After authoritarian technocracy: the space for industrial policy-making in democratic developing countries

Abstract

Many developing countries have, in recent years, adopted structural transformation strategies and strengthened state economic activism. While prima facie reminiscent of the post-war era’s developmentalist strategies, contemporary industrial policies have resurfaced in a different environment: they are often designed and implemented in (newly) democratic, rather than authoritarian, political regimes. This paper argues that when democratic developing countries seek to (re)deploy industrial policies, governments must navigate the specific demands arising in an institutional setting in which political power is constrained and contestable. Therefore, the focus of the classical industrial policy literature on instrumental-rational, top-down, technocratic ­policy-making, with centralised state–business relations, needs to adapt to this environment. This paper discusses how challenges to secure fiscal space, reach parliamentary consensus, and address diverse societal demands in a formal democratic institutional setting influence industrial policies in developing countries. We exemplify this using Indonesia as a case study.

Keywords:

• Developmental state
• industrial policy
• industrialisation
• policy space
• structural transformation
• democracy

Acknowledgements

The authors thank all the participants in the special issue workshop for valuable comments and anonymous referees and the guest editor for constructive suggestions on this article.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 Analyses of key policy decision makers and their politico-business networks are important in understanding the political economy of Indonesia’s industrial policies. However, this paper leaves these issues for future studies as its focus is on formal institutions.

Additional information

Notes on contributors

Lukas Schlogl

Lukas Schlogl is political scientist at the Department of Political Science. He studied International Development at the University of Vienna and the University of Vaasa and earned a doctorate in quantitative social science from the Department of International Development, King’s College London. Previously, he was a Visiting Scholar at LSE’s Saw Swee Hock Southeast Asia Center and a Research Associate at the ESRC Global Poverty and Inequality Research Network. His latest book is Disrupted Development and the Future of Inequality in the Age of Automation (Palgrave 2020).

Kyunghoon Kim

Kyunghoon Kim has recently completed a PhD in the Department of International Development at King’s College London. His research focuses on the role of state-owned entities in economic development. His recent publications include articles in Competition & Change, Journal of Contemporary Asia, the Pacific Review, Asia Pacific Business Review and Asia & the Pacific Policy Studies. He received an MSc from LSE and has worked as a Research Fellow at the Samsung Economic Research Institute, Korea.