The Developmental State
Ana Patricia Yanes
Professor John LewisNovember, 2018
In the developing world, the role of the state in promoting social progress and economic growth has been subject to controversy in the international development field for the past 50 years. Over those years, the role of state has significantly diverged. Through the 1950’s and 1960’s state-led development with high levels of autonomy was encouraged by the international community (ie.1997 World Development Report). A developmental state is generally understood as one that exhibits clear commitment to a national development agenda, one that has solid capacity and reach, and seeks to provide growth as well as poverty reduction and the provision of public services (Fritz & Rocha, 2006). This state is characterized by having strong intervention in the economy, as well as a background in considerable regulation and planning. It calls for effective state involvement that will play a facilitator role in encouraging activities of private businesses and individuals, in contrast to neoliberalist laissez-faire policy.
International development scholars began to define and amplify the concept of developmental state in response to the economic growth results of countries in South East Asia in the post-war period (Routley, 2012). The Asian state’s development practices and experiences, along with the broad concept of the developmental state, have placed new emphasis on the role of the state in achieving economic growth, social process and poverty reduction (Routley, 2012). Overall, the state-led development should play an active role in guiding economic development, using the skills and resources at hand to meet the needs of the people, it should try to balance economic growth and social development and use state influence to attack poverty and expand economic opportunities for the nation.
One of the central debates around developmental states has focused on the controversy over how states should intervene in the market, and what role the state should play in development (White ; Wade, 1988). In the early 1980’s state-led development was criticised as inefficient considering the growing debt and economic problems in Africa and South America resulting in market-oriented reforms such as The Washington Consensus (Fritz & Rocha, 2006). Another issue discusses the political systems of developmental states. Due to its supposed sensitivity, as well as, in a way, doctrinarian character, there seems to be very little research conducted on the political environment necessary for a developmental state to thrive (Bolesta, 2014).
Chalmers Johnson first proposed the concept of a ‘developmental state’, using the term to describe strong interventionist policies implemented by Japan that led to sustained, rapid industrialisation and long-term economic development (Singh & Ovadia, 2018). The role of the state was then reviewed based on the successful experiences of the Asian Tigers since the mid-1990s: South Korea, Taiwan, Singapore and Hong Kong (Fritz & Rocha, 2006). But why did the state’s pivotal role fail in some cases, why were the preconditions for a successful state-led development in Africa less favourable than those of East Asian countries.
Various international financial institutions have argued that African states lack the capacity to pursue policies similar to the developmental states of East Asia (Taylor, 2005). By African case study conclusions, it is not about the degree of state involvement, but the type of state and its quality. There are successful existing examples in Africa that contradict the neoliberal position. At its independence in 1966, Botswana was rated among the poorest states in the world with a per capita GDP of only US$283. By 1999, the very same country was well ahead than the rest of the continent and had the highest rate of economic growth in the world (Lewin, 2011).
Botswana is known for its rich diamond resources, it is true that the diamond extraction profits have motorized the country’s growth. However, an abundance of mineral wealth on its own doesn’t remotely explain Botswana’s success, as the case of Sierra Leone demonstrates, natural resources may in fact sabotage nation-building and development (Taylor, 2005). The developmental state of Botswana is based on the fundamentals of capitalism in which the government, through incentives, promotes private investing. The government has also established respect for property rights and the rule of law. It upheld a great degree of transparency, which was reinforced by tribal traditions of consultation. These institutions shaped a certain trust in the government, in the sense that government exists to serve the people and promote development (Lewin, 2011). All of this has been assisted by efficient policies and bureaucracy that has resisted corruption, which has been a trademark for much of the civil service in most parts of the African continent.
It is important to point out that Botswana is not some sort of African utopia, not everyone has profoundly benefited from raised incomes or higher standards of living. But despite the criticism of inequality within the country, it is still relevant to point out that state intervention can play a vital role in creating ideal conditions for sustained growth, which can be further translated into poverty reduction, as the example of Botswana has demonstrated. Its developmental state has achieved suitable accomplishments. Botswana’s strategy has shown that ‘a disciplined activist African state that governs the market is essential for industrial development and recovery’ (Owusu ; Samatar 1997, p. 270).
The underlying reasons for the success of state intervention in some cases and the failure in others are a combination of political and social factors (Kohli, 2004). In many African countries, and in poor countries elsewhere, benefits generated by state led development were turned into rents for small elites, making investments successively less productive (van de Walle, 2001; Chabal and Daloz, 1999; Bayart, 1993). The existing structure of economic opportunities – in many countries centred on mineral resources and/or distribution of land – and historical legacies of the colonial period helped to set in motion vicious rather than virtuous circles. Political power constellations drove the choice and change of institutions. As Acemoglu, Johnson, ; Robinson (2004) have stressed: ‘because different groups and individuals typically benefit from different economic institutions, there is generally a conflict over these social choices, ultimately resolved in favour of groups with greater political power.’
The developmental state theory is not a recipe for successful civilizational advancements of a nation. It is, however, a state philosophy which can create an adequate ground for developmental efforts. This ideology puts development in the forefront agenda. We shall not, however, accept this theory as dogma. Too much faith seems to have been placed in state-led development in the 1950s and 1960s. One also needs to remember that introduction of the developmental state theory into the state policies and state main ideology may result in some negative effects, which, on the other hand, are also common in other countries. In the process of enriching the nation the state might prefer to enrich itself and not the people.
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