Comments on: Industrial Policy meets Doing Development Differently: an evening at SOAS

By: Ken Shadlen

Ken Shadlen — Wed, 23 Mar 2016 10:41:07 +0000

Nice summary and discussion. What you call “payment by results meets ind pol” is what amsden called reciprocal control mechanisms, or performance requirements, the hallmark of more successful industrial policies. Not a new idea. Nor does it solve the problem of state capacity, so much as re-ask it, since need ability to not just design but credibly enforce constraints. HJC’s insight here seems to be that the capacity need not come first but rather can emerge from the industrial policy experiences?

By: Nick

Nick — Sat, 19 Mar 2016 08:49:03 +0000

I like and appreciate the points you make around poverty and inequality, I think we need to talk and discuss inequality much more than we currently do.

I have recently published an article around how Netflix are making a difference in the TV and Movie industry to improving awareness of the current inequality of actors and cast members. In their own media publishing, Netflix seem to be trying to be as diverse as possible – while still not perfect, I think it’s a dramatic improvement to what we’re currently used to.

If you’d like to check it out you can see it here: http://streamsidekick.com/netflix-diversity-racism/

By: Scott

Scott — Fri, 18 Mar 2016 19:58:13 +0000

I may have missed the discussion here as I am arriving a bit late.
I am curious about a tension that I have not fully understood in debates about industrial policy. One kind of question is about what sorts of policies should domestic governments pursue. A second kind of question is about how trade agreements should be structured. On that second kind of question, I am unsure of what someone persuaded of the merits of industrial policy should say. On the one hand, trade agreements which leave room for states that can successfully pursue industrial policy without a big risk of rent-seeking and undue political interference should be free to do so. But on the other hand, those states which are least likely to succeed with industrial policy are those that are best served by trade agreements which do not leave room for industrial policy. This is because free trade agreements which tie the hands of government in supporting particular sectors turn out to protect that government against private sector backed coups and other forms of interference. So if one designs trade agreements with the developmental interests of somewhat effective states in mind, industrial policy stays in, but if the worst and weakest governments are the primary target, then industrial policy is out.

By: Roy Trivedy

Roy Trivedy — Thu, 17 Mar 2016 22:38:16 +0000

An excellent read and great summary Duncan. Thank you. There is a lot of great insights here for a country like Papua New Guinea (where I am working), which is struggling with rebuilding the public service and diversifying t he economy away from a reliance on extractives. I found Mushtaq’s comments very helpful. I have been trying for some time to get the International Growth Centre here to provide some top quality advice to political leaders here – but unfortunately it seems that a country the size of PNG (roughly 10m population and equating to roughly 80% of the population of the Pacific) and with significant elements of ‘fragility’ is not of interest to them. We would really welcome someone like Mushtaq to visit here. Thanks again.

By: Asif Dowla

Asif Dowla — Thu, 17 Mar 2016 15:19:37 +0000

As far as I know, the company Desh Garments didn’t get any support from the government initially. After the set-up of Desh Garments, it along with Daewood pursuaded the government to start bonded warehouse through which fabric could be imported duty free. So, the role of the government was indirect. See “The Catalyst Model of Development: Lessons from Bangladesh’s Success with Garment Exports,” World Development, 18(2), 333-346, 1990

By: Bakhodur Eshonov

Bakhodur Eshonov — Thu, 17 Mar 2016 14:41:05 +0000

When referring to South Korea Ha Joon Chang deals with a success story. Mushtaq Khan when referring to Bangladesh and India refers to cases which still to prove to become a success. Still, the very fact of debates between two heterodox economists sounds interesting.
Some early ‘non-conventional’ ideas on the role state, political parties concerned by short term electoral cycles rather than longer term (decades-long) structural reforms in economy (and social transformations in societies, which requires not decades, but generations), and leadership…- were raised by the Growth Commission (led by Michael Spence and sponsored by the WB, http://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/ORGANIZATION/EXTPREMNET/0,,contentMDK:23224987~pagePK:64159605~piPK:64157667~theSitePK:489961,00.html ).
In there recent article Jomo Kwame and Michael T. Clark from FAO not only question the term ‘good governance’, but raise another questions. We cannot expect that immature, in many cases infacnt governments, moreover infant states and societies, with extremely weak economic ground, could ‘introduce democracy’ just by a presidential decree or a parliamentary law. “The required reforms are so wide-ranging that they are beyond the means of most developing countries to implement. As a result, good-governance solutions tend to distract from more effective development efforts” (http://www.project-syndicate.org/commentary/governance-reform-development-agenda-by-jomo-kwame-sundaram-and-michael-t–clark-2015-06).
Developmental state thus is not about democracy or authoritarism, market or plan, industries or services, villages or urban mega-cities…. Developmental state is about development, it is about process. It is about a systemic transformation of both economy, society, state “as an interconnected system rather than a set of preferences and wishes that are correct individually but contradict one another when taken as a whole” (http://vision.cer.uz/Data/lib/vision/en/VISION_en.pdf#page=29), it is about more holistic approach for development and changes with societies and states.
The very term “developmental state’ becomes more fashionable these days. Luiz Carlos Bresser-Pereira – another well known promoter of the concept of developmental state organizes the 1st New Developmentalism’s Workshop: Theory and Policy for Developing Countries in June in Brazil. (http://www.bresserpereira.org.br/).

By: Mushtaq Khan

Mushtaq Khan — Thu, 17 Mar 2016 14:25:01 +0000

I fully agree that committed leaderships and political movements can change societies around. But I disagree with the implication that political will can change anything it likes or that the costs of change can be ignored. Agency matters but so does structure and we need to rediscover the importance of analysing their interdependence. Dialectics anyone? The great good luck of the East Asian developmental states was that the policies and enforcement strategies they attempted turned out to be aligned with their pre-existing social power structures (political settlements). Their political settlements changed further as a result, but in directions that set off few internal conflicts. The great bad luck of developing countries like Pakistan in the 1960s was that they had equally committed leaderships that tried to do similar things but their initial political settlements not only prevented them from implementing these fully or evolving in the right directions, they eventually triggered off violent internal conflicts. In neither case had leaderships figured out what was politically feasible in advance, but if we want to learn from history and advise countries, we need to get the dialectics of Doing Development right. I am much less sanguine than Hajoon about industrial policy success in Ethiopia or even Vietnam. Vietnam is abandoning industrial policy and supporting TPP because they have failed to discipline many of their supported industries. But in a relative sense they have some successes. Ethiopia has a committed leadership but many of their industrial support policies show no evidence of discipline (yet). The structure of the party and its internal divisions make it hard for it to develop in this direction. I hope they do, but it is by no means very likely. It would have been much better to analyse the power structures within Ethiopia and advise them of industrial policies that have a higher chance of success given their actual enforcement capabilities.

By: Readymade Business

Readymade Business — Thu, 17 Mar 2016 11:17:18 +0000

An interesting read indeed Duncan.

I must admit that comment from “Beatrice Webb” riled me a little bit – how can someone refer to the population of an entire country like that?

P.S. Love the hand drawn illustration too, made me chuckle.

By: Suvojit

Suvojit — Thu, 17 Mar 2016 09:46:29 +0000

Ha Joon Chang has documented how the Japanese auto industry was a big beneficiary of government intervention in the 1930s, as was the chaebol Daewoo in Korea. (Not making a bigger point here), but it is quite fascinating that both of Mushtaq Khan’s examples (Japanese car makers in India; and Daewoo in Bangladesh) involve a collaboration between a poor country and an industry that benefited from significant government protection in their early years.