Legitimate states that govern effectively and dynamic industrial economies are widely regarded today as the defining characteristics of a modern nation-state. But why have some developing states been more successful at facilitating industrialization and achieving economic growth than others? To address this question, Atul Kohli, the David E. In the book, Professor Kohli asserts that the answer to this question is best developed by focusing both on patterns of state construction and of state intervention aimed at promoting industrialization. Atul Kohli AK : As I began my research in the s, the prevailing policy orthodoxy was that economic growth in developing countries would be achieved mainly by opening their economies and by minimizing the role governments play in those economies.
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Legitimate states that govern effectively and dynamic industrial economies are widely regarded today as the defining characteristics of a modern nation-state. But why have some developing states been more successful at facilitating industrialization and achieving economic growth than others?
To address this question, Atul Kohli, the David E. In the book, Professor Kohli asserts that the answer to this question is best developed by focusing both on patterns of state construction and of state intervention aimed at promoting industrialization. Atul Kohli AK : As I began my research in the s, the prevailing policy orthodoxy was that economic growth in developing countries would be achieved mainly by opening their economies and by minimizing the role governments play in those economies.
I was suspicious of that claim. I started digging up histories of a variety of states to see which countries had done well and which had not, and tried get at the root of their successes and failures That investigation took me in a different direction than the prevailing orthodoxy.
WWS: Was there scholarly consensus on the issue? AK: Such consensus was common in the policy world, especially in development institutions such as the World Bank, the International Monetary Fund and the U. Agency for International Development. It was more of a policy orthodoxy and less of an orthodoxy in the scholarly community. But to a fair number of scholars also, who accepted the "Washington consensus," it seemed that a minimal role for governments and unfettered economic openness was the way to succeed, and I was suspicious of that.
WWS: Why did you study the four countries covered in the book? AK: South Korea was a relatively obvious choice because it is one of the most successful developers in the developing world. How they achieved this, I thought, must have lessons for others. I also thought it would be instructive to get some sense of states that were utter economic disasters, such as those less developed states in Africa.
Nigeria emerged as one good example. In many other African countries there was of course pervasive poverty. But to focus on those countries and to analyze why they did not industrialize might not have been all that puzzling. Nigeria however had enormous oil resources and the question was, with all this money, why were they not able to use it systematically to build their own economy and industry?
It thus became a logical case study for failure in this sense. So on one extreme I had a successful case in Korea, and on the other I had a failed case in Nigeria.
I thought examining both success and failure from a similar perspective would provide a good understanding of the dynamics behind each case. India and Brazil were natural "in between" cases. Collectively, these four countries also provided geographical diversity from Asia to Africa to Latin America.
I thought it could be a book about developing countries as a whole, rather than one area or the other. So, the choice of cases was in part driven by comprehensiveness of coverage; and for the rest, it was analytically driven in terms of successes, failures, and in-between cases. WWS: Did you discover any commonalities in terms of conditions of successful state interventions in developing countries?
AK: I argue that for growth in late-developing countries, first of all you need state support for private investors. What happens is that private investors in late developers are competing against formidable odds within the global scene. They need the support of their respective governments in a variety of ways to emerge, to mature, and to ultimately become autonomous and independent competitors.
State intervention and support of investor profits seems to have been an important precondition amongst successful growers. The trickier question, however, is why some governments are able to do this without falling into common problems of corruption, or nepotism, or simply just doing it badly. To try and answer that question and address why Korea had a good government and Nigeria did not, my research was forced back into history.
The fact that some countries had better government than others led me to the colonial origins of the types of governments that have emerged in the developing world.
WWS: So what role does effective governance play? AK: Effective governance essentially molds the conditions within which investment takes place. Growth-promoting governance, which can be considered anything from political stability and consistent policies, to something more active, as in providing support to investors, some very unsavory things can happen.
Holding labor unions back or not allowing them to organize until company profits are more robust is one example. So there can be real costs. There are democratic and human costs to how these growth-promoting governments, as in the case of Korea, acted in order to boost profits.
That is the story that needs to be told: that not all good things necessarily go together. The Korean government did many things which would be considered unsavory to a liberal mind, and yet the outcomes have to be thought of as partly benign, because there was an enormous amount of wealth being generated. The question was and is, how you weigh the issue of enormous wealth coming at the expense of a fair amount of repression in a society.
WWS: How serious an impact does colonialism in the first half of the 20th century have on these countries today in the 21st century? AK: I think the long term legacies are rather serious, especially on issues of state building. The reason I think long term legacies are so serious is because state creation basically requires a coherent, profoundly centralized act of force.
A semi-functioning state was destroyed and we are seeing just how difficult it now is to re-create a state. One country conquered another and created a long-term state structure. There are a lot of negative things about colonialism. However, the long term legacies have varied. The Japanese in Korea left behind a much more effective state than the British in Nigeria. One could spend a lot of time trying to figure out how various styles of colonialism differed.
But the fact is that once they differed, they left long term legacies that have continued. By contrast, you had a much more functioning state in Korea which the Japanese created in their own image and subsequently left behind. It was also a lot more brutal state, but it did allow the Koreans to use that state for furthering development in the late 20th century. In your view, what ultimately does development entail and what does it mean? AK: I qualify that right from the beginning.
In this book I argue that the most important determinant of economic growth in developing countries has been effective state intervention. What constitutes effective intervention and what the patterns of those state interventions are the main issues I have analyzed in State-Directed Development.
WWS: With the notion of effective state intervention, how do you address the role of the marketplace in your book? AK: It depends on how one interprets the word marketplace.
However, if the word market implies global integration within a highly competitive environment, which is a more common interpretation, then trying to create a totally open economy in that sense does not lead to successful growth.
The way some economists and international development institutions see the marketplace, they end up arguing that creating openness and highly competitive situations is good for growth. I have not been persuaded by that argument. I think competitiveness is good for efficiency. But efficiency is not the same as growth. Growth requires a different set of activities. It requires new people to take risks, to start new industries; this, in turn, has often required government support, and yes, some protection to emerging firms.
He puts emphasis on the role of states as well as on the obstacles that arise in the process of development. A number of different factors can be discussed as to why some states have been more successful in facilitating industrialization than others. Following a Weberian perspective, Atul Kohli pays special attention to the role of state institutions and society cohesion. Also according to a Weberian-inspired methodology, the author defines ideal types in order to classify the empirical date he analyses. Three are the main types of State that he identifies and compares: Neo patrimonial state — Represented by his case study on Nigeria. Here, state leaders take ownership of the resources in the country and their officials take the authority.