This document discusses developmental state theory and its application in East Asia. It notes that developmental states prioritize economic growth through active market intervention. While this led to growth in Japan and others, the theory is incomplete and overlooks political and social factors. The document analyzes case studies comparing development strategies and outcomes in places like Hong Kong/Singapore, Hong Kong/Philippines, South Korea/India, and firms in Hong Kong/Taiwan/China/South Korea to understand why some developmental state models succeeded while others failed. It questions the theory's assumptions about autonomous, rational state actors and suggests relationships between states and societies better explain development.

1. Development Strategies
Evidences from East Asia

2. Developmental state
• Paradigm of developmental state in
development economics and comparative
political economy
• mostly bred by experiences of Japan and
NIE’s from 1960s to 1980s
– choice of efficient, coherent, and flexible
economic policies
– effective implementation

3. Developmental state
• place top priority on economic
development
– growth, productivity, and competitiveness
• actively intervene in market
– guide, discipline, and coordinate private
sector
– strategic allocation of resources
– use of diverse policy instruments
• rational and competent bureaucrats
– insulated from political pressures

4. Paradigm
• Departure from traditional neoclassical
development strategies
– government intervene only to correct market
failure
– “Washington consensus” of US Treasury,
IMF, and World Bank
– free market, free trade, free capital mobility,
and limited government

5. Paradigm
• Deviation from “dependence” school of
thought
– integration into the international capitalist
division of labor
– developing economies at the periphery
depend on developed economies at the core
– developing economies are denied the
opportunity for self-sustained growth

6. Incomplete conceptualization
• State is not an internally cohesive and
unitary actor
– divisions within executive leadership
– executive-bureaucracy relationship
– inter-bureaucracy conflicts
• State-society relationship
– bureaucrat-constituent links

7. Problematic premises
• Insulated bureaucrats make rational
policies
– often not insulated: under political pressures
– often not rational: politicized
• Efficient, coherent, and consistent policies
• State policies determine economic
performance and outcomes
– supply-side factors, demand-side conditions,
corporate structure and strategy, luck, etc.

8. Network theory
• Developmental state is embedded in
society
– functional links
– exchange of information
• Policies result from interactions
– interdependence of private sector and state
– intermediate organizations
• State and private sector merged into an
internal organization

9. Problems solved and created
• Networks are dynamic
• Networks create opportunities for
corruption
• Networks are not naturally efficacious and
benign
– What factors lead to dysfunctional and
malignant networks?

10. Case study 1
• Hong Kong and Singapore
– both are entry ports to mainland
– both are former British colonies
– both are mostly ethnic Chinese societies
• Profoundly different development
strategies
• But, both invested heavily in human capital
and public spending to enhance
international competitiveness

11. Case study 2
• Hong Kong and the Philippines
– both are “weak” states
– difference in economic performance
• A weak state
– doesn’t necessarily lead to free market
– can be dominated by powerful economic
interests
– creates opportunities for powerful economic
groups to manipulate and distort economy

12. Dependency theory
• International capitalist economy
– exploit weak third-world countries at the
periphery
– perpetuate poor nations’ dependence on rich
nations at the core
• Multinational corporations and foreign
capital play significant role in the
economies of Hong Kong and the
Philippines, with different consequences

13. Case study 3
• South Korea and India
• both states are strongly committed to
promoting economic growth
• both states had significant intervention in
the industrialization
– India was one of the first states in the
developing world to produce a detailed
development plan (1952)

14. Restriction on foreign capital
• South Korea and India
• both states restrict multinational
corporations and foreign capital
• different economic outcomes
– protection of domestic industries
– build up efficiency of domestic firms
– increase competitiveness of domestic firms

15. Different strategies
• Import-substituting industrialization
– tariff and non-tariff barriers to protect
domestic industries
• Export-oriented industrialization
– selective protection and free trade regime
• State intervention in financial and labor
market
• State-owned enterprises

16. Case study 4
• Firm size & competitive strategy
• Hong Kong and Taiwan
– small and medium enterprises
• China’s mainland
– township and village enterprises
• South Korea and Japan
– large integrated conglomerates

17. Strong states, weak states