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Political Economy of Growth: East Asia and Latin America Compared. Bert Gilbert 3/16/2006. Haggard: Explaining Developmental Strategies. Developmental Strategies “Packages of policies aimed at steering economic activity into a particular mixture of ownership and sectors (23)”

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haggard explaining developmental strategies
Haggard: Explaining Developmental Strategies
  • Developmental Strategies
    • “Packages of policies aimed at steering economic activity into a particular mixture of ownership and sectors (23)”
    • Based on more than factor endowments
comparing east asian and latin american nics
Comparing East Asian and Latin American NICs
  • Three Patterns of development
    • Import-Substitution (ISI)
      • Mexico, Brazil, several other large LDCs
    • Export-Led Growth (ELG)
      • Korea, Taiwan
    • Entrepôt Growth
      • Singapore, Hong Kong
  • Virtually all developing countries begin international trade as exporters of primary products
difference between east asian and latin american nics
Difference Between East Asian and Latin American NICs
  • Industrialization through exports versus industrialization through import substitution
  • Haggard uses comparative analysis to:
    • Weigh competing explanations of policy change
    • Generate some contingent generalizations
    • Develop more convincing explanations of particular cases
  • Four levels of analysis
    • The International System
    • Domestic Coalitions
    • Domestic Institutions
    • Ideology
comparing east asian and latin american nics1
Comparing East Asian and Latin American NICs
  • Haggard uses these analyses in order to explain variation across Korea, Taiwan, Singapore, Hong Kong, Brazil, and Mexico.
the international system
The International System
  • Table 2.2 pg. 33
  • Constrain state choices in two ways:
    • Market Pressures
      • Depression of 1930s hit Latin America but not Korea and Taiwan
      • External economic shocks likely to influence outward-oriented policies
    • Political Pressures
      • Latin America independent for longer, increased freedom to maneuver
      • U.S. more concerned with East Asia, importance of aid flows on foreign policy
domestic coalitions
Domestic Coalitions
  • Weak private sector combines with export-led policies to provide opportunities for national firms.
    • MNCs and Local Firms coexist without threat of denationalization
  • Latin America
    • Role of FDI involved greater potential for political conflict
  • East Asia, labor controlled for the purpose of pursuing export-led growth
domestic institutions
Domestic Institutions
  • Characteristics of the State as an Institution:
    • Degree of autonomy from social forces
      • Corporatist structures in democracies have proved successful in extracting restraint from labor and business
    • Cohesion of the policy-making apparatus
      • Larger states of Latin America more difficulty than East Asian NICs
    • Available policy instruments
      • Hong Kong, few instruments of intervention, relied on market-oriented system of adjustment
  • Table 2.5 pg. 48
  • Chicago Boys in Chile
  • Korea and Taiwan
    • Declining U.S. aid
    • Various ideas about how to respond
    • American advisors influenced developmental thinking.
evans class state and dependence in east asia lessons for latin americanists
Evans: Class, State, and Dependence in East Asia: Lessons for Latin Americanists
  • Using analysis of East Asia to further the dependency approach
  • Insights of East Asianists may lead us to a better understanding of dependent capitalist development
  • East Asia’s different history than Latin America allows us to apply dependency theory elsewhere, test the theory
differences between dependence of east asian nics and latin american nics
Differences between Dependence of East Asian NICs and Latin American NICs
  • Most important difference: Role of FDI
    • Latin American Industrialization maximized the consequences of FDI
      • Foreign economic domination
    • East Asian Industrialization occurred during a period of little FDI
  • Flows of FDI to East Asia still significantly lower than to Latin America
aid trade
Aid & Trade
  • East Asian countries highly dependent on international trade
    • Does not seem to have slowed down their economic growth or distribution of benefits
  • East Asian NICs, aid has little to do with the interests of U.S. transnational corporations
    • Strengthen ability of states to confront Communist neighbors
  • Consequences of trade between rich and poor countries depends on the specific social structure in which trade takes place
the state and the local bourgeoisie
The State and the Local Bourgeoisie
  • Japanese colonialism left little space in East Asia for the emergence of even the relatively weak industrial bourgeoisies found in Latin America
  • Relations between state and local bourgeoisie make it more difficult for the state to smoothly impose such policies as EOI
  • Absence of rural elite influence from the formation of state policy unites East Asian cases and seperates them from those of Latin America
inequality in east asian dependent development
Inequality in East Asian Dependent Development
  • Latin America characterized by large scale inequality
  • East Asian development has been very equal
    • Long unbroken historical experience of FDI produces a greater likelihood of inequality
    • Confirms suspicions regarding the negative welfare consequences of transnational dominated industrialization
evans conclusions
Evans -- Conclusions
  • Triple Alliance
    • East Asia: State is dominant partner
    • Latin America: TNC and Local Private Capital more important
  • Suggestions
    • Latin Americanists should be careful not to overemphasize industrial class relations
    • We don’t really understand the consequences of a relatively more autonomous state machine
    • Avoid false parallels
      • Careful analyses of concrete historical situations must precede any expectations about results from policy.
silva state business relations in latin america
Silva: State-Business Relations in Latin America
  • Latin America
    • Political and Economic calamities culminating in debt crisis of early 1980s
    • Replace state-led, ISI, populism, and authoritarian regimes with free-market economic reform, fiscal sobriety, and political democracy.
structural adjustment and business system change
Structural Adjustment and Business-System Change
  • Common view: Developmentalist state generated weak, state-dependent private sectors
  • Free-market reforms: fiscal restraint, macroeconomic stability, privatization, financial-sector liberalization, and opening to international competition
  • Personal and Family Ownership, closed-property firm, interlocking directorships in conglomerates prevail. Banks more than capital markets for financing long-term investment.
  • Privatization: 1) Adopt Anglo-American business practices 2) Conglomerate expansion too rapid 3) expand in regional economic blocs 4) difficulty in extracting state from some enterprises
economic change and recasting business state relations
Economic Change and Recasting Business-State Relations
  • Management of economic change benefits from centralized state that is autonomous from social and political forces
  • Business-state relations founded on established conglomerate more stable than newly created, competing conglomerates
  • No “Latin American” model of business-state relations
business and democracy in latin america
Business and Democracy in Latin America
  • Absence of state control of organized interests creates space for a vibrant civil society which is a crucial feature of democracy
  • Institutionalized Tripartite negotiating system of societal corporatism provides a meaningful channel for the civil society’s participation in public policy
  • LA not ripe for societal corporatism
  • Institutional element underdeveloped
  • LA closer to U.S. pluralist model
  • Exclusionary business-state relationships that work now may contribute to economic and political difficulties in the future
  • How applicable is the developmentalist model to East Asian development?
  • From what we have seen, what is the most important factor in predicting a country’s development strategy?
  • What is the biggest problem in comparing East Asian development to Latin American development?