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Climbing out the Ditch. Managing the Politics of Change: Leadership and the Role of Institutions in East Asia ‘s Rapid Growth. low per capita GDP. high unemployment. crushing poverty. Underdeveloped Country. wide rural-urban disparities. high illiteracy. weak capacity.

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Climbing out the ditch

Climbing out the Ditch

Managing the Politics of Change: Leadership and the Role of Institutions in East Asia ‘s Rapid Growth


Climbing out the ditch

low per capita GDP

high unemployment

crushing poverty

Underdeveloped

Country

wide rural-urban disparities

high illiteracy

weak capacity

high mortality rates

inept government

political instability

poor governance


Climbing out the ditch

High per capita GDP

Intermittent bouts with unemployment

low poverty

Developed

Country

manageable regional disparities

high literacy

well endowed capacity

low mortality rates

well functioning government

long term political stability

good governance


The real challenge of development
The Real Challenge of Development

Desired

State

Managing the

Politics of Change

(Developed)

status quo

(underdeveloped)


East asia s high performers
East Asia’s High Performers

Taking the bull by the horns . . .

. . . managing the politics of change


Requisites of change management
Requisites of Change Management

embedding change in the culture

establishing a sense of urgency

consolidating gains & producing more change

CHANGE

creating a guiding coalition

generating short term wins

developing a vision and strategy

empowering broad based action

communicating the change vision

John Kotter, 1996


Requisites of change management1
Requisites of Change Management

embedding change in the culture

establishing a sense of urgency

consolidating gains & producing more change

creating a guiding coalition

generating short term wins

Threat of communist

takeover

developing a vision and strategy

empowering broad based action

communicating the change vision

John Kotter, 1996


Requisites of change management2
Requisites of Change Management

embedding change in the culture

establishing a sense of urgency

consolidating gains & producing more change

creating a guiding coalition

generating short term wins

Shared growth

developing a vision and strategy

empowering broad based action

communicating the change vision

John Kotter, 1996


The principle of shared growth
The Principle ofShared Growth

The Wealth Pie


The principle of shared growth1
The Principle ofShared Growth

All share in increments to the pie



The shared growth phenomenon1
The Shared Growth Phenomenon

Ratio(unweighted average) of Top to Bottom Quintile and per Capita Growth Rate, Selected Years: 1976-1988


The shared growth phenomenon2
The Shared Growth Phenomenon

Integrated Poverty Index, 1988


Requisites of change management3
Requisites of Change Management

embedding change in the culture

establishing a sense of urgency

consolidating gains & producing more change

  • Vision 2020

  • Annual awards for

  • export performance

creating a guiding coalition

generating short term wins

developing a vision and strategy

empowering broad based action

communicating the change vision

John Kotter, 1996


But why shared growth
But Why Shared Growth?

History and path dependence

Thrust of Leadership


The role of institutions

Desired

State

Managing the

Politics of Change

(Developed)

status quo

(underdeveloped)

The Role of Institutions

The Western World

democratic institutions

? ? ?

East Asia post WWII


The predicament of leadership
The Predicament of Leadership

Paradox of autocracy

Time inconsistency of economic policies


The paradox of autocracy
The Paradox of Autocracy

Property rights ???


Time inconsistency
Time Inconsistency

Costs

Benefits

“today”

“tomorrow”


The predicament of leadership1
The Predicament of Leadership

Paradox of autocracy

Time inconsistency of economic policies

credible commitment


Institutional foundations of shared growth
Institutional Foundations of Shared Growth

Deliberation councils

Wealth sharing mechanisms

Competent/functional

bureaucracy


Requisites of change management4
Requisites of Change Management

embedding change in the culture

establishing a sense of urgency

consolidating gains & producing more change

government - business

deliberation councils

creating a guiding coalition

generating short term wins

developing a vision and strategy

empowering broad based action

communicating the change vision

John Kotter, 1996


Institutionalizing consultative processes the deliberation council
Institutionalizing Consultative Processes: the Deliberation Council

Coordination and

information “leveling”

Rent allocation

Credible commitment


Wealth sharing mechanisms
Wealth Sharing Mechanisms

  • land reform

  • developing rural infrastructure

  • investing in basic education

  • promoting SMEs/labor intensive manufacturing

  • allocating corporate equity

  • worker cooperatives

  • public housing programs


Land reform
Land reform

Distribution of Land and Owner-Cultivated Households in Taiwan, by size of Holding, 1039 vs. 1960


Land reform rural infrastructure
Land reform/rural infrastructure

Overall Effectiveness of Simulated Experimental Programs in South Korea, 1978

Rural

Income of

Bottom decile

Rural

Households in

Poverty (percent)

28.7

30.4

77.6

63.5


Basic education
Basic education

Primary and Secondary Enrollment Rates in the High-Performing East Asian Economies

(insert table 3-1 in Campos, p.32)


Labor intensive smes
Labor intensive SMEs

Exports of Small and Medium Enterprises in Taiwan (Hundreds of millions of U.S. Dollars)


Malaysia nep
Malaysia NEP

Malaysian Ownership of Share Capital of Limited Companies (at par value 1969-1990)


Requisites of change management5
Requisites of Change Management

embedding change in the culture

establishing a sense of urgency

consolidating gains & producing more change

well functioning

bureaucracy

creating a guiding coalition

generating short term wins

developing a vision and strategy

empowering broad based action

communicating the change vision

John Kotter, 1996


Implementation capacity the bureaucracy
Implementation Capacity: the Bureaucracy

Merit based recruitment and career advancement

Adequate compensation


Implementation capacity the bureaucracy1
Implementation Capacity: the Bureaucracy

Estimates of per Capita GDP and Ratio of Public to Private Sector Salaries, Developing Countries


Climbing out the ditch

Depth of political appointments

Philippines

Korea

Minister

Secretary

Index of bureaucratic capability

Under secretary

Level 2

Assistant secretary

Level 3

1.0

Bureau Director

Level 4

0.6

Regional Director

Service Director

0.5

Division chief

Division chief

0.2

Political appointees

Ratio of public to private wages

Percent

0.0

100

Philippines

Korea

66

80

60

26

40

20

0

Philippines

Korea

Source: WDR 1997


Implementation capacity the bureaucracy2
Implementation Capacity: the Bureaucracy

Merit based recruitment and career advancement

Adequate compensation

Accountability