Developmental state, hard state, State-led developmentalism or in some cases Neo-developmental state,"By addressing the process, product and performance of the policy shift in this way, this thesis presents a distinctive description and analysis of the way the cultural and creative industries (CI) have been nurtured in the era of ‘post-organized capitalism’.
As a former representative developmental state and as a neo-developmental state currently known for having made a clear break with the past, the Korean case can provide a unique opportunity to re-think the recently fashionable creative turn among various nations. is a term used by international political economy scholars to refer to the phenomenon of state-led macroeconomic planning in East Asia in the late 20th century. In this model of capitalism (sometimes referred to as state-development capitalism), the state has more independent, or autonomous, political power, as well as more control over the economy. A developmental state is characterized by having strong state intervention, as well as extensive regulation and planning. The term has subsequently been used to describe countries outside East Asia that satisfy the criteria of a developmental state. The developmental state is sometimes contrasted with a predatory state or weak state.Evans, Peter. 1995. Embedded Autonomy: States and Industrial Transformation. Princeton: Princeton University Press.
The first person to seriously conceptualize the developmental state was Chalmers Johnson.Leftwich, Adrian, "Bringing politics back in: Towards a model of the developmental state", Journal of Development Studies, Volume 31, Issue 3 February 1995, pages 400-427 Johnson defined the developmental state as a state that is focused on economic development and takes necessary policy measures to accomplish that objective. He argued that Japan's economic development had much to do with far-sighted intervention by bureaucrats, particularly those in the Ministry of International Trade and Industry (MITI). He wrote in his book MITI and the Japanese Miracle: In states that were late to industrialize, the state itself led the industrialization drive, that is, it took on developmental functions. These two differing orientations toward private economic activities, the regulatory orientation and the developmental orientation, produced two different kinds of business-government relationships. The United States is a good example of a state in which the regulatory orientation predominates, whereas Japan is a good example of a state in which the developmental orientation predominates.
A regulatory state governs the economy mainly through regulatory agencies that are empowered to enforce a variety of standards of behavior to protect the public against market failures of various sorts, including monopolistic pricing, predation, and other abuses of market power, and by providing collective goods (such as national defense or public education) that otherwise would be undersupplied by the market. In contrast, a developmental state intervenes more directly in the economy through a variety of means to promote the growth of new industries and to reduce the dislocations caused by shifts in investment and profits from old to new industries. In other words, developmental states can pursue industrial policies, while regulatory states generally cannot.
Governments in developmental states invest and mobilize the majority of capital into the most promising industrial sector that will have the maximum spillover effect for the society. Cooperation between state and major industries is crucial for maintaining stable macroeconomy. According to Alice Amsden's Getting the Price Wrong, the intervention of state in the market system such as grant of subsidy to improve competitiveness of firm, control of exchange rate, wage level and manipulation of inflation to lowered production cost for industries caused economic growth, that is mostly found in late industrializers countries but foreign to early developed countries.
As in the case of Japan, there is little government ownership of industry, but the private sector is rigidly guided and restricted by bureaucratic government elites. These bureaucratic government elites are not elected officials and are thus less subject to influence by either the corporate-class or working-class through the political process. The argument from this perspective is that a government ministry can have the freedom to plan the economy and look to long-term national interests without having their economic policies disrupted by either corporate-class or working-class short-term or narrow interests.
Examples in East and Southeast Asia Some of the best prospects for economic growth in the last few decades have been found in East and Southeast Asia. Japan, South Korea, China, Hong Kong, Singapore, India, Thailand, Taiwan, Vietnam, Malaysia, Philippines, and Indonesia are developing at high to moderate levels. Thailand, for example, has grown at double-digit rates most years since the early 1980s. China had been the world leader in economic growth from 2001 to 2015. It is estimated that it took England around 60 years to double its economy when the Industrial Revolution began. It took the United States around 50 years to double its economy during the American economic take-off in the late nineteenth century. Several East and Southeast Asian countries today have been doubling their economies every 10 years.Kristof, Nicholas D., and Sheryl WuDunn. 2000. Thunder From the East: Portrait of a Rising Asia. New York: Knopf.
In most of these Asian countries, it is not just that the rich are getting richer, but the poor are becoming less poor. For example, poverty has dropped dramatically in Thailand. Research in the 1960s showed that 60 percent of the people in Thailand lived below a poverty level estimated with cost of basic necessities. By 2004, however, similar estimates showed that poverty there was around 13 to 15 percent. Thailand has been shown by some World Bank figures to have had the best record for reducing poverty per increase in GNP of any nation in the world.Nabi, Ijaz, and Jayasankur Shivakumer. 2001. Back from the Brink: Thailand's Response to the 1997 Economic Crisis. Washington, DC: World Bank.United Nations Development Report. 1999. Human Development Report of Thailand 1999. Bangkok: Author.World Bank. 2000. World Development Report 2000/2001. New York: Oxford University Press.
When viewed through the lens of dependency theory, developmentalism is about countries such as Thailand, Taiwan, Malaysia, Japan, South Korea, and increasingly Vietnam, where the governments are able and willing to protect their people from the negative consequences of foreign corporate exploitation. They tend to have a strong government, also called a "developmental state" or "hard state", and have leaders who can confront multinationals and demand that they operate to protect their people's interests. These "development states" have the will and authority to create and maintain policies that lead to long-term development that helps all their citizens, not just the wealthy. Multinational corporations are regulated so that they may follow domestically mandated standards for pay and labor conditions, pay reasonable taxes, and by extension leave some profits within the country.
Specifically, what is meant by a developmental state is a government with sufficient organization and power to achieve its development goals.Chang, Ha-Joon. 1999. "The Economic Theory of the Developmental State." Pp. 182-199 in Meredith Woo-Cumings (ed.), The Developmental State. Ithaca, NY: Cornall University Press.Cumings, Bruce. 1999. "Webs with No Spiders, Spiders with No Webs: The Genealogy of the Developmental State." Pp. 61-92 in Meredith Woo-Cummings (ed.), The Developmental State. Ithaca, NY: Cornall University Press.Johnson, Chalmers. 1982. MITI and the Japanese Miracle. Stanford, Calif.: Stanford University Press.Pempel, T.J. 1999. "The Developmental Regime in a Changing World Economy." Pp. 137-181 in Meredith Woo-Cummings (ed.), The Developmental State. Ithaca, NY: Cornall University Press. There must be a state with the ability to prove consistent economic guidance and rational and efficient organization, and the power to back up its long-range economic policies. All of this is important because the state must be able to resist external demands from outside multinational corporations to do things for their short-term gain, overcome internal resistance from strong groups trying to protect short-term narrow interests, and control infighting within the nation pertaining to who will most benefit from development projects.
Thailand In the late 1990s a study was conducted in which the researchers interviewed people from 24 large factories in Thailand owned by Japanese and American corporations. They found that most of the employees in these corporations made more than the average in Thailand, and substantially more than the $4.40 a day minimum wage in the country at the time. The researchers’ analysis of over 1,000 detailed questionnaires indicated that the employees rate their income and benefits significantly above average compared to Thai-owned factories. They found the working conditions in all 24 companies far from conditions reported about Nike in Southeast Asia.Richter, Frank-Jurgen. 2000. The Asian Economic Crisis. New York: Quorum Press.
One answer to the discrepancies found between multinational corporations in Thailand and the conditions described for Nike workers is that companies such as Wal-Mart, The Gap, or Nike subcontract work to small local factories. These subcontractors remain more invisible, making it more easy to bribe local officials to maintain poor working conditions. When multinational corporations set up business in countries like Malaysia, Taiwan, or Thailand, their visibility makes much less likely employees will have wages and conditions below the standards of living of the country.Kerbo, Harold. 2006. World Poverty in the 21st Century. New York: McGraw-Hill.
Thailand is said to fall between the U.S. model where government has little involvement in economic policy, and Japan which has governed with a very heavy hand for more than 100 years.Muscat, Robert J. 1994. The Fifth Tiger: A Study of Thai Development. Armonk, NY: M.E. Sharpe.Kulick, Elliot, and Dick Wilson. 1996. Time for Thailand: Profile of a New Success. Bangkok: White Lotus Press. One focus of Thai development policies was on import substitution. Here, a development state must be able to tell multinational corporations that goods will be imported, if at all, with tariffs as high as 80 to 150 percent to prevent these goods from competing with goods made in (at least at first) less efficient infant factories in the poorer country. Only a development state can have the influence to enforce such a policy on rich multinational corporations (and their governments), and only a development state can have the influence to enforce such a policy against the demands of their own rich citizens who want the imported goods and want them then at a cheaper price, not waiting for infant industries to produce suitable products. Thailand began placing tariffs of 150 percent on important automobiles, but at the same time telling the foreign auto industries that if they came to Thailand to create joint ventures with a Thai company to build cars—and thus hire Thai employees, pay Thai taxes, and keep some profits within Thailand—the auto company would get many forms of government assistance.