Developmentalism and the Developmental State

[girder]

I felt it important to share this information in a public forum given the general lack of awareness of the concepts mentioned below among the general populace. As my former professor told me, such concepts are actually heavily discussed in developing countries in Africa and the Middle East, yet are little known by even the academe in the Philippines, despite their great relevance. As such, I will be attempting to summarize nearly a semester's worth of classes on the subject matter in this thread. Please bare with me as I try to make a write up that is understandable to the layman. I can say from the experience of my own class that it was only my prior education in economics and development theory that allowed me to comprehend the subject matter so readily. My classmates took much more time to understand many of the theoretical discussions.

What is Developmentalism?

• A political-economic philosophy or worldview of policymakers about a country's development goals and what role the state should play in achieving these goals. This has influenced a set of institutional arrangements to facilitate the design and implementation of developmentally-oriented industrial policies.

• Essentially a set of ideas about the necessity and desirability of strategically governing the industrial economy for nation-building, accompanied by policy measures in other domains (social, cultural) likely to be shaped by the imperatives of industrial upgrading and innovation.

At its core developmentalism is probably most succinctly defined as economic nationalism, a recognition that in order to strengthen and secure one's nation-state, policies must be set in place to strengthen and secure that nation-state's economy. It is based on a world view that is realist and pragmatic, and so its policy prescriptions are pragmatic and strategic in orientation.

Within the historical context of East Asia, developmentalism arose out of the geopolitical realities of the Cold War: East Asian developmental states were poor countries that found themselves as pawns in the contest of the superpowers. If they were to assert their sovereignty and independence, they needed to strengthen themselves and overcome their poverty. In order to do that, they needed to develop. In order to do that, they needed to industrialize.

And so rather than adopt growth strategies based on either of the two prevailing ideologies of the time, the East Asian states adopted a pragmatic, strategic, experimental and ideologically-agnostic approach to their development strategy.

What is the Developmental State?

The developmental state can be summarized as a political-economic arrangement characterized by the presence of both a capitalist system and an interventionist state where the objective is development through industrialization. Conceptually the developmental state occupies a middle ground in between free-market capitalism and socialist-style central planning, the two major competing political-economic ideologies of the 20th century.

Perhaps the most remarkable characteristic of this concept is its origin: Unlike the capitalist and socialist systems which are based on theories derived from deductive reasoning (Classical/Neoclassical Economics & Marxist Theory), developmental state theory emerged from the study of the real-life practices and historical experiences of states that were able to successfully industrialize and develop, specifically the East Asian economies of Japan, South Korea, Taiwan & Singapore. These countries, also known as the  "2nd wave of industrializing countries" or the "late developing countries", were able to do in a matter of decades what it took the early industrialized countries nearly a century to achieve, leading them to be labelled the "Miracle Economies".

More specifically, developmental state theory can be traced back to the work of Chalmers Johnson in his study of the Japanese Ministry of International Trade and Industry (MITI) and its key role in the Japanese economic miracle. In this seminal work there were two major characteristics of the Japanese country case: (1) a consensus among the country's policy-making elite towards national industrialization and development (2) a capable economic bureaucracy working closely with private enterprise in such a way as to be able to steer the economy towards national developmental objectives, but still remain uncaptured by special interests and able to discipline the private sector.

The growth strategies adopted by these countries can be characterized as capitalist, but not free market, open to trade, but not free trade. Their economies were open in order to leverage demand, knowledge and technology available on the global market, but coupled with protectionist policies aimed at creating a domestic capitalist class that was globally competitive. The creation of which was hoped to reduce reliance on imports, create earnings through exports, overcome poverty through job creation, and increase national strength through the development of a industrialized and diversified economies.

These characteristics were found to apply similarly to the other East Asian countries, though exact policies differed between country cases: Japan and S. Korea for example focused on developing heavy industries via large conglomerates (keiretsus & chaebols), whereas Taiwan focused more on developing small and medium enterprises (SMEs). Japan and S. Korea relied on domestic investments largely through control of capital through financial institutions, whereas Singapore relied on large amounts foreign direct investment.

To be clear, though the developed East Asian economies are the most famous examples of developmental states, the concept is not limited to them alone. In Europe perhaps the most clear example of a developmental state is that of France, which adopted an economic doctrine called Dirigisme during the post-war period, notably nationalizing many strategic industries such as electrical utilities and telecommunications and directing others such as the nuclear and aerospace industries. Neither are these concepts necessarily modern ones, as South Korean economist Ha-Joon Chang argues that the origins of the developmental state can be traced back as far as the 16th century and the Mercantilist economic tradition. In fact many of the today's developed countries such as the Great Britain, the United States had extremely protectionist economic systems in place during their developmental periods, only adopting more free trade stances after achieving industrialization. This last point is particularly pertinent give the free market and free trade policy prescriptions that has been handed down to developing countries since the 1980s.

What are the key characteristics of the Developmental State?

The historical experience of the East Asian developmental states show certain common characteristics:

a. Consensus among policy-making elite

Among the policymakers there was an unwavering commitment to economic growth and development by transforming the industrial structure in order to enhance its international competitiveness. This required active state intervention in the economy (‘plan-rational’).
These policymakers possessed a shared both nationalist ambition and an idea on how to achieve it (e.g., strategic intervention in the market).


b. Competent economic bureaucracy

These states had professional, meritocratic bureaucracies with personnel often recruited from best law, engineering, public administrations schools. (Some even drafted from the military, as was the case in South Korea.) Appointments were made on the basis of merit and, and were unaffected by election results.

Notably there were state organs in the form of pilot or steering agencies concerned with economic development and responsible for planning and coordinating industrial transformation  (e.g., S. Korea’s Economic Planning Board, Singapore’s Economic and Dev’t Board, etc.).

c. State control over finance

By controlling domestic finances, states were able to strategically direct the flow of investments to areas of key interest (strategic industries, etc.) and national priority. This was often applied through the use of state banks and financial institutions. Governments channeled capital (from loans with low interest rates or foreign loans) to business elites to invest in industries aligned with national development plans, and in the process created political interest groups that could be molded into a developmental coalition (South Korea and Japan). This type of relationship is conceptualized by the term embedded autonomy, where state organs would have have close relationships with the private capitalist class ("embedded") but retain their integrity in enforcing state policy and avoiding capture ("autonomy"). Of course, such a relationship involving the trading of privileges with acquiescence to state policy is not without problems (cozy state-business relationships, corruption, moral hazard), but it allowed for the coordination between public and private sectors towards a common developmental goal.

Another way in which the State controlled finance, was through the currency and exchange rate policies. This is important as it has a bearing on repayment of loans from abroad, the price competitiveness of export products and the international balance of trade , which all influence a country’s macro-economy.

Another little-known aspect of this were policies restricting the ability of consumers/business to spend their money in certain ways. For example on luxury imported goods or travel abroad. All to keep limited financial resources directed towards domestic investment.

d. Strict/repressive policies towards labor

Direct or indirect state intervention in labor management relations; labor rights were severely curtailed in exchange for increased productivity. This was particularly true in the autocratic states such as South Korea and Taiwan.

e. Social policies (universal education, healthcare, housing, etc.)

Despite repressive labor policies, education, health, even housing, services tended to be universal as it was needed for  structural transformation; it also gave legitimacy to the state in the eyes of the people. Such policies gave the common man the sense that the state was looking out for their well-being.

From the ideational perspective on the developmental state one can derive a much simpler, broader defining trait that goes beyond the peculiar East Asian experiences: That so long as a state possesses a developmental drive (the political will towards becoming a developed country) and enacts interventionist policies towards such vis-a-vis an open economic strategy, it may count as a developmental state.

Another broader characteristic can be said to be the pragmatic manner in which they have gone about crafting and implementing their development strategies. Not being tied down by any single ideology, developmental states have alternatively used market- and state-centered policies depending on what worked. As Deng Xiao Ping succinctly put it: "It doesn't matter if a cat is black or white, so long as it catches mice." Such an approach is inherently experimental and the history of these states involved a lot of trial-and-error in order to discover what worked.

How is the Developmental State relevant today?

With the end of the Cold War came the succession of neoliberalism to the mainstream of policy circles, economic academe & the international trading regime. Formerly exemplar developmental states such as Japan were eventually forced to adopt mainstream free market/free trade economic policies. This process intensified with the General Agreement on Tariffs and Trade and ascendance of the World Trade Organization. At the same time, the wave of democratization at the end of the Cold War led to decline of the types of regimes that were previously able to implement restrictive labor policies and maintain politically-insulated policy-making bureaucracies. The loss of economic policy autonomy on multiple areas (currency exchange, tariffs, state direction of domestic capital, labor policy, etc.) had led some authors to declare the death of the developmental state.

However, others (Wade, 2018) have argued otherwise. They argue that developmental states are more than just a specific growth strategy or set of policy options. They argue that the developmental state, inherently realist and pragmatic as it is, is alive and well, and has merely adopted to the current geopolitical circumstances. Adopting the ideational perspective (mentioned above) they argue that so long as states adopt a development-based societal mission and market‐steering roles well beyond neoliberal limits then it will continue to endure.

Perhaps the biggest exemplar of a developmental state today is the People's Republic of China. While western journalists and think tanks write about the so-called "Beijing Consensus" as a developmental paradigm to challenge the neoliberal "Washington Consensus", in truth nothing in Beijing's approach is particularly new. It is the essentially the same paradigm as was used by Japan and the other East Asian economies, it is the same as was used by the early industrialized countries. The criticisms hurled at China mirror those hurled at Japan during the 1980s and are largely based on the insecurity felt by Western countries (particularly the United States) at the rise of an economic rival.

[For further reading on China's developmental state, here is a link to my presentation on the subject including reference lists for readings and video clips used.]

Of particular interest to the developing world are the lessons of how China, a WTO member with a stake in the international trade regime, manages to balance its domestic economic needs with its international commitments. How it creatively "games" the system, so to speak.

Why is the Developmental State relevant in the Philippine context?

The Philippines is still a developing country. One that is still struggling to industrialize. Historically the country had in fact attempted to follow developmentalist policies during the 1950s to the 1970s. Notable highlights include the Filipino First policy under the Garcia administration in the 1950s, and policies such as the Self Reliant Defensive Posture policy during the Marcos administration. These policies were not continuous, however, with the Filipino First policy having been ended by the succeeding administration, and the policies of the 1970s being reversed by policy concessions required of loans made out by the IMF and World Bank since the late 1970s (the so-called Structural Adjustment Programmes).

These Structural Adjustment Policies (SAPs) were based on the policy prescriptions of the then emergent, now dominant neoclassical school of economics (so-called neoliberalism). At its heart such policies are market-centric and take a dim view of the idea of state intervention in the economy. As such, beginning in the late Marcos administration and solidifying in the first Aquino administration, the Philippines has pursued a characteristically neoliberal economic development strategy. In fact, it was during the Aquino administration that the industrial policy planning arm of the Department of Trade and Industry was abolished as any form of industrial policy is considered taboo under free-market paradigm. In the Philippines, as in many other developing countries, plan-rational and strategic approaches to developmental policy were replaced with market-oriented policies that saw the state retreat from its previous role. It has gotten to the point where it seems that many in policy circles and the academe had lost sight of the core objective of decades past: industrialization.

All is not lost, however, as recent developments seem to indicate that the pendulum might be swinging back the other way: Within the Department of Trade & Industry reformers have been working under the radar on reviving industrial policy, and have in fact been pushing a low-key Filipino First-style policy. The 2017-2022 National Security Strategy outlines the development of domestic strategic industries as a key component. The Department of National Defense seems to have become a  proponent for industrial policy with recent policy recommendations made by the Sec. of Defense on the possible takeover of Hanjin's local shipyard facilities, and the President's receptiveness to said proposal. This last development in particular would have been unthinkable even a few years ago. Another example is the DND's sourcing of pistols from local company Armscor Global Defense for the AFP's pistol tender.

On the private side, local industrialists have been pushing to grow globally competitive companies either on their own or in line with government mandates. A notable example is SteelAsia, whose president Adrian S. Cristobal Jr. was the former Secretary of Trade and Industry, is currently investing in expanding its facilities through out the country, notably seeking to source raw materials by recycling domestic supplies of scrap metal. Improved domestic capacity in steel production would increase self-reliance and reduce imports of steel products.

Only time will tell if such policies can get enough long-term support in order to make an significant impact on the performance of the country's economy.

Further Reading:

• Johnson, Chalmers A (1982). MITI and the Japanese Miracle: The Growth of Industrial Policy, 1925-1975. Stanford University Press. ISBN 0-8047-1206-9.

• Woo-Cumings, Meredith (1999) Introduction: Chalmers Johnson and the Politics of Nationalism and Development in the Woo-Cumings, Meredith (ed) The Developmental State, Ithaca and London, Cornell University Press
 
• Suehiro, Akira (2008) CATCH UP INDUSTRIALIZATION The Trajectory and Prospects of East Asian Economies, Honolulu, University of Hawai’i Press
 
• Zhu, Zhiqun (2009) Understanding East Asia’s Economic ‘Miracles’ in Key Issues in Asian Studies No. 3, Ann Arbor, Association for Asian Studies, Inc.
 
• Wade, R. (2018) The Developmental State: Dead or Alive Development and Change 00 (0): 1-29.DOI:10.1111/dech.12381 International Institute of Social Studies
 
• Stubbs, Richard (2009) What ever happened to the East Asian Developmental State? The unfolding debate in The Pacific Review, Vol. 22 No. 1, Routledge (Taylor and Francis)
 
• Thurbon, E. (2014). The Resurgence of the Developmental State: A Conceptual Defence’. Critique Internationale, 63 (April/May): pp. 8, 59-75.

[girder]

One last thing...

The often heard of lament regarding the state of the Philippine's development is "why could we not be as _____ as our more successful neighbors?" Often this is mixed with a dose of the fatalist (or path dependency for those academically-inclined) notion that extreme differences in culture, society or government explain why other countries are more successful and we are not. What such discussions often forget is that those same neighbors started out in similarly dire often desperate circumstances (war, poverty, corruption, lack of technical knowledge & skills, lack of capital, etc.). From positions of national, economic and institutional weakness. They did not succeed overnight, they had a goal: to become developed, and they pursued it. They muddled through and made mistakes, but they endured and overcame their shortcomings. (See: China, Indonesia, Malaysia & Thailand).

The national will and commitment to development, whether it be the political will of the leadership or the collective consensus of the policymaking elite, is the first step. It is the most important step. Policy and industry follow in the wake of aspiration. Without an aspiration there is no direction for what to strive towards.

What is unfortunate is that for the past four decades, mainstream thinking in both the academic and policy spheres has aimed at "disabusing" us of such notions. Theoretical and ideological propositions have hardened into dogma and the pervading paradigm has practically deified the invisible hand of the market. Unfortunately, experience has shown the invisible hand to be a deaf, dumb & blind god.

This situation is even more striking when one considers that prior to the 1980s, this was not the case, and that the historical data shows that developing countries grew more rapidly when they followed Keynesian policy prescriptions (before liberalization).


Further references:

• Amsden, A. H. (1989). Asia's Next Giant: South Korea and Late Industrialization. New York: Oxford University Press.
• Amsden, A. H. (2003). The Rise of "The Rest": Challenges to the West from Late-Industrializing Economies. New York: Oxford University Press.
• Chang, H.-J. (1994). The Political Economy of Industrial Policy. Basingstoke: Macmillan.
• Chang, H.-J. (2002). Kicking Away the Ladder: Development Strategy in Historical Perspective. London : Anthem.
• Chang, H.-J. (2012). 23 Things They Don't Tell You About Capitalism. London: Bloomsbury Press.
• Evans, P. (1995). Embedded Autonomy: States and Industrial Transformation. Princeton: Princeton University Press.
• Lin, J. (2009). Economic Development and Transition: Thought, Strategy, and Viability. Cambridge: Cambridge University Press.
• Rock, M. T. (2017). Dictators, Democrats and Development in Southeast Asia: Lessons for the Rest. New York: Oxford University Press.
• Rodrik, D. (1995). How South Korea and Taiwan grew rich. Economic Policy, 10(20), 53-107.
• Wade, R. (2003). Governing the Market: Economic Theory and the Role of Government in East Asian Industrialization. Princeton: Princeton University Press.
• Wade, R. H. (2018, January 31). The Developmental State: Dead or Alive? Development and Change, 49(2).

[girder]

From the concluding chapter of Rock, M. T. (2017). Dictators, Democrats and Development in Southeast Asia: Lessons for the Rest. New York: Oxford University Press.:

Lessons derived from the country case studies of Indonesia, Malaysia & Thailand (IMT).

The central thesis of the book puts emphasis on the politics of development and economic growth strategy. This is key as to how the countries were able to have long-term policy continuity.

Lessons for the Rest

1. Sustained growth in IMT did not occur until political leaders completed nation-building projects that created clear winners (center right coalition consisting of monarchies, bureaucratic elites, the military, and business leaders) and clear losers (the Left, popular groups in civil society, and religious fundamentalists), enabling the winners to defined what it meant to be an Indonesian, Malaysian, or a Thai. Nation-building in IMT was a long, drawn out, and sometimes violent project rooted in recurrent crises.

2. Economic and political crises sometimes facilitated important shifts in development strategy and/or in political institutions.

3. Winning political elites used their control over the state and their conservative pre-dispositions to pursue a more or less coherent, but largely trial and error, highly pragmatic, and sometimes muddling through growth strategy that emphasized a capitalist, but not free market, industrial and open economy, but not free trade, approach to growth and development.

4. The clear winners in the struggle for control of the state in IMT used that control to build and sustain center right pro-growth political coalitions and the institutions to support them that provided the time needed for the new growth strategy to work.

5. The growth strategy succeeded because it was economically viable; because it had long-run support from a strong and dominant center right political coalition; because political leaders saw it in their own long-run political interests; and because political leaders put in place mechanisms to weed out bad investments and poor policy choices.

6. Because the growth strategy relied on markets and states, political leaders in IMT discovered a non-ideological, pragmatic, trial-and-error, and one might say "muddling through" middle way between an Anglo-American minimal state and a Northeast Asian developmental state*. The long-run success of this strategy suggests that even less strong and autonomous governments than those in Northeast Asia can sometimes use selective interventions to stimulate growth. Moreover, it is important to recognize that sometimes selective interventions were viewed by political elites as political solutions to political problems. They were seen as necessary to assemble and sustain coalition partners, rewards to supporters, and symbols to the public. Without them, there may not have been a support coalition for growth and development policies. Because of this, debates about exactly how good or bad these interventions were in terms of economic efficiency and growth are missing the point.

7. While center right political coalitions in IMT locked popular groups - workers, farmers and students - out of the politics of development policy, these groups were not ignored. In fact, governments in IMT adopted a variety of policies and programs, including second-best ones that sacrificed economic efficiency for political sustainability to reward, placate, and co-opt popular groups in civil society so they could sustain high growth.

8. The growth strategy privileged business and led to a successful, but corrupt, exchange of government promotional privileges for kickbacks and political contributions that enabled political leaders to deliver development and use patronage, political parties, and vote-getting machines to sustain their pro-growth coalitions and to win elections.

9. The success of this growth strategy is probably leading to diminishing returns, and continued high growth will most probably required more coherent technology policies that entice firms to engage in the hard slog of building their technological capabilities.

10. Governing elites in IMT hijacked the democratization process in IMT to deliberately craft democratic developmental states. Their ability to do so suggests that they were as successful at selective interventions in politics as they were with selective interventions in the economy.

11. Growth in IMT's developmental democracies has been as high as it was during developmental autocracy, suggesting that democratization need not slow growth.


*It should be noted that the author (Michael Rock) conceives of the spectrum of development models as the Washington Consensus on one extreme and the Developmental State on the other with the IMT models in between, somewhat excluding the command economy models of the former 2nd World. Granted this may be a deliberate choice to exclude what they consider non-viable development models that were actually mentioned in the introductory chapter: predatory neo-patrimonialism in Sub-Saharan Africa, state-centered populist import-substituting industrialization in Latin America, rent-seeking state-led development in India & the Great Leap Forward in China.

One interesting thing that the author notes in the historical experiences of the three countries studied was the direction of politics during the period of development. With Thailand and Indonesia, there was a transition from authoritarian regimes (under military rule) towards democratic developmental states. Whereas in Malaysia, a democratic state transitioned to a more developmental authoritarian regime (under Mahathir).

[adroth]

Arguably, an example of a country that successfully implemented this philosophy is the People's Republic of China

Made in China 2025, Explained

A deep dive into China’s techno-strategic ambitions for 2025 and beyond.
By Elsa B. Kania
February 01, 2019
 
https://thediplomat.com/2019/02/made-in-china-2025-explained/
 
< Edited >

Made in China 2025 is but one key piece of a complex architecture of plans and policies aimed at generating “innovation-driven development,” an agenda that has emerged as a clear priority under Xi Jinping’s leadership.

In many respects, the launch of this initiative reflected a response to the weakness of Chinese manufacturing capabilities relative to global leaders, while also seeking to take advantage of a perceived opportunity to achieve a new source of growth. Increasingly, Made in China 2025 has come to be emblematic of these ambitions, rightly provoking intense U.S. anxieties over China’s emergence as a technological powerhouse that rivals American leadership. The core objective of advancing “indigenous innovation” to enable China’s “national rejuvenation” has been highly consistent across recent generations of Chinese Communist Party (CCP) leaders. In this regard, the technological dimension of China’s rise is integral to its future trajectory as a rising power with global ambitions.

At its core, Made in China 2025 has aimed to transform China into a “manufacturing superpower.” In particular, the plan highlighted 10 priority sectors, which include new-generation information technology; advanced numerical control machine tools and robotics; aerospace technology, including aircraft engines and airborne equipment; and biopharmaceuticals and high-performance medical equipment. At a time when China’s economy is slowing, the embrace of such emerging industries and technologies is seen as a critical means to sustain and upgrade growth. For instance, the pursuit of advances in intelligent manufacturing is seen as vital to ensure future competitiveness against the backdrop of a new industrial revolution.

These objectives are not unique to China. Made in China 2025 was inspired by a close study of Germany’s “Industry 4.0” initiative.

< Edited >


=====

Made in China 2025: The Industrial Plan that China Doesn’t Want Anyone Talking About
MAY 7, 2019 / by EMILY CRAWFORD

https://www.pbs.org/wgbh/frontline/article/made-in-china-2025-the-industrial-plan-that-china-doesnt-want-anyone-talking-about/

< Edited >

Announced by Chinese Premier Li Keqiang in 2015, MIC 2025 follows a long line of state-directed plans to channel government support and subsidies toward the development of Chinese companies. The 2025 plan, however, stood out for its ambition. It called for domestic companies to control not just Chinese markets, but also global ones. The plan’s focus on 10 key sectors, including robotics, artificial intelligence, and energy-efficient cars — all industries expected to drive the world economy in the coming decades — gained international attention.

< Edited >

But to the Trump administration, this strategy was a prime of example of how China’s  development model promotes unfair competition and disadvantages U.S. businesses by subsidizing Chinese companies and limiting market access to foreign ones. The administration’s biggest MIC 2025 critics have argued that the plan’s ambitious targets motivate some of the more questionable behaviors U.S. officials have accused China of, including forced technology transfer and cyber theft. In March 2018, President Trump released a major investigation from the U.S. Trade Representative’s office highlighting MIC 2025’s role in what it called China’s “unreasonable” trade practices.

China took notice. Within weeks of Trump’s first tariff announcement in June 2018, the Chinese government started to downplay MIC 2025 and has avoided mentioning the plan since (which Trump held up as evidence that, thanks to him, China had abandoned the plan). Chinese media has been barred from reporting on it. And in March of this year, Keqiang did not mention MIC 2025 in his annual government work report for the first time since its announcement.

< Edited >

Spoken or otherwise, there seems to be consensus that the principles behind MIC 2025 are alive and well — China just isn’t using that name anymore.

[girder]

Arguably, an example of a country that successfully implemented this philosophy is the People's Republic of China

I would hope so, considering how I wrote 159-slide report on it.

On related note, here is another article that looks into the East Asian Economic Miracles:

Hobart, B. Lessons from the East Asian Economic Miracle. Retrieved: 17 June 2019.

A somewhat less academic piece than what I've previously posted, I know. But it does make the interesting comparison between the developmental state model and venture capitalist companies. Which is something that I think deserves attention from...well whatever academic field has the theoretical framework to do comparison between business strategy and macroeconomic policy (public administration, political economics, perhaps management?).

[girder]

Stephan Haggard on developmental states

Professor Stephan Haggard, UC SanDiego, discusses development states.

The concept of the developmental state emerged to explain the rapid growth of East Asia in the postwar period. Yet the developmental state literature also offered a heterodox theoretical approach to growth. Arguing for the distinctive features of developmental states, its proponents emphasised the role of government intervention and industrial policy as well as the significance of strong states and particular social coalitions. Comparative analysis explored the East Asian developmental states to countries that were decidedly not developmentalist, thus contributing to our historical understanding of long-run growth. Prof. Haggard provides a critical but sympathetic overview of this literature and ends with a look forward at the possibilities for developmentalist approaches, in both the advanced industrial states and developing world.

[girder]

d. Strict/repressive policies towards labor

Direct or indirect state intervention in labor management relations; labor rights were severely curtailed in exchange for increased productivity. This was particularly true in the autocratic states such as South Korea and Taiwan.

I regret never elaborating much on this point. Let me remedy this by posting some sources on the topic.

Minns & Tierney. (2003). The Labour Movement in Taiwan (PDF)

Winn. (1987). There Are No Strikes in Taiwan: an Analysis of Labor Law in the Republic of China on Taiwan

Kwon & O'Donnell. (1999). Repression and Struggle: the State, the Chaebol and Independent Trade Unions in South Korea

South Korea’s “Economic Miracle” Was Built on Murderous Repression

A similar situation occurred in the ostensibly democratic Japan, where post-war authorities are known to have leveraged local yakuza crime syndicates to serve as muscle for anti-communist/anti-leftist activities, often being employed to break up workers' strikes. Such ties between the political establishment and organized crime helps explain why the authorities would often turn a blind eye to yakuza activities so long as they adhered to their mutual understanding.

[girder]

Additional readings:

Ng, C. (2008). The 'Developmental State' and Economic Development. Oxford University

Doner, R. F., Ritchie, B. K., & Slater, D. (2005). Systemic Vulnerability and the Origins of Developmental States: Northeast and Southeast Asia in Comparative Perspective. International Organization, 59(02).

The first one is another overview of the developmental state and its attributes, however the latter reading is much more interesting to me as it argues that developmental states arise from situations of 'vulnerability' which necessitate the policies and actions of the governments typical of developmental states.

1. broad coalitional commitments,
2. scarce resource endowments
3. severe security threats

This highlights the internal (societal, political and economic) and external (geopolitical) threats to the state that catalyze the formation of a developmental state out of realist necessity.

These two readings I found in the reference list of, to my delight, a well-researched Youtube video of one of my favorite video games, of all places. Amazing where you can find gems of information when you cast your net wide.

[girder]

One sub-topic that I only briefly touched upon on my presentation on China's developmental state was the role of overseas ethnic Chinese as foreign direct investors to the mainland.

These business people from places such as Hong Kong, and more relevantly from Taiwan (known as the Taishang) played a key role in establishing the PRC as a global manufacturing hub.

Shelley Rigger writes about this in her book "The Tiger Leading the Dragon: How Taiwan Propelled China's Economic Rise".

[Video] Shelley Rigger on Taiwan's Role in China's Economic Rise

Some highlights on the discussion:

In 1987, Taiwan ended a ban on travel to the mainland, allowing for their citizens to visit family left behind.

In the process Taiwanese businessmen were able to see opportunities in setting up shop in he mainland.

At that point, Taiwanese industry had primarily been SME-driven, with many smaller businesses producing export-oriented goods for the global market.

By the 1980s they were in danger of being out competed due to rising domestic costs (labour costs, land costs, etc.)

The mainland offered a means of expansion for businesses that they did not have in overcrowded Taiwan. This opportunity gave Taiwanese businesses a new lease on life.

As such, the Taishangs brought with them:
      ○ Money
      ○ Jobs
      ○ Technology
      ○ Management expertise
      ○ Supply chain relationships

This cross-strait relationship also influenced mainland society through:
      ○ Consumer tastes (introduction of affordable luxury)
      ○ Philanthropy
      ○ Religion (Notably the revival of traditional Chinese religion)
      ○ Popular culture
      ○ Institutions (legal institutions)

[kyuzoaoi]

So, with these in mind, should the Philippines catch up by going back to Keynesianism?

[girder]

That's a very vague notion. These days there are many schools of economic thought that are considered under the banner "Keynesian", with various differences among them.

However, as South Korean Ha-Joon Chang writes in one of his books, countries actually don't necessarily need economists to make good economic policy. The traditional forms of economic nationalism that guided older countries weren't necessarily rooted in sophisticated economic schools of thought (though these did exist back then, even prior to the classical school of Adam Smith)when they were implemented, rather they were the result of "common sense" pragmatic policy.

Put another way: good economic policy existed before sophisticated economic theory. Back then it was more a matter of statecraft before being spun of into it's own subject. (From the subject of  political-economy to the subject of economics).

That said, what would help the policy landscape of the Philippines is if the policy-influencing/forming bodies of society and government (academe, politicians, bureaucrats, etc.) could get over neoliberal policy prescriptions of the Washington Consensus that had been pushed onto developing countries since the 1980s.

That said, in terms of economic schools of thought, I think the emergent heterodox school is very promising paradigm for creating a more holistic economic academe and subsequently better policy prescriptions.

But regardless of all that, what is really important is that government should revive its role in strategically steering the economy based on realistic calculation and long-term objectives. That is the core tenet of developmentalism.

The free market fundamentalist/neoliberal policy prescriptions that have been advocated here have done much to get rid of the ability of government to think in such a manner. It is the equivalent of preaching that the best strategy for a war is to let one's soldiers fight the enemy in a free for all, because surely the competition will allow the best fighters to rise to the top.

It is no wonder then that the Department of National Defense is inevitably a stronghold of developmental thinking in the government. (SDRP, emphasis on multi-dimensional security in the National Security Policy) The military sciences are all about strategic thinking, and the idea of leaving things to the free market is anathema to the military profession.