East Asia, but not all and not equally.
Boyd and Ngo claim that ‘long before the East Asian miracle lost
something of its gloss in consequence of the Asian financial crisis
of the late 1990's, there were grounds for scepticism concerning
some of the claims made for the developmental state’ (Boyd and

7. Ngo, 2005, p. 2). Boyd and Ngo cite Miwa and Ramseyer who
believe the empirical foundations are less than secure and that
developmental state theory entails a certain romanticism of the
Asian experience (Miwa and Ramseyer, 2002, p. 2). The Asian
Financial Crisis brought down many of the miracle economies and
Asian capitalism became outmoded and dysfunctional as Asian
governments were urged to eliminate cronyism, abandon political
collusion and embrace the natural efficiency of the market
(Camdessus, 1997, p. 5). Boyd and Ngo believe the Asian Financial
Crisis in the early 1990's revealed some problems for the thesis
mainly because developmental states where no longer
characterised as developmental. Meaning, what was the recipe
for success and hallmarks of the state, institutions and their
relationships, was once hailed as 'close harmonious government
industry relations' became known has 'crony capitalism' (Kang,
2002, p. 2) which along with political collusion became the
ingredients for disaster, stagnation and decline. Boyd and Ngo
state their attention derives from the claim and status of the
thesis as an explanation of economic growth.
The political economy of Asia predicates upon the organisation
and logic of power, the relationship between the state and the

8. market, and power dynamics between social classes and other
groups (Boyd and Ngo, 2005, p. 3). All of these issues are related
to development; however, Boyd and Ngo believe they cannot be
understood exclusively in terms of development (Boyd and Ngo,
2005, p. 3). The danger highlighted by the authors is that the very
success of the developmental state thesis has reduced the study
of the Asian political economy to the study of economic
development. Boyd and Ngo cite Gerschenkron's idea of late
development which argues that latecomers to the world economy
need a centralised approach to industrialisation and economic
growth (Boyd and Ngo, 2005, p. 3). According to Gerschenkron, in
order to 'catch up' developing states demand a more centralised
mechanism for capital mobilization, industrial adjustment and
technology upgrading (Gerschenkron, 1962, p. 4). According to
Boyd and Ngo, they are concerned about how state centric
analysis is construed in western terms which either mislabel or
misrepresent their understanding which is then in turn projected
uncritically upon Asia. As such, the developmental state thesis
distorts and misrepresents the political economy of Asia (Boyd
and Ngo, 2005, p. 2).
Development is an important way by which we have since the

9. middle of the twentieth century described and analysed the East
Asian miracle (Williams, Meth, Willis, 2009, p. 275). East Asian
nations were able to catch up to the first world because of local
government policy, foreign direct investment, and state led or
intervention to develop and grow their economy. In 1993 the
World Bank published its report The East Asian Miracle which
compared the experience of East Asian countries to Latin America
and Sub-Saharan Africa during the period 1965-89. The main
conclusions were that the East Asian countries had been able to
achieve high levels of economic growth without increasing levels
of economic inequality (Bird and Milne 1999, Rigg 2003, Wade
1999, World Bank, 1993). These countries were classified into
what has been termed a 'flying geese' pattern with Japan at the
head followed by NICs Hong Kong, Singapore, South Korea and
Taiwan. The report ascribed success to the openness of the East
Asian economies to foreign investment and state involvement in
economic activities (Williams, Meth, Willis, 2009, p. 122).
Following the publication the report was criticised because it
implied that all countries in East Asia were the same and had
followed similar patterns. Another criticism was the word miracle
which implies something cannot be explained even though the
World Bank listed very obvious policies for success, however, the

10. World Bank’s report crediting neoliberal policies for economic
growth has caused various analysts to criticize the institution for
disregarding a number of state supported policies that assisted
growth, and discard the principles of neoliberalism (Derek, 2009,
p. 52).
The development state thesis and term 'newly industrialising
country' was applied to a number of countries in East Asia which
switched their focus from largely primary producing economies to
industry and manufacturing (Williams, Meth, Willis, 2009, p. 120).
For example Hong Kong, Singapore, South Korea and Taiwan were
called 'Tiger Economies' which perceived progress reflected by
opening up the economy to foreign direct investment, particularly
in electronics and clothing (Williams, Meth, Willis, 2009, p. 120).
The Tiger Economies of East Asia were able to benefit from the
post-war capitalism. The Cold War was favourable to the
developmental strategies of East Asian nations who allied with the
United States because they had goals for growth and provided
valuable aid and assistance (Boyd and Ngo, 2005, p. 4). South
Korea and Taiwan have subsequently managed to achieve rapid
rates of economic development and industrialisation by following
the Japanese blue-print of state-led development, rather than the

11. neoliberal, market-led development that has become influential
across much of the Western world (Moon and Prasad, 1994, pp.
360-86).
The flying geese paradigm is a model for the international division
of labour processes in East Asia based on dynamic comparative
advantage which refers to the shifts in a system’s competiveness
over time to change economic and domestic factors (Mody, A.
1990, pp. 291-95). Changing technologies meant that the
manufacture of goods and development of industry became
streamlined, gaining the most amount of profit with minimum
amount of risk. The developmental state thesis argues that East
Asia's 'economic miracles' depended on wide and effective state
intervention, targeted industrial policies, and the primacy of
economic performance over formal market forces (Boyd and Ngo,
2005, p. 23). The thesis fails to account for the economic miracles
and highlight the problems of conventional wisdom. Moreover,
although the notion of developmental state was initially used to
identify distinctive features of the national state of Japan and
then extended to first-generation late industrializing East Asian
economies and was used for states at any level that actively
pursued economic growth. The developmental state appears

12. more realistic than neoliberal market centred studies; however,
Jessop rejects the concept in favour of the Listian workfare
national state.
In Asia previous forms of Fordist productions were being replaced
by 'just-in-time' production. Just-in-time production is a 'flexible
accumulation' process as opposed to the perceived fixity of
Fordism which describes existing forms of global flexible
production. JIT is more flexible and responsive to market
demands and involves greater labour flexibility (Williams, Meth,
Willis, 2009, p. 117). Import Substitution industrialisation is a
development strategy where the state plays an important role in
promoting domestic industry by replacing imported domestic
goods for domestically produced ones (Williams, Meth, Willis,
2009, p. 286). This in turn strengthens their industrial base and
moves away from depending on primary productions alone. This
was accomplished by placing high tariffs on imported goods and
by expanding the domestic market (Williams, Meth, Willis, 2009,
p. 286). One noted negative impact of ISI was the delivery of
second rate products while concentrating the power and
resources in the hands of political elites and technocrats
(Williams, Meth, Willis, 2009, p. 286). By the late twentieth

13. century South Korea became one of Asia's leading Tiger
Economies, between the 1960s and 70s its economy grew at an
average rate of over 8 per cent per year developing a global
presence in ship building, electronics and the automobile
industries (Williams, Meth, Willis, 2009, p. 286). Under Park
Chung-hee's leadership South Korea abandoned earlier policies of
ISI in favour of export led-growth with incentives like low interest
loans offered to companies with good performances. These
strategies turned the Korea's family-controlled business
conglomerates (chaebol’s), such as Samsung and Hyundai into
globally recognised brands known for innovation.
Boyd and Ngo question how far and how accurately the
developmental state thesis explains the state of Asia. They cite
Cummings who believes the developmental state theory is 'the
most formidable theory of the East Asian state’ (Cummings, 1999,
63). and Woo who defines the developmental state as 'a
shorthand for the seamless web of political, bureaucratic and
moneyed influences that structures economic life in capitalist
Northeast Asia (Woo and Cummings, 1999, p. 1). Along with
'Import-Substitution industrialisation' and other such policies the
developmental state thesis was hailed as a means for successfully

14. creating economic growth, however, since the 1970s critics have
blamed these policies for slowing down the economies (Williams,
Meth, Willis, 2009, p. 120).
Supporters use the developmental state theory to explain the
origins of the economic miracle in terms of the particular features
of a state apparatus; however, Jessop believes it ignores the
extent of economic growth outside East Asia (Boyd and Ngo,
2005, p. 9). To overcome these problems Jessop argues we need
to rethink the relation between the economic and the political. He
conceptualises East Asian states in terms of the 'Listian workforce
national state' and shows the limitations of these states
highlighting how new states emerge and adapt to new and
changing global circumstances (Boyd and Ngo, 2005, p. 10).
Underhill and Zhang argue that the fundamental weakness of the
developmental state theory stem from a failure to include
configurations of societal variables embedded in the market
which also forms the state and society dichotomy which is in
contrast to the nature of the market as mechanisms of
governance. Underhill and Zhang claim successful development

15. processes in East Asia have been based on political strategies
which involve the integration of a variety of active market agents
into the official realm of state projects (Boyd and Ngo, 2005, p.
10). Underhill and Zhang completed a comparative analysis across
Korea, Taiwan, Malaysia, and Thailand in order to demonstrate
the importance of interactive and reclusive state and market
relations in shaping core elements of the development process
(Boyd and Ngo, 2005, p. 10).
Ngo's examination of Taiwan's development planning and
implementation has also challenged the developmental state
thesis. Instead of finding a state with a high degree of unity and
concentrated agency he discovered institutional fragmentation,
imperfection, and even amorphous hierarchy. Ngo argues that
state agency in pursuing developmental projects was episodic
rather than constant. He claims agency derived from
circumstances that enabled specific power holders to register
their own agenda and the external threat of communist China not
characteristics of institutions and organisational resources.
Taiwan after WW2 experienced remarkable economic growth and
during the 1980s vied with South Korea for the fastest growing
economy. Taiwan's economic success can be attributed to

16. multiple factors including the legacy of colonial development
under Japan, the abilities of the Taiwanese people to industrialise,
the influx of skilled better educated mainlanders, the Kuomintang
policies that supported growth, American aid and the free market
discipline that accompanied it, and the open world markets,
especially America which took half of Taiwan's exports. American
aid began in the 1950s and its main goal was growth (Fairbank,
Reischauer, Craig, 1989, pp. 904-905). By the 1960s there was a
switch toward export industries and Taiwan welcomed foreign
investment. There is also the impact of the Korean War Taiwan
was secured as a United States client-state, and the Vietnam War
which boosted Taiwan's economy. Foreign industries were able to
use Taiwan's cheap labour in return Taiwanese labour force
learned new skills and acquired new technologies (Fairbank,
Reischauer, Craig, 1989, pp. 904-905).
Since the Asian Financial Crisis and the widespread adaption of
'Structural Adjustment Policies' majority of countries in East Asia,
besides North Korea, opened up their economies to Foreign Direct
Investment (Williams, Meth, Willis, 2009, p.121). In 1990 inflow of
FDI reached 8.791 US$m which increased to 125.774 US$m by
2006 (data from UNCTAD, 2008, Williams, Meth, Willis, 2009, p.
123). This means that as we are moving toward globalisation

17. national economies are becoming increasingly linked together,
along with multinational and transnational corporations who hold
significant amount of power. It is argued that the power of
corporations in East Asia and the global south is undermining the
power of the nation state, destroying national sovereignty and the
middle class, while overtaking the state as the main actor in
international relations (Williams, Meth, Willis, 2009, pp.120-28).
Countries attempting the same economic policies today would
face pressure from the international markets, especially if they
are reliant on foreign capital or FDI to kick start growth. According
to Boyd and Ngo what began as a claim that 'the state plays a
central role in promoting economic growth in some countries' has
been turned round to become the claim that 'the developmental
state can be found in countries which experienced economic
growth (Boyd and Ngo, 2005, p. 4). Boyd and Ngo are primarily
concerned with what they call a growth-paradigm-turned-state-
theory slippage which embodies a characterization and a
theorization of the state that go well beyond the original claim of
a theory of growth because it diminishes our account of the
political economy of Asia as a state defined and understood in
terms of its functionality for growth (Boyd and Ngo, 2005, p. 4).

18. The rise, fall and return of the developmental state
The idea that national governments should actively direct social
and economic change was a central theme in development
thinking during the decolonisation period. For a number of
reasons it was considered common sense and necessary. First,
following decolonisation was independence, national identity and
an expectation for a dramatic transformation of people's lives.
State-led development offered the most effective way to respond
to these expectations. Second, the 1929 stock market crash and
subsequent Great Depression had exposed that private markets
needed a degree of government regulation to avoid another
financial crisis. Writing against the background of the Great
Depression John Maynard Keynes argued that government should
have a more interventionist role in the economy, to regulate
demand for services and goods and lowering interest rates in
economic downturns (Williams, Meth, Willis, 2009, p. 280). Third,
the economies of many Asian countries at independence were still
based around primary industries, agriculture and mining,
containing an economic structure that reflected the colonial
needs for Asia to be seen as a source of raw materials and place
for marketing European manufactured goods (Williams, Meth,
Willis, 2009, p. 281). James Scott (1998) has argued that

19. centralising power in the hands of the state can lead to the
production of standardised, simplified solutions to development
problems that ignore local diversity and knowledge. Peter Evens
(1989) argued this also led to widespread corruption in high
places questioning whose interests are really represented within
state-led development. In 1997, economies across East Asia
suffered economic problems following the devaluation of the Thai
baht leading to the Asian Financial Crisis. In response to the AFC
the World Bank argued that it was a result of financial
mismanagement and what has been termed as cronyism or crony
capitalism. The interpretation of the state’s role in economic
success of the different East Asian countries including in
protecting particular family businesses like Samsung, Hyundai and
Mitsubishi was also challenged (Bird and Milne 1999, Rigg 2003,
Wade 1999, World Bank 1993).
Conclusion
Asian States re-examines developmental state thesis, points out
the shortcomings of the theoretical approach, and attempts to
suggest how we might move forward. Boyd and Ngo question the
status of the development state theory and whether or not it is
really a theory of political economy or if it would be better
understood more restrictively as a theory of economic growth.

20. Concerned with the political economy of Asia, interrogating
developmental state thesis and recognise it is not reducible to the
question of economic growth. Failures of developmental states
has more to do with external international relations, the rise of
transnational and multinational corporations and terrorism comes
new security threats then internal politics. I do agree with Boyd
and Ngo that questions of the state, politics, and power cannot be
captured in measures of efficiency and effectiveness because
there are problems and issues that are not reducible to economic
success and failures. The World Banks good governance agenda,
globalisation and the rise to power of MNCs and TNCs has eroded
national sovereignty. Even where developmental states have been
successful it is important to ask whose interest have they served
and at what social and environmental costs. South Korea has
achieved the economic success other states aspire to; however,
this is not a result of developmental state policies which can be
copied and applied in any country.
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