Comparative studies of development theory of East Asia and Latin America

1. S
Rethinking Development Theory:
Insights from East Asia and Latin
America
Gary Gereffi
Presented by Group 5

2. The Emerging Global
Manufacturing System: Toward a
Theoretical Synthesis
S (1) the declining significance of industrialization
S (2) the position of core and peripheral capital in
commodity chains and export/marketing networks
S (3) a new framework for differentiating the roles of the
newly industrializing countries in the world economy.

3. Research Objectives
S Japan, and its regional neighbors South Korea, Taiwan,
Hong Kong, and Singapore, have made the most
impressive economic strides of any nations in the world in
the postwar era.
S Mexico, Brazil, and Argentina being the Latin American
analogues of East Asia's "Four Tigers"

4. Theoretical perspectives: perceptions
and misconception
S the new international division of labor
S the globalization of production
S newly industrializing countries
S development strategies: outward/inward-oriented
S Semiperipheral countries
S dependent development
S developmental state
S cultural factors (Confucianism/Ibero-Catholic)

5. The NICs in Historical and World-Systems
Contexts
Table I. The East Asian and Latin American NICs: Basic Indicatorsa
Country
Populatio
n
(millions,
mid-
1986)
Area
(thousand
s of
square
kilometers
)
GDP
(US$ millions)
GNP
Per capital
Distribution of gross domestic product (percent)
Agriculture Industry Manufacturing
b
Services, etc
1965 1986 1981 1986 1965 1986 1965 1986 1965 1986 1965 1986
Taiwan 19.5 36 2800 76,210 2560 4040 27 6 29 47 20 39 44 47
Hong
Kongc
5.4 1 2150 32,250 5100 6910 2 0 40 29 24 21 58 71
South
Korea
41.5 98 3000 98,150 1700 2370 38 12 25 42 18 30 37 45
Singapore 2.6 1 970 17,350 5240 7410 3 1 24 38 15 27 73 62
Brazilc 138.4 8,512 19,450 206,75
0
2220 1810 19 11 33 39 26 28 48 50
Mexico 80.2 1,973 20,160 127,14
0
2250 1860 14 9 31 39 21 26 54 52
Argentina 31.0 2,767 16,500 69,820 2560 2350 17 13 42 44 33 31 42 44
a Sources: World Bank (1988:223, 227; 1983: 149) for 1981 GDP per capita; and CEPD (1988:3-4, 23, 29, 41, and 199) for the data on Taiwan.
b Because manufacturing is generally the most dynamic part of the industrial sector, its share of GDP is shown separately.
c The most recent data for GDP and the percentage distribution of GDP are for 1985.
 East Asian & Latin American NICs ----similar levels of industrial development;
 Upper-middle-income countries;
 GNP/capital ---- Higher in EA nations (1986);
 The cornerstone of development for the Latin American & EA NICs ----
Manufacturing;
 The service sector ---- largest share of the economy.

6. The NICs in Historical and World-Systems
Contexts (Cont.)
Table II. Export by the East Asian and Latin American NICs, 1965 and 1986a
Country
Exports
(US$ billions)
Exports/GDP
(Percentage)
Percentage share of exports(b)
Primary
commodities
Textiles
and clothing
Machinery
and transport
equipment
Other
manufactures
1965 1986 1965 1986 1965 1986 1965 1986 1965 1986 1965 1986
Taiwan 0.5 39.8 18 52 59 9 5 18 4 29 32 44
Hong Kong 1.1 35.4 51 94c 13 8 43 35 6 21 38 36
South Korea 0.2 34.7 7 35 40 9 27 25 3 33 29 33
Singapore 1.0 22.5 103 130 65 33 6 5 11 38 18 25
Brazil 1.6 22.4 8 12c 92 60 1 3 2 15 6 23
Mexico 1.1 16.2 5 13 84 70 3 2 1 18 12 10
Argentina 1.5 6.9 9 10 94 77 0 2 1 6 5 14
a World Bank (1988:242-245). The 1965 export figures for all countries except Taiwan are from the IMF (1986: 114-117).
Taiwan’s export total for 1965 is given in CEPD (1988:208). The 1985 export data for Hong Kong ($30.2 billion) and Brazil
($25.6 billion) are from the World Bank (1987:221).
b Percentages may not add up to 100% due to rounding error.
c 1985.
 EA & Latin American NICs launched major export (1965);
 EA NICs --- 3rd World’s premier exporters (1986);
 The NICs --- priority given to external trade (EA NICs);

7. The NICs in Historical and World-Systems
Contexts (Cont.)
Latin America
NICs
 The world slump of 1929-33--- cutting purchasing power by 60% Most
countries --- to suspend the convertibility of their currencies, etc (Latin
America);
 Latin America NICs --- open door to new wave of DFI: The US, West Europe,
and Japan (mid-1950s);
o DFI in traditional --- export-oriented projects: mining, oil, and agriculture;
o DFI in the postwar --- import-substituting investments: automobiles,
chemicals, machinery, and pharmaceuticals.
East Asia
NICs
 Rapid economic growth in the EA NICs (1960s) --- after the colonization by
Japan (1945);
 HK, Singapore, S. Korea & Taiwan --- Outward-oriented industrialization
(1960s): textiles, garments, and electronic equipments.
 Heavier industries: steel, petrochemicals, shipbuilding, vehicle

8. Phases of Industrial
Development
Outward-looking industrialization Inward-looking industrialization
Commodity export phase
(unrefined or semi processed raw
materials: agricultural goods, minerals,
oil, etc.)
Primary ISI
(shift from imports to the local
manufacture of basic consumer goods:
textiles, clothing, footwear, and food
processing)
Primary EOI
(export of labor-intensive
manufactured products)
Secondary ISI
(a variety of capital- and technology-intensive
manufactures)
Secondary EOI
(export of higher value-added items
that are skill intensive and require a
more fully developed local industrial
base)
EOI – Export Oriented Industrialization
ISI - Import Substituting Industrialization

9. The dynamic interplay of inward- and
outward-oriented industrialization

10. Dependent development in Latin
America and East Asia

11. Declining Significance of Industrialization
S 1950-1980 – gap between developed and developing
countries narrowed in terms of industrialization.
S Decline of industry & manufacturing share of GDP –
balanced by increase of service sector and high-value segments of
manufacturing
S Conclusions:
1) “Industrialization” and “development” are not synonymous
East Asia performed better than Latin America in terms of indicators
2) Industrialization does not guarantee proximity to core status in the
world system
 Core status is defined by economic activities toward
technology- and skill-intensive products and techniques
with higher levels of local value added

12. Declining Significance of Industrialization
S 1950-1980 – gap between developed and developing
countries narrowed in terms of industrialization.
S Decline of industry & manufacturing share of GDP –
balanced by increase of service sector and high-value segments of
manufacturing
S Conclusions:
1) “Industrialization” and “development” are not synonymous
East Asia performed better than Latin America in terms of indicators
2) Industrialization does not guarantee proximity to core status in the
world system
 Core status is defined by economic activities toward
technology- and skill-intensive products and techniques
with higher levels of local value added

13. Commodity Chains and
Export/Marketing Networks
S Commodity chain – network of labor and production
processes whose results is a finished commodity
 Which part is more profitable?
Raw material
supply
Production Exporting Marketing/retail
 To move to most profitable end of commodity chain, shift
from manufacturing to marketing is required – will require
new patterns of investment in research and development,
advertising, retail distribution etc.

14. Differentiating the Roles of the NICs in
the World Economy
 Based on export production, 4 roles:
a. Commodity-export role – export of natural
resources, re-exports (Latin America, Singapore)
b. Export-platform role – foreign-owned, labor-intensive
assembly of manufactured goods in export-processing
zones.
 Moved from Korea and Taiwan to China, SEA (labor cost)
 Upswing in Latin America (labor cost, proximity to markets)

15. Differentiating the Roles of the NICs in
the World Economy
c. International-subcontracting role – production of finished
consumer goods by local firms, output is distributed and
marketed by core or peripheral capital.
 Major niche filled by East Asian NICs since 1980s
d. Component-supplier role – production of component parts
in capital- and technology intensive industries in the periphery,
for export or assembly in core country
 Latin America – production owned by core capital, sometimes
with partner
 East Asia – foreign subsidiaries manufacture parts or
production by local firms

16. Thank you for your
attention!
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