The developmental state in the era of globalization: beyond the Northeast Asian model of political economy

Abstract

Criticism of the developmental state can be divided into two categories. One is the neoliberal position that criticizes the efficacy of the developmental state model itself. According to this view, the developmental state was not an important factor in East Asian development and the adoption of industrial policy would in fact be detrimental to developing countries. A second critical position concedes that a degree of achievement was indeed attained by the developmental state in the past, but argues that the developmental state model is no longer a viable option today. This position holds that the high level of government intervention in successful East Asian countries more or less contributed to their economic development, but that this policy is no longer feasible. While deepening globalization in the world economy is regarded as inimical to the developmental state, some also argue that the developmental state model could only have worked during the Cold War and could not function in today's international political and economic climate. Despite these negative observations, the purpose of this article is to demonstrate the viability of the developmental state model. First, the article supports the statist position by broadening the scope of the argument: developmental states exist not only in Northeast Asia, but also in Southeast Asia, and the East Asian authoritarian regimes had a role in economic development. Second, this article directly counters new criticism of the developmental state. It argues that the developmental state model is still an effective development strategy in the post-Cold War period and even in the era of globalization: the model was useful in East Asia, and could be useful beyond East Asia.

Keywords:

• Developmental state
• East Asia
• economic development
• globalization

Shigeko Hayashi is currently an independent researcher.

Notes

1 According to Johnson (1995: 12), those who point out that Japan has a political economy different from that of the Anglo-American countries in terms of institutions, the role of the state, and the weight of economic nationalism are said to be part of this school.

2 The shift in the thinking of the World Bank is clearly seen in the 1997 and later volumes of the World Development Report (World Bank, various years).

3 Indeed, the Ministry of Economy, Trade and Industry (METI, the successor of the Ministry of International Trade and Industry – MITI) is still trying to identify and support new sunrise industries, in addition to the general promotion of science and technology. However, as the Japanese economy grows, such a policy has been of diminishing importance, and has achieved only limited success at most. Worse still, several studies suggest that the ministry's efforts in the 1980s and 1990s to promote some high tech industries, such as the computer industry or the semiconductor industry, were not useful at all and perhaps were even counterproductive (Takahashi 2003). As for South Korea, see Wong (2004).

4 Murakami uses the term developmentalism, but he basically means the developmental state by it (Murakami 1996: 132)

5 It may be worth mentioning that even for Japan we have the illusion that super-rational bureaucrats single-mindedly pursued economic goals during the rapid developmental period. The business has influenced policy-making processes in various ways, sometimes through pressuring politicians to intervene. Also, the fact that industries are in many cases the future employers of bureaucrats could have affected the business–bureaucrat relationship.

6 We note that he explicitly excludes Indonesia from the miracle economies.

7 He analyzed the auto industry in his case study.

8 Indeed the list is getting long (Grindle 2004).

9 He specifies four policies as fundamentally necessary for industrial policy: the designation of priority industries, industry-specific indicative planning, policies to promote technological progress and the regulation of excessive price competition (Murakami 1996: 185–6).