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development strategy

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Development Strategies
Evidences from East Asia
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
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
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
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
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

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asiadevs.ppt

  • 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