Revisiting the developmental state 9: Conclusion

The East Asian developmental state was a phenomenon of its time that hasn’t been precisely replicated, but state developmentalism as a strategy for national insertion into the global order remains necessary

Well, it turned out to be worthwhile revisiting the concept of the developmental state, didn’t it?  Our contributors have performed splendidly in providing a succession of incisive yet pithy takes on the current standing and relevance of this once much-used frame of analysis.  What follows in this last post is an attempt by us as series editors to draw at least some broad conclusions.  It’s not written on behalf of the various contributors, but it is unquestionably inspired by the insights and thoughts they have published on this blog over the last couple of months.

Where to start?  Let’s get into the discussion by considering the question of how well the idea of the developmental state has travelled over time and space.  Kunal Sen is clear that other developing countries (with the exception of China, of which more shortly) have not been able to deliver the ‘almost uninterrupted rapid economic growth for well over four decades’ achieved by the original developmental states of East Asia, principally of course Japan, Korea, Hong Kong and Taiwan.   By comparison, the three Asian countries on which he focused – Indonesia, Malaysia and Thailand – experienced boom from the 1960s to the 1990s, but then went bust in the Asian financial crisis of 1996 and never properly recovered.  They are now not expected to reach high-income status for some time to come and therefore have not replicated the successes of the original members of the club.

China is unquestionably a different story.  It has delivered extraordinarily rapid sustained growth over a long period and it seems to fit into the classic developmental state story in respect of the active role of its state in promoting industrial transformation.  And yet…China still doesn’t quite fit the model, at least as it has mostly been described.  Ziya Ӧnis talks of China as an example of ‘strategic capitalism’, but also wonders if it wouldn’t be more appropriate to describe China as a ‘post-developmental state’, given its openness to foreign direct investment right from the beginning of its re-entry into the global economy in the early 1980s.  He is quick, though, to add that ‘Chinese openness to transnational investment was always based on an active bargaining process focused on aligning the terms of entry with its broader strategic priorities’.

In this connection Shaun Breslin makes a brilliant point – not just that China’s development model has always been a hybrid, and constantly evolving, mix of the state and the market, but also that ‘where you think you are’ in categorising this mix ‘can depend on where you came from’.  His elaboration of this last observation is worth quoting at length: ‘If you start mentally in the “liberal west” and then go to China, the Chinese economy is much more state-guided and coordinated (and indeed state-owned) than your starting point.  However, if you start from China’s (fairly recent) past … then the startling thing about the country is not the pervasiveness of the state, but the extent of the role played today by market and private actors in directing economic activity when compared to the past.’  What’s more, he adds, ‘it’s not a case of one perception being wrong and the other right’.

So, despite its growth record, China doesn’t stand up convincingly as proof that the original developmental state argument travelled smoothly to China across both time and space.  Nor, do India and Brazil constitute better cases of policy emulation, as Valbona Muzaka reminds us.  As she writes, ‘neither the Indian nor the Brazilian state has ever managed fully to secure its developmentalist credentials, especially when the outcomes of their strategies are compared with those of the Asian “miracle”’.  In turn, David Booth hints that some countries in Africa (he cites as examples Ethiopia and Rwanda) have at least taken some of the first steps in identifying the ingredients of effective economic transformation, but he is clear that, in explaining this, ‘the extant concepts’ about the developmental state are ‘more confusing than helpful’.  They bear ‘too many of the birth-marks of a very specific debate from the 1980s’.

So that’s several fallen riders already, so much so that we are left from our series of posts with just one case that made it to the post – the ‘small island developing state’ of Mauritius!  Yet, even in recognising this achievement and characterising this small Indian Ocean island country as a developmental state success-story, Courtney Lindsay insists that Mauritius has ‘deployed a developmental strategy that marks it out from the prototypical East Asian developmental state’.  It has been social democratic rather than authoritarian; it focused as much on social welfare as on competitiveness and productivity; and it never used ‘harsh market-distorting industrial policies’, preferring subsidies and incentives.

Something surely is by now beginning to emerge from this discussion.  It’s that the experience of the classic developmental state of East Asia was indeed distinctive in character, style and timing.  It was, we can now see, a phenomenon of its time.  It hasn’t been emulated in precise form and nobody actually expects that to alter.  But – and this is really the key point of this concluding post – the pursuit of developmental transformation by states in what is still essentially a state-based international system continues to take place in every continent of the world and to embrace every type of state regardless of the old, redundant ‘developed/developing countries’ dichotomy.  Development is a universal problematic which states simply can’t ignore.

In these blogs Bona Muzaka hits this nail right on the head.  ‘Using the successful East Asian state form as the yardstick for the application of the developmental state concept everywhere would’, she says, ‘betray the extent to which our collective grasp of political economy has been limited and ahistoricised’.  Over at least the past 500 years, she goes on, ‘the developmental state has always been one that designs and orchestrates socio-economic-political strategies aimed at catching up with whatever it deems an advanced economy at a given point in time’.  In saying this, she cleverly reminds us both of the existence of a first wave of developmental states before those in East Asia (namely, Britain, the United States, Germany) and the ongoing efforts of all other countries in the world today to find their particular place in ‘the historical “catch-up treadmill”’.  This, by the way, is a great phrase which deserves to catch on!

In short, the East Asian experience was but an episode – admittedly a striking and distinctive one – in a long and varied story of state developmentalism that still continues.  In retrospect, we can see that the model worked in its time for two fundamental reasons: first, these countries got their domestic politics right, forging internal political settlements that ensured a rough balance of power between elite groups in their societies; and, second, they were lucky in respect of the external geopolitical environment within which they operated, the Cold War generating from the US both huge amounts of aid and a considerable tolerance of statism.

The problem is that this particular combination of factors can’t just be re-created as desired in contemporary conditions.  But it can be learned from.  It suggests strongly that there is always an internal and an external dimension to the pursuit of state developmentalism and that there is therefore no reason in theory why other different, but equally felicitous, mixes of appropriate internal and external mechanisms should not be sought and achieved by other states seeking development in different times.

Our contributors support this contention in both regards.  On the internal side of the development equation, Kunal Sen, for example, highlights the core necessity to forge domestic political settlements that allow ‘ruling elites to have the enforcement capacities to discipline politically-connected firms and follow effective industrial policies’.  David Booth notes in similar fashion that the political settlement approach – which, as he says, has joined the mainstream thanks to its placing at the centre of the 2017 World Development Report – is really ‘about the way that power configurations influence the way institutions function’.  In his view, the best type of settlement relieves elites of at least some of the pressures of clientelism and prevents them from having to govern only with a view to the short term.

On the external side of the equation, it is apparent that the global political economy is characterised today by ever more intensified competition.  Henry Wai-chung Yeung suggests in fact that ‘successful industrial transformation is increasingly dependent on the strategic coupling of domestic firms with global production networks (GPNs)’.  In such a changed external context from that of the 1960s and 1970s, he argues that industrial policy has to be completely rethought: in respect of its intended recipients, its policy foci and its connection with the wider range of unruly actors at work within contemporary innovation-based capitalism.   Nevertheless, he remains a firm advocate of industrial policy, albeit favouring a more calibrated approach focused on niche policies that can ‘nudge’ the strategic coupling with GPNs that is the new means to development.  Valbona Muzaka also calls for the pursuit of ‘unorthodox policies’ that do not just copy what are supposed to be the advanced economies, but instead chart novel and genuinely authochthonous routes to development.

In sum, there is plenty here to hold on to here both analytically and politically.  It’s the case that we do perhaps need to stop obsessing about the East Asian developmental state as classically defined by Johnson and Amsden in the early 1980s.  But at the same time it’s vital that we continue to think about and analyse other ongoing types and forms of developmental state that exist around us.  Across the world states with different histories, ideologies and resources are constantly and necessarily looking inwards and outwards in search of that felicitous mix of factors that works for them and brings out meaningful development.

This article is the final post in a SPERI Comment series on revisiting the developmental state. Read all of the articles in the series so far here