3
Dependency Theory
Expected outcomes for periphery economic
results in continued underdevelopment, i.e. poverty
social produces inequality (“transnational
kernel”) and conflict political
reinforces authoritarian government
Statist theory: Introduction
Challenge to dependency theory
Dependency theory failed to explain the rise of the East Asian NICs
Newly industrialized countries
South Korea, Taiwan, Singapore
Why East Asia surged ahead of Latin America (June 2006)
Table 1.
Reversal of fortunes
East Asia has surged ahead while Latin America has lost ground.
(ratio of income per capita to that of the United States, at purchasing
power parity, 1990 dollars)
1950 2001
East Asia1 0.057 0.151
East Asia (excluding China) 0.097 0.215
Latin America 0.263 0.208
Source: Maddison (2003). 1Comprises China, Hong Kong SAR, Korea, Singapore, and Taiwan Province of China, plus
Indonesia, Malaysia, Philippines, and Thailand.
Why East Asia surged ahead of Latin America (June 2006)
“Increasingly, institutions are seen as accounting for divergent growth patterns across countries. Analysts have identified areas in which government institutions have helped underpin growth in East Asia.” A quarterly magazine of the IMF
Why East Asia surged ahead of Latin America (June 2006)
“The strength and independence of government bureaucracy has been important to East Asia's economic development and has too often been lacking in Latin America.
“Asian governments have tended to foster the development of a professional, merit-based civil service tradition, insulated from political influence, to implement economic policy in close consultation with business groups.
“To streamline decision making, lead government agencies with strong coordinating authority were created to translate a national strategic vision of economic development into specific actions.”
A quarterly magazine of the IMF
Asia and Africa in the Global Economy (August 1998)
“Government’s administrative competence is the single most important factor explaining the difference in growth among many developing countries.
“Africa comes in the bottom group in cross-regional comparison in terms of an index of ‘bureaucratic efficiency’.”
Asia and Africa in the Global Economy (August 1998)
“The World Bank put it quite starkly: ‘African governments have become employers of last resort and dispensers of political patronage, offering jobs to family, friends and supporters
“The poor economic management capacity and cumbersome administrative and bureaucratic structures of African bureaucracies has limited the successful formulation and implementation of economic policies and become a central obstacle to market oriented reforms.”
Statist Theory
Focus on nature of state institutions Developmental vs.
predatory Institutional level
of analysis Not individual level Not global political
economy structure
Statist Theory
Characteristics of developmental state bureaucracy Merit/skill-based recruitment technocrats Performance-based rewards
With competitive salaries, proper incentives Belief in bureaucratic mission Insulation from societal pressures Power to formulate and implement policy
Statist Theory: Background
Why would states have interests autonomous from society’s in promoting development?
Remember Tilly
Statist Theory: Background
Because they are responsible for national security.
States must compete in the international state system Militarily
To compete militarily, states need to develop economically States need $$$ to pay for
military competition
Statist Theory: Background
Gerschenkron’s insight Timing of
development matters for how states develop
Early and late players in the game of state survival develop differently
Statist Theory: Background
How can latecomers compete militarily & economically?
States must “jump in” to the international system at the global technological frontier
Or be crushed.
Statist Theory: Background
Note that the global technological frontier is always moving forward Militarily
Statist Theory: Background
Note that the global technological frontier is always moving forward Economically
Statist Theory: Background
So, how can latecomers amass the huge investments necessary to develop economically and militarily at the global technological frontier?
Statist Theory: Background
Remember Gerschenkron’s insight Timing of
development matters for how states develop
Early and late players in the game of state survival develop differently
Statist Theory: Background
How did Britain—the earliest industrializer—do it?
Britain ~1700s Early
Small start-up firms
Statist Theory: Background
How can latecomers amass the huge investments?
Germany ~1840s Only a little “late” Only a little
“backward” Investment banks
Statist Theory: Background
How can latecomers amass the huge investments?
Russia/Soviet Union ~1880s-1930s Much “later” More “backward”
State itself
Statist Theory: Background
Soviet state Asserted control
over entire economy Forcibly extracted
resources To use for military
development Russia/Soviet
Union
Premises of Statist Theory
States have the potential to promote development within their own borders (NOT simply “externally conditioned”)
States have interests autonomous from society’s in promoting development because they are responsible for national security; they must compete militarily and economically in the international state system
Ability of states to promote development depends on the nature of state institutions