Comparative Public Policies: African, Asian and OECD Developmental States

Comparative Public Policy

PhD Programme Block Two: I Comparative Public Policies:

African, Asian and OECD Developmental States (MPMP 906) 2015

Lecture and Seminar Notes BT Costantinos, PhD, [email protected]

Addis Ababa University School of Graduate Studies, Department of Management and Policy, College of Management, Information and Economic Sciences.

Contents The objective of the course …i 1. Introduction…1 1.1. The Developmental State…1 1.2. Dirigisme…4 1.3. Rise and fall of developmental state …5 2. Developmental States in Africa…6 2.1. Disjuncture of analytical tradition …7 2.2. Learning the Wrong Lessons for Africa …8 2.3. The Impossibility Theses …9 2.4. Lack of Ideology? …9 2.5. Dependence Syndrome…10 2.6. Lack of Autonomy …12 2.7. Neo-patrimonialism…12 3. Public Choice and Rent Seeking…14 4. Wrong Economic Histories …17 5. New International Order …19 6. Mal-adjusting the African State …19 6.1. Undermining State Capacity …19 6.2. Proliferation of tasks for weak states …20 7. Dis-embedding the state …21 7.1. Creating and Taming a National Bourgeoisie …22 7.2. Reconstructing the State Apparatus …23 7.3. Is the developmental state any longer appropriate? …24 8. Case Study: the Arab Spring…31 References …41

The claim that developmental states may still be an essential component of successful development is contentious, but strongly supported by the historical record. Ha-Joon Chang is the most prominent of a number of scholars that have drawn attention to the absolutely central role played by states in all those countries that have experienced successful economic development. Significantly, Chang points out that both the UK and US - seeming paragons of market, rather than state-led development, and latter day champions of the free market or neoliberal model – enjoyed significant state assistance in their initial industrialising phase. Chang, Ha-Joon (2002) Indeed, not only is infant industry protection of a sort enjoyed by nineteenth century Britain and America, and twentieth century Japan, still a prerequisite of successful indigenous industrialisation, but attempting to outlaw such practices through the currently dominant neoliberal agenda championed by the international financial institutions (IFIs), amounts to ‗kicking away the ladder‘ to development. The potential utility of the developmental state has been undermined as much by a shift in the dominant discourse about optimal or appropriate modes of development as it has by any inherent failings. In other words, the continuing utility or feasibility of the developmental state many depend as much on external geopolitical factors as it does on any specifically domestic ones.

The objective of the course The aim is to provide intensive analytical training in the systematic comparison of social and public policies from an international perspective and develops substantive knowledge in a wide range of policy fields around topical issues such as policy evaluation, policy learning and policy transfer. In a context of growing interconnectedness between national governments and supranational organisations, alongside increased movement of people and globalised economic trade, advancing our understanding of the similarities and differences of social and public policies across national systems is becoming ever more important in academic and professional terms alike. This degree is highly relevant to anyone who works or intends to work in policy-relevant professions in the public, private or non-governmental sectors that operate in an increasingly international context of policy-making. The PhD in Comparative Public Policy provides a cross-national analytical perspective on the activities of government and other social and political actors. We focus specifically, but not exclusively, on policies relating to the welfare state. Among the knowledge and skills it provides are: a thorough training in methods of comparative analysis, training in analyzing datasets and policy documents, knowledge of different forms and purposes of comparison, grounding in the politics and/or economics of policy-making, detailed comparative knowledge of substantive areas of policy and knowledge of policy learning and policy transfer. At the end of the course, you will have a range of intellectual, practical and transferable skills necessary to assess different policy options, and to understand the origins and developments of policies within their national and international contexts. Learning strategy: The teaching and learning technique will augur on the understanding of complexity, uncertainty, and triangulation. Hence, the learning strategy will focus on getting the learner to understand the discourse and glean out the options that fit in to the various realities governance will be referred too in the course of the learner‘s professional life after the university years. The strategy will hence augur on: seminars, lectures and guest lectures; Role plays and group breakout and team work and distribution of tasks Assessment indicators: indicators of achievement in this regard are  The degree of insight of the learner on basic definition and components of public policy;  The extent to which the learner articulates public policy;  Ability to advance thoughts on public policy, governance and its impact on human development, human security and environmental resource management for a state‘s sustainable future;  Oral presentations of exercises;  Seminar degree of participation in articulating concepts, processes and outcomes  Tests of learning Evaluation, Characterisation and Organisation: These are complex human awareness and response reflectors and hence the valuation mechanism can be as challenging as the learning systems!   

COGNITIVE: Knowledge, Comprehension, Application, Analysis, Synthesis… AFFECTIVE: Receiving, Responding, Valuing… PSYCHO-MOTOR: Perception, Set, Guided Response, Mechanism, Complex overt Response, and Adaptation

1. Introduction 1.1. The Developmental State: In the literature, the developmental state has two components: one ideological, one structural. It is this ideology-structure nexus that distinguishes developmental states from other forms of states. In terms of ideology, such a state is essentially one whose ideological underpinning is developmentalist in that it conceives its mission as that of ensuring economic development, usually interpreted to mean high rates of accumulation and industrialisation. Such a state establishes as its principle of legitimacy its ability to promote sustained development, understanding by development the steady high rates of economic growth and structural change in the productive system, both domestically and in its relationship to the international economy (Castells, 1992: 55). At this ideational level, the élite must be able to establish an ideological hegemony, so that its developmental project becomes, in a Gramcian sense, a hegemonic project to which key actors in the nation adhere voluntarily. The state-structure side of the definition of the developmental state emphasises capacity to implement economic policies sagaciously and effectively. Such a capacity is determined by various others — institutional, technical, administrative and political. Under-girding all these is the autonomy of the state from social forces so that it can use these capacities to devise long-term economic policies unencumbered by claims of myopic private interests. It is usually assumed that such a state should, in some sense, be strong and enjoy relative autonomy from key social actors. The quest for a strong state in the development process was a strong feature of the modernisation literature. Such a state was contrasted to what Myrdal (1968) referred to as the soft state that had neither the administrative capacity nor the political wherewithal to push through its developmental project. In addition, finally, the state must have some social anchoring that prevents it from using its autonomy in a predatory manner and enables it to gain adhesion of key social actors. As formulated, the definition of the developmental state runs the risk of being tautological since evidence that the state is developmental is often drawn deductively from the performance of the economy. This produces a definition of a state as developmental if the economy is developing, and equates economic success to state strength while measuring the latter by the presumed outcomes of its policies. It has led to myopic concentration of analysis around success to the neglect of the trial and error nature of policy-making even in the most successful cases. If a developmental state is not be deified into some kind of omnipotent and omniscient leviathan that always gets what it wants, then the definition must include situations in which exogenous structural dynamic and unforeseen factors can torpedo genuine developmental commitments and efforts by the state. This allows room for poor performance due to exogenous factors, miscalculation or plain bad luck. At times, a government‘s political will and technical capacity may simply prove inadequate to fend off exogenous forces. In Africa, we have many examples of states whose performance up until the mid-1970s would have qualified them as developmental states in the sense conveyed by current definitions, but which now seem anti-developmental because the hard times brought the economic expansion of their countries to a halt. Recognition of episodes and possibilities of failure leads us to a definition of a developmental state as one whose ideological underpinnings are developmental and one that seriously attempts to deploy its administrative and political resources to the task of economic development. Proxies such as tax efforts and public expenditure patterns can be used to measure such seriousness. The main force behind the developmentalist ideology has usually been nationalism, inducing nations to seek to catch up with countries considered as more developed, to firm the resource base for national defence and security, etc. It is essential to stress these ideological underpinnings of state policies for it is these that provide 1 | Comparative Public Policy: Developmental States. BTC 2011

the rationale for some of the policies and give legitimacy to otherwise unpalatable sacrifices, not only because they serve as the opium of the masses, but also because they knead together the ruling class. The centrality of ideology also points to the naiveté of the de-politicised quest for technocratic governance, now pushed by IFIs, in which a technocracy is supposed to carry out policies that are good for the nation for no apparent reason, not even self-serving ones. The idea of the developmental state is most closely associated with Chalmers Johnson and his seminal analysis of Japan‘s very rapid, highly successful post-war reconstruction and (re)industrialisation. Johnson, Chalmers (1982) Johnson‘s central contention was that Japan‘s quite remarkable and historically unparalleled industrial renaissance was neither a fluke nor inevitable, but a consequence of the efforts of a ‗plan rational‘ state. A plan rational or developmental state was one that was determined to influence the direction and pace of economic development by directly intervening in the development process, rather than relying on the uncoordinated influence of market forces to allocate economic resources. The developmental state took it upon itself the task of establishing ‗substantive social and economic goals‘ with which to guide the processes of development and social mobilisation. (Ibid, MITI and the Japanese Miracle, p 23). The most important of these goals in Japan‘s case, of course, was the reconstruction of its industrial capacity; a process made easier by a widespread social consensus about the importance of economic development. At the centre of the Japanese developmental state - and of its most successful imitators in Taiwan and South Korea - was a highly competent bureaucracy dedicated to devising and implementing a planned process of economic development. One of the key elements of a developmental state - and an essential prerequisite for managing the developmental process – is the existence of a pilot agency, like Japan‘s celebrated Ministry of International Trade and Industry (MITI), which was the main focus of Johnson‘s original analysis. The pilot agency is charged with task of directing the course of development itself, and employs and devises a range of policy tools to ensure that indigenous business is both nurtured and managed in the overall ‗national interest’.1 In those countries that have had the greatest ‗state capacity‘,2 or the ability to devise and implement various industry policies – primarily the aforementioned Northeast Asian states and Singapore – they have also had extensive, relatively efficient bureaucracies, staffed by the nation‘s brightest and best. Evans, Peter (1998) Not only did such pilot agencies generally enjoy a degree of prestige and legitimacy that actually allowed them to recruit outstanding personnel, but they were able to utilise policy tools that gave them additional authority over the indigenous business class their actions helped create.3 In Japan, for example, MITI and the Ministry of Finance were able to use their control of domestic savings to provide cheap credit for particular industries. In this way, Japanese planners were able to guide a continuing process of initial industrialisation and subsequent industrial upgrading as new, more valuable industries were encouraged and older ones like textiles were encouraged to move off-shore. This pattern of state-led intervention has been emulated across the region with varying degrees of success and to differing extents: Japan‘s Northeast Asian acolytes Taiwan and Korea copied the Japanese experience earliest and most successfully, while the countries of Southeast Asian followed later and with more mixed results. But before considering the present, rather discredited state of the developmental state in both Japan and across the region, it is important to emphasise one thing: whatever difficulties Japan and some of its imitators may currently be experiencing, both Japan‘s and the rest of East Asia‘s transformation over the last forty or fifty years is a quite staggering and substantial achievement. In considering the possible continuing utility of the developmental state, therefore, we need to be conscious of the following: the developmental state has been central to East Asia‘s unique transformative experience; East Asia has experienced substantial, sustained and real in2 | Comparative Public Policy: Developmental States. BTC 2011

creases in per capita incomes as a consequence; different levels of development and different state capacities mean that the developmental state may still remain an appropriate – perhaps an inescapable - element of economic development. The claim that developmental states may still be an essential component of successful development is contentious, but strongly supported by the historical record. Ha-Joon Chang is the most prominent of a number of scholars that have drawn attention to the absolutely central role played by states in all those countries that have experienced successful economic development. Significantly, Chang points out that both the UK and US - seeming paragons of market, rather than state-led development, and latter day champions of the free market or neoliberal model – enjoyed significant state assistance in their initial industrialising phase. Chang, Ha-Joon (2002) Indeed, not only is infant industry protection of a sort enjoyed by nineteenth century Britain and America, and twentieth century Japan, still a prerequisite of successful indigenous industrialisation, but attempting to outlaw such practices through the currently dominant neoliberal agenda championed by the international financial institutions (IFIs), amounts to ‗kicking away the ladder‘ to development. The potential utility of the developmental state has been undermined as much by a shift in the dominant discourse about optimal or appropriate modes of development as it has by any inherent failings. In other words, the continuing utility or feasibility of the developmental state many depend as much on external geopolitical factors as it does on any specifically domestic ones.4 This possibility is graphically illustrated in the rise and demise of the developmental state in Japan. Japan’s place as a potential bulwark against communist expansion in East Asia in the aftermath of the Second World War meant that it received especially favourable treatment from the US – a country that emerged in the war’s aftermath as the hegemonic power of the era. The US’s preoccupation with containing communism and nurturing proto capitalist democracies meant that Japan was a beneficiary of American aid and the stimulatory economic impact of the US’s military activities in Korea on the one hand, and of a tolerant American attitude to domestic reform in Japan on the other. Johnson‘s original analysis of the Japanese developmental state detailed just how ineffective American efforts to reform the Japanese state were during its postwar occupation, something that helps to explain the continuity and effectiveness of state led development in that country. Indeed, Johnson dryly notes that in the postwar period Japan ‗gave a virtuoso performance of how to extract the most from the United States while paying the least to support its global strategies’ (Johnson, C. (1999). Significantly, it was a performance that was widely noted and emulated across the region, and given as structural consolidation by Japan‘s own success. Indeed, Japanese economists were at the forefront of promulgating the ‗flying geese theory‘ of regional development, in which Japan would pull other industrialisation economies along in its wake.5 The key point to emphasise at this point, however, is that the tolerant geopolitical environment which saw the US privilege systemic strategic issues over narrower, national economic interests, and which provided the relatively tolerant environment in which the developmental state states flourished, has been overturned. Indeed, even before the Cold War ended the US was increasingly concerned about economic competition from the successful East Asian developmental states, and more willing to use its economic and political leverage to pursue trade agreements designed to remedy expanding trade deficits.6 Now, free of the strategic concerns that formerly constrained its unilateralist tendencies, the US can more actively promote marketoriented reforms which threaten the very basis of the region‘s developmental states. (Beeson, M. and Berger, M.T. (2003) The application of direct American pressure and the more diffuse impact of processes associated with ‗globalisation‘ has caught the de3 | Comparative Public Policy: Developmental States. BTC 2011

velopmental state in a potentially fatal pincer movement that threatens to undercut both its efficacy and its legitimacy. To see why, we need to look at both the internal and external factors that have affected state capacity in the region. The key question in this context is one with implications that go far beyond East Asia: even if we accept that the developmental state has been a crucial component of successful industrialisation everywhere, is it any longer useful or sustainable in an increasingly integrated global economy dominated by the US? 1.2. Dirigisme Before the Second World War, France had a relatively fragmented capitalist economic system. The many small companies, often family-owned, were often not dynamic and efficient in comparison to the large industrial groups in Germany or the United States. The Second World War laid waste to France. Railroads and industries were destroyed by aerial bombardment and sabotage; industries were seized by Nazi Germany; in the immediate post-war years loomed the spectre of long years of rationing (such as the one enforced in the United Kingdom). Some sections of the French business and political world lost authority after collaborating with the German occupiers. Post-war French governments, from whichever political side, generally sought rational, efficient economic development, with the long-term goal of matching the highly-developed and technologically-advanced economy of the United States. The main French tool was indicative central planning, through plans designed by the Commissariat général du plan ("Commission for the Plan"). Unlike the governments of the Soviet Bloc, however, the French government never owned more than a minority of industry, and did not seek to enforce its economic directions in authoritarian ways; instead, it used various incentives. In addition, France never ceased to be a mainly capitalist country. Because French industry prior to the Second World War was weak due to fragmentation, the French government encouraged mergers and the formation of "national champions", large industry groups backed by the government. Two areas where the French government sought greater control were infrastructure and the transportation system. The French government owned the national railway company SNCF, the national electricity utility EDF, the national natural gas utility GDF, the national airline Air France; phone and postal services were operated as the PTT administration. Interestingly, the government chose to devolve the construction of most auto-routes (freeways) to semi-private companies rather than to administer them itself. Other areas where the French government directly intervened were defense, nuclear and aerospace industries (Aérospatiale). This development was marked by volontarisme, the belief that difficulties (e.g. postwar devastation, lack of natural resources) could be overcome through willpower and ingenuity. For instance, following the 1973 energy crisis, the saying "In France we don't have oil, but we have ideas" was coined. Volontarisme emphasized modernization, resulting in a variety of ambitious state plans. Examples of this trend include the extensive use of nuclear energy (close to 80% of French electrical consumption), the Minitel, an early online system for the masses, and the TGV, a high-speed rail network. The development of French dirigisme coincided with the development of meritocratic technocracy: the École Nationale d'Administration supplied the state with high-level administrators, while leadership positions in industry were staffed with Corps of Mines state engineers and other personnel trained at the École Polytechnique. During the 1945-1975 period, France experienced unprecedented economic growth (4.5% on average) and a demographic boom, leading to the coinage of the term Trente Glorieuses ("Thirty Glorious [years]").

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Dirigisme flourished under the center-right governments of Charles de Gaulle and Georges Pompidou. In those times, the policy was viewed as a middle way between the American policy of little state involvement and the Soviet policy of total state control. In 1981, Socialist president François Mitterrand was elected, promising even more state enterprise in the economy; his government soon nationalised industries and banks. However, in 1983 the initial bad economic results forced the government to renounce dirigisme and start the era of rigueur ("rigour"). Dirigisme has remained out of favour with subsequent governments, though some of its traits remain. Economic dirigisme has been described as an inherent aspect of fascist economies by one author, Ivan T. Berend in his book An Economic History of TwentiethCentury Europe. (ibor Ivan Berend, 2005) However, the Fascist systems created by Benito Mussolini (Italy), Francisco Franco (Spain) and Adolf Hitler (Germany) are a varied mix of elements from numerous philosophies, including nationalism, authoritarianism, militarism, corporatism, collectivism, totalitarianism, and anticommunism. (Baker, David, 2006).)Regardless of the differing components found in the historic fascist state, the opposition to liberalism including democracy and equality before the law are agreed qualities of all.789 Dirigisme has been brought up as a politico-economic scheme at odds with laissez-faire capitalism in the context of French overseas holdings. Countries such as Lebanon and Syria have been influenced by this motif, (The daily Star, 2007) in varying degrees throughout the postcolonial period. 1.3. The rise and fall of the developmental state Mark Besson in his paper, the rise and fall of the developmental state10 states that in the aftermath of the Second World War a number of features of the evolving international order were especially striking. Most obviously, the world divided into two implacably opposed ideologically and militarily opposed camps – a structurally entrenched bifurcation that was to distinguish post-war international relations for more than four decades. At the same time, an equally surprising and, arguably, important, but altogether more positive development occurred: much of East Asia began to rapidly industrialise and witnessed a concomitant and seemingly permanent rise in living standards across the region as a consequence. East Asia‘s transformation was surprising because even as late as the 1960s and 1970s, influential strands of radical scholarship continued to question whether the ‗peripheral‘ parts of an increasingly inter-connected global economy could ever hope to escape the predations and exploitation of the established industrial heartlands of Western Europe and North America11. In addition yet the fact that Japan had rapidly re-established itself as East Asia‘s pre-eminent industrial economy appeared to be unequivocal evidence that, not only was rapid economic development possible outside the established ‗core‘ economies, but that such a processes might ultimately take on a regional and self-sustaining quality. Such heady optimism appeared to have a solid empirical basis throughout the 1960s, 1970s, and 1980s. Ironically, the increasingly positive, not to say selfdeluding, sentiment that developed about ‗Asia‘ in the 1990s encouraged a flood of speculative capital into the region, fuelling a rising tide of expectations and asset values as a consequence. A detailed analysis of the crisis is not possible here,12 but it is important to emphasise that one of the most important consequences of the crisis was to subject the entire East Asian development experience to a rapid and generally unfavourable reappraisal. The distinctive role of the region‘s interventionist political elites was the object of particular attention as what were formerly seen as ‗strong‘ states were now depicted as centres of self-serving ‗crony capitalism‘. This remarkable change in the conventional wisdom about East Asian modes of governance was mirrored in, and drove, an externally imposed reform agenda - de5 | Comparative Public Policy: Developmental States. BTC 2011

signed by primarily by the International Monetary Fund with encouragement from the United States - which was intended to completely reconfigure much that was distinctive about East Asian developmental states. The questions that emerged as a consequence of the crisis and its subsequent economic and political aftermath were:  

Was the East Asian developmental state actually the cause of the crisis? Can it survive in the face of external reformist pressure in particular and in the face of competitive pressures generated by ‗globalisation‘ more generally?

Hence one must look more closely at the evolution and role of the developmental state in East Asia generally and at the way that this very distinctive institution has been understood in the theoretical literature. 2. Developmental States in Africa 2.1. Disjuncture between an analytical tradition One remarkable feature of the discourse on the state and development in Africa is the disjuncture between an analytical tradition that insists on the impossibility of developmental states in Africa and a prescriptive literature that presupposes their existence. States whose capacity to pursue any national project is denied at one level (theoretical or diagnostic) are exhorted, at the prescriptive level, to assume roles that are, ex definicione, beyond their capacity or political will. Such states are urged to delink, to reduce themselves, to stabilise the economy, to privatise the economy, to engage in good governance, to democratise themselves and society, to create an enabling environment for the private sector, etc. In other words, to do what they cannot do. What we then have is, to paraphrase Gramci, the pessimism of the diagnosis and the optimism of the prescription. Obviously such a contradictory position is unsatisfactory. To attain some congruence between diagnosis and prescription, we need to retrace our steps back to the diagnosis. We shall argue that neither Africa‘s post-colonial history nor the actual practice engaged in by successful developmental states rules out the possibility of African developmental states capable of playing a more dynamic role than hitherto. This assertion has to contend with a whole intellectual tradition on the prospects of capitalist accumulation in Africa and the nature of African states and societies — a tradition characterised by the casualness with which assertions about such prospects are made, and the deterministic and aprioristic nature of the discourse rarely based on analysis of the actual experiences, but merely on first principles, ideological conviction or faith. We shall also contend that most of the analyses about African states that have led to so much despondency about prospects of development are based on invidious comparison between African states in crisis and idealised and tendentiously characterised states elsewhere. This invidious comparison has occulted the state, making concrete analysis of its character less important than the normative statements about what it should be. The ought to has proved more interesting than the is; turning debates on the African state into the most pontifical and teleological of any theme. If the state was given a central role in earlier views of the process of development in Africa, the situation changed dramatically in the late 1970s and 1980s. The African state is today the most demonised social institution, vilified for its weaknesses, its over-extension, its interference with the smooth functioning of the markets, its repressive character, its dependence on foreign powers, its ubiquity, its absence, etc. The state, once the cornerstone of development, is now the millstone around otherwise efficient markets. It is now the rentier state, and overextended, parasitical, predatory, lame leviathan, patrimonial, prebendal state, crony, kleptocratic and inverted state, etc. Although this inflation of epithets has reached high proportions in more recent years, the tradition itself predates the crisis years. Early criticism of the state in Af6 | Comparative Public Policy: Developmental States. BTC 2011

rica came from the neo-Marxists whose own epithets to describe the pathological condition of the African state included the petty bourgeois state, the neo-colonial state and the dependent state. The many epithets underscore the fall from grace of the African state. It is now argued that not only has the state become dysfunctional in terms of the larger societal issues, but also a real nuisance in la vie quotidienne of its citizens, as evidenced by the withdrawal from state-dominated economic and social spaces (Chazan, 1988a; Chazan, 1988b; Rothchild, 1994). Some even go so far as to conceive of developmental schemes that completely circumvent or marginalise the state as NGOs, private sector and communities proceed almost surreptitiously addressing issues of poverty and development without the encumbrance of the state. The shift in attitudes is attributable not only to the dismal performance of African states during social and economic crisis, but also to a number of ideological, paradigmatic and structural shifts in both the domestic and international spheres. First, on the ideological level there has been the dramatic ascendancy of neoliberalism, partly as a result of the rise and political triumph of the neo-conservative movements riding on the discontent with welfare state and the inflationary impact of Keynesian solutions. To the extent that perceptions of welfarism and state interventionism spilled over into the aid business, it is not surprising that the aid discourse has embraced some of the anti-statism of neo-liberalism. Second, at the structural level, the process of globalisation has forced governments to rethink and restructure the state-market relationships and to pay greater homage to markets. 2.2. Learning the Wrong Lessons for Africa Not only has the spectacular success of the East Asian Four Tigers led to a re-reading of the role of the state in the development process, but it has also raised the question of replicability of their policies and experiences in other developing countries. The lessons drawn from these experiences differed and were often shaped by the pre-analytic predisposition of the observer. Earlier recognition of this performance of the Four Tigers was refracted through the prism of neo-liberalism so that the experience appeared shorn of all dirigisme and was cited as irrefutable evidence of the superiority of essentially laissez-faire policies. More specifically, reliance on market forces and the adoption of market-driven export-oriented development strategies was said to have led to efficient exploitation of the comparative advantage of these countries in cheap labour (Balassa, 1971; Little et al., 1970). The first presentation for African consumption of the lessons from Asia from the neo-liberal perspective was the Berg report (World Bank, 1981), which has been the definitive document on adjustment for 17 years. There have been amendments, subtractions, additions and refinements of the argument, but as Adjustment in Africa (World Bank, 1994) clearly suggested, the World Bank was almost congenitally tied to the core argument of the Berg report with its faith in the market and a minimalist view of the state. The 1994 report insisted on the dichotomy made in policy-making between state and market in which these appeared as rival forms thus reviving Manichean discourse that had, for years, vitiated development planning in Africa. Subsequent analysis has shown that neo-classical reading of experiences of development in Asia has been tendentious, deliberately downplaying the role of the state in the success stories. Revisionist literature on the Asian experience presents a picture quite different from that projected by neo-classical interpretation of that same experience. These countries were far from paragons of laissez-fairism and, instead, were highly dirigiste economies13 in which the states had governed markets to ensure high levels of accumulation, technology absorption and conquest of foreign markets. The general conclusion of this literature is that market failure so prominent in development economics is still a problem that warrants government intervention and that since such failures differ in intensity, scope and location, a selective set of interventions is required.

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The most significant lesson has been the central role played by a developmental state in the process of development. This dirigiste Asian experience and theoretical developments in economics have revived interest in some of the issues that were central to development studies, unleashing what Krugman (1992) has called a counter-counter revolution. These issues include problems of human capital; possibilities of the state crowding in private investment; market imperfections and failures, industrial policy, etc. In the African case, the failure of SAPs has compelled even the most dogmatic institutions to recognise the positive role the state can play in the process of development, beyond acting as a night watchman. In its book, Sub-Saharan Africa: From Crisis to Sustainable Growth, the World Bank (1989) acknowledged the importance of the state in managing development and social change, and brought back on the agenda the pro-active role of the state in development. However, the return of the state was now premised upon a whole series of proposals about good governance. In Adjustment in Africa (World Bank, 1994) and Bureaucrats in Business (World Bank, 1995), the Bank retreated to its more familiar ideological terrain in which a developmental state borders on an oxymoron. One sees in the tortured logic of the presentation of the Asian miracle, especially with respect to industrial policy and its reduction of a complex set of pro-active state policies into a vacuous market friendliness. The lesson drawn for Africa by the World Bank was that, in the best of cases, development strategies or, more precisely, industrial policy was either superfluous or, where useful, merely simulated the market, which, in the opinion of some, would have done better without the interventions anyway. In the African case, two additional arguments were added: first, even if industrial policy had worked in the successful economies, African states were too weak and too prone to capture by vested interests, so that the pursuit of such polices would produce perverse outcomes. Second, the WTO trade régime most of the policies central to industrial policy were no longer acceptable. 2.3. The Impossibility Theses The economic crisis of the 1970s, the demise of the theoretical armour for state intervention, the ideological hegemony of neo-conservatism in key funding institutions and donor countries, the palpable failure of development planning in many countries, stagnation and the crisis of accumulation in the socialist countries and the changing mood towards poor countries (the Afropessimism, etc.), the pessimism or cynicism of the development establishment about its counterparts in the recipient countries; all these pointed to government failure as more insidious than the market failure that state policies had purportedly been designed to correct. However, although some of the arguments against state intervention are based on an idealised and dogmatic view of markets, there is now widespread acceptance of market failure on the grounds of economies of scale, imperfect information, etc. Consequently, the most important case against developmental states in Africa is not faith in flawless markets, but rather that whatever the degree and extent of market failure African states cannot correct them in ways that do not make things worse. What emerges in the literature is that what has obviously worked in other late industrialisers is simply a non-starter in Africa. While it is now admitted that the state has played a central role in the development of Asian countries, it is suggested that replication of the Asian experience is impossible for Africa, because of the (a) dependence, (b) lack of ideology, (c) softness of the African state and its proneness to capture by special interest groups, (d) lack of technical and analytical capacity, (e) the changed international environment that did not permit protection of industrial policies, and (f) past poor record of performance. Peter Lewis, (1996) discussing replicability of the Asian model, states: While some aspects of this model (for instance, greater political insulation of economic policy makers) could reasonably be achieved in African countries, the extensive

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co-ordinated economic interventions of the East Asian states are well beyond the administrative faculties of most African governments

Similar sentiments are explicitly expressed by Callaghy (1993), who argues that African states lack the capacity to pursue the statist model of Asia since Africa is hemmed in as it tries to navigate between weak states and weak markets and to do so with open political structures. 2.4.Lack of Ideology? One argument often advanced by Africans themselves relates to the lack of an ideology of development anchored in some form of nationalist project. This is a recurring theme in political discourse in Africa. Frantz Fanon‘s (1966 and 1967) tirades against the ideological numbness of the emergent ruling classes in Africa remain among the most sustained statements of this position. Many other political leaders and analysts have elaborated on this lacuna. Onimode (1988) talks of the ideological vacuum that he attributes to petty bourgeois commitment to their class interests and their fear of revolutionary pressures, to the obscurantism of imperialist powers and to mass illiteracy which imposes a culture of silence and passivity and inhibits popular demand for ideological discourse. Thus Claude Ake states: The ideology of development was exploited as a means of reproducing political hegemony; it got limited attention and served hardly any purpose as a framework for economic transformation (1996).

For some, the lack of ideology is inherent to personal rule under which loyalty is not to some overriding societal goals but to individuals, often holding highly idiosyncratic ideologies that they themselves flout with impunity and with no moral qualms (Jackson and Rosberg, 1982; Sandbrook, 1986). Consequently, such leaders are said to have no moral basis on which they could demand enthusiastic and internalised compliance to whatever national project they launched. In the more extreme versions the lack of ideology of development is evidence of the cultural rejection of development by African leaders and their followers. However, as argued elsewhere (Mkandawire, 1997), for most of the first generation of African leaders development was certainly a central preoccupation. Indeed some writers characterise the post-colonial state as developmentalist almost by definition. African leaders have always been aware of the need for some nationalist-cumdevelopmentalist ideology for both nation building and development. The quest for an ideology to guide the development process inspired African leaders to propound their own idiosyncratic and often incoherent ideologies to rally the masses for national unity and development. If such ideologies are still absent it is definitely not for lack of trying. The centrality of development was such that it acquired the status of an ideology (developmentalism) that provided the ideological scaffolding of development plans and the authoritarian scaffolding given to it. For some, such an ideology has essentially served purposes of mystification and obfuscation. Gavin Williams, (1977: 286) on the ruling class in Nigeria, states: The Nigerian bourgeoisie lacks the commitment of a religious socialist or nationalist character of the rationalising, capital accumulating, surplus expropriating classes of Britain, Russia, Germany, or Japan during their period of industrialisation. Perhaps it is this which lies behind the repeated call for a ‘national ideology’, which seeks to subordinate the energy of the people behind a single national goal. In fact the Nigerian bourgeoisie do have an ideology, in the sense of a theoretical legitimisation of the status quo. It is found in the concept of ‘development’...

Some views are less cynical. By political commitment and social origins most of the leaders were deeply committed to the eradication of poverty, ignorance and disease, which formed an unholy trinity against which nationalist swords were drawn in the post-colonial era. In addition even today, some view of development conditions African policy-makers‘ perception of policy. The exigencies of political legitimacy impose development on any meaningful political agenda. Although the Bretton Woods institutions (BWIs) have managed to convince many that Afri9 | Comparative Public Policy: Developmental States. BTC 2011

can leaders‘ objection to Structural Adjustment Programmes (SAPs) was because these would undermine their rent seeking and clientelistic chasse gardée, there are well-documented developmental arguments against SAPs, advanced by African bureaucrats, on the need to maintain public investment in infrastructure and education, on the need for some form of credit rationing to stimulate private investment, etc. The Economic Commission for Africa has over the years regularly codified these positions, which were often dismissed peremptorily by the BWIs. In conclusion, one should note that, if the first generation of African leaders concentrated their energies on the politics of nation building, there are signs of a new leadership whose focus is on the economics of nation building. These new leaders swear by economic growth and seem to view good growth indicators as the main source of their legitimacy. In addition, if the earlier nationalist leaders associated capitalism with foreign control, the new leadership seems much less preoccupied with that. They have embraced privatisation and attraction of foreign capital as centrepieces of their policy initiatives. Ominously, these leaders are more attentive to the apprehensions and appreciation of international organisations than to their domestic capitalists. While assiduously cultivating a good image in the eyes of international financial institutions (IFIs) and seeking out foreign capital, they tend to have a jaundiced view of domestic capitalists, whom they hold in spite and incessantly vilify for parasitism, failure jointly to set up modern enterprises able to compete internationally, etc.14 2.5. Dependence Syndrome 2.5.1. Modernisation school: In the modernisation school that dominated development studies in the 1950s and 1960s, it was usually assumed that, once colonialism had shaken these underdeveloped countries out of their traditional stupor, they would embark on a process of modernisation that would make them traverse certain stages as spelt out by W.W. Roust in his famous anti-Communist manifesto, Stages of Economic Growth (Rowstow, 1960) towards a full-fledged capitalist system. Considerable empirical work was produced indicating certain historical regularities associated with economic growth, the idea being that once identified they could then be deliberately introduced or manipulated (through aid schemes and development planning) in the underdeveloped countries to initiate or accelerate the growth process. Traditional society might set up barriers but these would be overcome by modernising élite, aid and foreign capital. The first generation of post-colonial development plans were couched in a language that suggested conscious efforts to move economies from one stage, usually the pre-take off stage towards the take-off stage. In all this, the centre stage was occupied by modernising élite guided by the aspirations of nation building. The developmental state was seen as not only desirable but possible and able to be facilitated by training programmes, aid, military support, etc. (Gendzier, 1985). 2.5.2. Dependence School: By the mid-1970s, this linear view of capitalist development began to lose its dominance largely due to the onslaught of the Dependence School that generally denied that capitalism in the periphery could play its historical progressive role (in the Leninists sense of leading to an increase in the productive forces of social labour and in the socialisation of labour). Instead it spoke of processes of an ineluctable development of underdevelopment, predicated upon a rather constricted view of possible paths of capitalist accumulation and a highly stereotyped and idealised view of how the paths of the developed capitalist countries, which were then posited as models against which development experiences could be judged, had actually been. This point of departure in turn led to the mistaken view that, because capitalism in the periphery was different 10 | Comparative Public Policy: Developmental States. BTC 2011

and produced a series of social, political and economic contradictions that were specific to it, it ceased to be capitalist or, worse, it led to stagnation, a view associated with the Russian Narodniks that Lenin was to debunk. More significant was the fact that this perspective ruled out the possibility of developmental states in Africa that were either led by a national bourgeoisie or capable of nurturing one. This of course meant that either transnationalisation processes had obviated the need for such a national bourgeoisie or the asymmetric nature of centre-periphery relations tended to produce class structures that were not conducive to dynamic accumulation and, more specifically, produced a bourgeoisie that was historically condemned to be no more than a comprador bourgeoisie subservient to the interests of foreign capital (Leys, 1975; Nabudere, 1981; Shivji, 1980). Such a ruling class could not produce the captains of industry needed for the mobilisation of resources and acquisition of technology. Fanon (1966; 1967) was to provide the quintessential characterisation of the socio-psychology of this class as essentially born senile and decadent before scaling the heights of enlightenment and industrial revolution. At best, Africa could have lumpen bourgeoisie, dependent capitalist or, worse, drone capitalist, pointed to one fact that the African state was not up to its historical mission of ensuring capitalist accumulation. They underscored how the African state diverged from the historical norm of the capitalist state in the centre in which the national bourgeois had created a state that was the linchpin of the industrialisation of Europe. The question that emerged from this analysis was: is the aberration only temporary so that one could envision a set of policies and events that would turn this state into a normal bourgeois state, or was the historical conjecture such that the position of these peripheral states would remain pathological and that the only solution would be some kind of delinking from the world system? Most of the countries that openly pursued the capitalist path were considered neocolonial and so beholden to foreign interests that they could not possibly pursue something so eminently national as development. Versions of associated dependent development appeared in literature on Africa to accommodate the high growth rates in such countries as Côte d‘Ivoire and Kenya, and were most articulately advanced in the so-called Kenya debate. The third position was that, even if capitalist accumulation was possible, transcending of capitalism in the periphery was not on the immediate agenda and there was no point in going through the phase of a nationally directed process of a capitalist accumulation and, therefore, of thinking about appropriate state structures and functions. This argument was the more persuasive when informed by the view that the revolutionary pressures were intense and that the revolution was around the corner (Ake, 1978). The actuality of the revolution (to use George Lukac‘s phrase) meant that radical change was imminent. There was simply no point in considering possibilities of capitalist accumulation under the aegis of a national bourgeoisie given the apparent imminence of socialist transformation. Having reduced the choice in the Third World to that between Barbarism or Socialism, there was no point in pondering the prospects of capitalist accumulation as a feasible, let alone, morally acceptable alternative. The more successful states, in terms of growth, were usually dismissed as neo-colonial and that was that. If a developmental state was to emerge it would be in the transient from a national democratic phase. By the 1970s and 1980s most of these arguments had begun to lose their force partly because of the Asian — and some African and Latin American — experience of what Cardoso and Faletto (1979) termed associated depend11 | Comparative Public Policy: Developmental States. BTC 2011

ent development and partly because of ideological changes among key social movements that increasingly sought internal reform rather than rupture. The associated dependent development allowed for capitalist development in the periphery and in many ways provided the intellectual tools necessary for conceptualising the possibilities and dynamics of dependent development. The prerequisites for such development were, inter alia, that a progressive national alliance be established between the national bourgeoisie and labour and that the alliances constitute a developmental bloc able and willing to pursue a strategy of national industrial development over the long term. All this presupposed a developmental state. Similarly, those of classical Marxist persuasion asserted that capitalist accumulation was taking place in the developing countries in the normal way — both during colonialism (that pioneered capitalist industrialisation) and, more obviously, after independence (Warren, 1980). Warren‘s thesis was applied in its unadulterated form to Africa by Sender and Smith (1986), whose book was a polemical attack on the nationalists’ dependence view that colonialism and imperialism had bred underdevelopment. Arguments that capitalism had been stunted by colonialism were either evidence of guilt and shame and were lumped together with the literature of the masochistic modern version of the White Man’s Burden (Warren, 1980) or nationalist scapegoatism aimed at shifting the blame for post-independence policy failure on imperialism (Sender and Smith, 1986: 132). 2.6.Lack of Autonomy One major set of recent impossibility theorems are derived from a focus on the internal conditions of African countries and are largely informed by neoWeberian accounts of state-society relations or by public choice formulations on how the rational pursuit by individuals of their interests has led rather to lack of autonomy of the state and African malaise due to capture by societal interests. 2.7. Neo-patrimonialism: The neo-Weberian critique has focused on the failure of African states to establish themselves as rational-legal institutions and to rise above the patrimonialism that affects all of them, regardless of their ideological claims and the moral rectitude of individual leaders. Going back to the functions that modernisation had assigned to the state, the neo-Weberian highlights the flawed nature of the performance of the post-independence state, especially in its relationship with a society at large from which it has not been able to distance itself adequately so as to perform efficiently. In these accounts, market failure central to development economics and government failure central to neo-classical economists are replaced by something more debilitating and more recalcitrant societal failure signalled not only by lack of social capital, but also by the disease-like spread of this societal malaise into both market and state structures. Termite-like, Africa‘s primordial and patrimonial relationship (what Göran Hyden refers to as the economy of affection) has eaten into the very core of the edifice of modern administration rendering it both weak and incoherent. In Hyden‘s words (1983: 21): ... the economy of affection is an underestimated threat to the macro-economic ambitions of either capitalism or socialism in Africa. Derived from a mode of production in which the structural interdependence of the various production units is minimal or nil it has no provision from a systemic superstructure to keep it together. Instead the economy of affection is a myriad of invisible micro-economic networks which, if allowed to penetrate society, gradually wear down the macro-economic structures. The threat of the affective networks stems from their invisibility and intractability.

Mired in redistributive activities imposed by affective relations, prebendalism or clientelism, so the argument goes, the state has not been able to provide the bureaucratic order and predictability that capitalists need if they are to engage in long-term 12 | Comparative Public Policy: Developmental States. BTC 2011

investment. To the Asian autonomous state is juxtaposed the African lame Leviathan (Callaghy, 1987), which is so porous and penetrated by society, so beholden to particularistic interest groups, so mired in patron-clientelist relationships, and so lacking in stateness it cannot pursue the collective task of development, which demands insulation from such redistributive demands. It is these relationships that constitute what Bayart (1993) terms the politics of the belly that has paralysed African economy. Of the governmentability (i.e. mode of governance) produced by this eating, Bayart states (1993: 268): … it has crushed most of the strategies and institutions, in particular the Christian churches, the nationalist parties and the civil services, which have worked for the advent of a modern Africa. The experiences of governments which attempted to break free from their grip have either not lasted a long time or have in their turn been absorbed by its practices… There are a number of problems with this approach as we contemplate the prospects of a developmental state in Africa. One is that it is not always clear whether such state-society relationships are inherent to the level of development and that with passage of time the African state will evolve into a more respectable and recognisably developmental form. Or are they merely conjunctural phenomena attributable to the greed and venality of African leaders spurred on by the dramatic increases in revenue accruing to the state in the post-colonial era? Or are these attributes of the peculiarities and the historicity of African cultures that account for Africa‘s predicament (as compared, for instance, to the blessings of Confucianism enjoyed by the Asian countries) that can only be transcended in the longue durée? Another problem is that neo-patrimonial states in and outside Africa have pursued a wide range of policies including some that are squarely developmental. In other words, other than indicating the style of governance, neo-patrimonialism does not tell us much about what policies a state will pursue and with what success. In the African case neo-patrimonialism has been used to explain import substitution, export orientation, parastatals, privatisation, the informal sector development, etc. The result is that, in seeking to explain everything, it explains nothing except perhaps that capitalist relations in their idealised form are not pervasive in Africa. Even more damning is the fact that some of the features of the African state highlighted by this literature have been a salient aspect of successful developmental states. Accounts of spectacular corruption in the high performing East Asian economies have become frequent in the press following the financial crisis. So, obviously, neopatrimonialism is not a robust independent variable in explaining low economic growth. One solution to this conundrum is to suggest that, while the Asian variant of patrimonialism does not constrain rational bureaucratic decision-making (a contradiction in terms), Africa‘s patrimonialism does just that. The African state is said to be afflicted not only with paternalism, but also with a debilitating strain of pathological paternalism (Ergas, 1986). Much of this speculation fails to spell out exactly what African cultural attributes would produce the pathology of paternalism in Africa. It also displays ignorance or idealisation of the Asian experience and thus occults the very complex processes behind the successful performance of these economies. Finally, we should also bear in mind that morally reprehensible or culturally unacceptable though certain clientelistic practices may be, we do not have a clear theoretical establishment of how they affect the performance of capitalist economies. Capitalist economies operate with a much broader moral latitude than it is often preached. A very wide range of morally reprehensible behaviour can be integrated into strategies of accumulation effortlessly. Not even the case for the negative effects of corruption and capitalist accumulation has been satisfactorily established, despite the new crusade against corruption. 3. Public Choice and Rent Seeking: 13 | Comparative Public Policy: Developmental States. BTC 2011

The most cogently stated of these critiques is that of public choice school with the work of Bates (1981) being the single most comprehensive statement of the critique as far as Africa is concerned. Essentially this critique starts from assumptions of how unregulated markets work. In general, these markets are said to operate in a Pareto optimal way in the sense that the allocation of resources that they generate is such that it can only be improved upon by making somebody worse off. Given that markets work well, why are market distortions by the state tolerated or generated? In Bates‘ work, the answer lay in the rational pursuit of self-interest groups by organised individuals who pushed the state to adopt policies that generated rents for them. The state was then essentially a rent generating institution that inhibited efficient allocation of resources. In this literature rent seeking invokes the expenditure of resources to capture artificially created rents. It should be stressed that the point of departure of rent seeking literature is the perfect market. In real life and, indeed, by this definition, rent would be ubiquitous in any situation in which a state existed to safeguard or transfer rights. Like neo-patrimonialism, rent seeking is used in a procrustean manner so that it ultimately assumes the character of a bogeyman. While the concept points to something real in most economies, it has been made to carry more than it can bear. This has been partly because of the anti-statist ideology to which it has become tethered making it serve as an ideological weapon in the statephobia that neo-liberalism has cast so broadly, and partly because of the protean definition assigned to it so as to include anything from Mafia-like activities to the protestations by the Chamber of Commerce over pieces of legislation. In the case of Africa, rent seeking is conflated or used interchangeably with corruption, patron-clientelism and even the extended African family. Rent seeking15 usually involves redistribution of income from one group to another. The effect of such redistribution on growth depends on its impact on incentives and the use to which the winners put the surplus in their hands. As Catherine Boone (1994) notes in the case of Senegal, rents can constitute a form of primitive accumulation, as can be inherited wealth or any form of windfall profit. She observes that, for the emergence of African capitalism, the key question is: will wealth collected in the form of rents be transformed into capital through productive investment? Other than the easy come, easy go thesis, there are no a priori reasons to believe that only the wealth earned by one‘s blood, sweat and tears will be used productively. In most of the literature, rent seeking activities are around firm, industry or sector micro-economic policies, leading to various micro-economic distortions that have all been grouped under import substitution policies. Rent seeking is generally responsible for micro-economic inefficiencies that are often remotely related to the macro-economic imbalances for which rent seeking is usually blamed. Rodrik (1995) points out that it was generally macro-economic imbalances and the failure to correct them in time that have accounted for the economic crisis in most developing countries. The countries that experienced the debt crisis were those that failed to adjust their monetary and fiscal policies and not those that had large micro-economic distortions. The rent seeking literature in Africa has tended to blur the distinction between micro-economic distortions and macro-economic balances, tending to believe that the latter was the logical consequence of the former. It is now generally evoked against active policy making even in directions that have been theoretically and empirically demonstrated to be beneficial. It has become the great caveat that brings the apparently inexorable logic of market failure to a dead halt. In addition yet many of the policies attributed to rent seeking and identified as the cause of Africa‘s failure have been and are still in use by the High-Performance Asian Economies (HPAEs) to good effect. In other words, while micro-economic distortions were costly, what eventually drove many impost substituting countries to ruin was not so much the inefficiencies induced by rent seeking, but macroeconomic imbalances that are not easily attributable to rent seeking groups.

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Even in the context of new growth theories, we simply do not have evidence on the precise channels through which rent seeking adversely affects such variables as growth, if at all. In looking at some of the advice given to African countries, it turns out that what is wrong is not rents per se but rents attached to a wrong strategy. This partly explains why advocates of export-oriented strategies admit, albeit surreptitiously and reluctantly, to the need to deploy rents to stimulate export-oriented industries. In the push for exports towards which Africans are now being urged, it is suggested that governments provide selective confessional credits, export subsidies, etc. This involves creating rents in these new activities. It is not clear why these rents will not induce as much lethargy as those given for import substitution industry. Rents can be either productive or unproductive in their incentive impact. In most models it is assumed that rents are exogenous to the individual firm. They are out there and the firm allocates resources to get them. It follows from this assumption that such an allocation will leave fewer resources for productive investments. However, once the assumption of exogeneity is dropped and once we assume instead that the level of rents a firm gets depends on the size of the firm‘s activities, the story changes and we get an entirely different dynamics in which rent is a function of the firm‘s performance. The pursuit of rents can lead to expansion of productivity activity. In such cases rent seeking becomes a spur to growth as rent seekers attempt to capture as much of the rents as possible. In a study of Tunisia, Bellin (1994) concludes that government mediation of profits and even extensive cronyism can be compatible with productive investment and growth if appropriate political conditions prevail. What matters about rent is its contingency and reciprocity. This in turn depended on the nature of the state structure, the selfmonitoring of the capitalist class themselves, the pressures of other social classes for performance and the logic of the régimes sustaining political coalition. Much of the writing on Asia, at least up until the current financial crisis, took it for granted that the creation and allocation of rents by the state had played a central role in both creating a nationalist capitalist class and promoting accumulation. Writers on Asia point to contingent rents, which have been used to encourage contests among private firms for government incentive and co-ordination schemes (Yanagihara, 1997). Such rents are paid to reward growth enhancing activities by private firms. Jomo (1994: 649-650) makes a very clear statement of the issue ... the rentier nature or origins of income does not mean that such income will necessarily be subsequently deployed unproductively. Scale economies or other considerations may well determine that a perfectly competitive situation will be suboptimal, in which case the question arises of how best to distribute or allocate such rents. Rather than insist on competition in such circumstances in a vain search for efficiency, which would effectively dissipate the rent through the expenditure of rent seeking costs, the state could instead allocate such rents in a manner so as to accelerate and direct the accumulation process, e.g. in favour of industrialisation. Hence, for instance, effective protection policies have been used in Northeast Asia to push import substituting industries to export through the use of conditional incentives. It is not the existence of rents in themselves which should always be the focus of concern, but rather their distribution or allocation and deployment for productive purposes. In many circumstances, the existence or attraction of rent capture may well be the most effective incentive to encourage productive) investment or economic activity, e.g. technology development

Elsewhere Jomo (1996:12). notes: Rent transfers may well contribute to, rather than undermine further investments in the national economy since rentiers can usually count on further advantages from such investment. If capital flight is thus discouraged, the greater concentration of wealth associated with such rentier activity may actually have the consequence of raising corporate savings, thus accelerating capital accumulation, growth and structural change.

The Asian use of rent seeking to spur firms to expand and export echoes this endogenisation of rents. The dependency on rent earned on investment has been used as an instrument by governments to raise the profitability of investment in selected economic 15 | Comparative Public Policy: Developmental States. BTC 2011

activities. This case is well argued by Akyüz (1996), who advances the proposition that the creation of rents and the pushing of profits over and above those that would be attained under free market policies were central to the process of accelerated capital accumulation and growth and establishing of new industries by providing a profit-investment nexus that undergird the high corporate savings and investments in a number of Asian countries. He suggests five reasons for the success in the linking of rent creation to promotion of industrialisation.  Rents were achievable through activities which served national interests.  Rent seeking costs (information collection, influence peddling and bargaining) were kept low.  Governments acted to close off non-productive channels of wealth accumulation such as urban real estate speculation.  Rents were provided on a selective and temporary basis and withdrawn as new industries became mature enough to compete internationally.  The realisation of rents was related to performance standards. The point of the Asian experience is that the use of rent seeking as an argument against a more active developmental state is simply not credible. The relevant issues are rents for whom and with what reciprocal obligations for receivers of such rents? In addition the answer will lie on the desired income distribution and strategy of development. The denial of an active developmental state for fear of capture is tantamount to the denial of the possibilities in Africa of accelerated development achieved by a deliberate government of the market towards greater mobilisation and developmental allocation of resources (including rents). In the African debates, the fear of the damaging effects of rent seeking has not only sustained the argument for a minimalist state, but has also given the foreign experts, who for inexplicable reasons do not engage in rent seeking like all other mortal beings, a moral upper hand. Both the rent seeking and neo-patrimonialism argument have been used to seek more autonomous states by suggesting that the key to Asian states was such insulation. Analysis by institutionalists suggests that the view of the autonomy of the state in the Asian miracle countries is an oversimplification and the argument for state technocracies pursuing development in complete isolation from societal pressures is a myth and is not empirically founded. In the seminal work on developmental states, Chalmers Johnson (1981) underlined as a crucial feature the intimacy of their relationship with the private sector and the intensity of their involvement in the market. Subsequent writing on other developmental states has underscored this point leading to the useful, albeit problematic, notion of embedded autonomy to describe the nature of state autonomy in these societies as circumscribed by the dependence of the state on the activities of the private sector for its development project (Evans, 1992). Evans (1992) has also argued that the much vaunted autonomy is embedded in a progressively dense web of ties with both non-state and other state actors (internal and external) through which the state has been able to co-ordinate the economy and implement developmental objectives. In popular parlance such a relationship is encapsulated by such expressions as Japan Inc. or Malaysia’s smart partnership, which all point to close relationship between state and domestic capital from what is advocated by IFIs. These essentially corporatist arrangements were central to the edification of the relationship of trust between state and capital. In many countries, independently organised business associations have had considerable influence on state polices. In South Korea, concentration of business and the highly diversified interests of the chaebols obviated the need for organised collective action. Instead business-government relations were managed through direct firm level and even personalistic consultations between the chaebols and state institutions (Cheng et al., 1996). Hawes and Liu note that in other Asian countries technocrats, who have enjoyed less autonomy than those in South Korea and Taiwan, have had to seek allies where they could find them both nationally and internationally, and they have found many willing 16 | Comparative Public Policy: Developmental States. BTC 2011

partners in the demand for new institutions within the growing and increasingly competitive classes of the region (1993: 647). The World Bank observes that formal institutions that facilitate communication and co-operation between the private and public secures ... in effect an institutionalised form of wealth sharing aimed primarily at winning the support and co-operation of business elites (1993: 181). The isolation of these states was not from all particularistic interests but from those of some particular interests or classes. More specifically what most of the state autonomists imply is an economic bureaucracy beyond the reach of populist pressures (Felix, 1994) — a point that has unwarrantedly led to the view that autonomous states must be authoritarian. These problems arise from the tendency to treat conjunctural features of states as if they constituted structural or intrinsic features of African societies. Failure to handle a particular crisis is considered as evidence that the state is non-developmental in both ideology and technical capacity. The result is ambiguity in the use of concepts and their relationship with other variables. Associated with success in Asia, clientelism and close ties between business and the state have been advanced as evidence of embeddedness of state autonomy while similar practices in Africa are evidence of capture. In addition now that same embeddedness in Asia is advanced as evidence of crony capitalism that has ineluctably led to the current Asian financial crisis. It is obvious that such concepts as neopatrimonialism cannot serve as a robust independent variable — especially when given a culturalist twist. 4. Wrong Economic Histories: Much of this impossibility literature is based on a misreading of the economic history of Africa. The Berg report contained a brief history of Africa‘s post-colonial development and the role of the state in that development. It portrayed both post-colonial policy and performance as unmitigated and undifferentiated disasters. The veracity of the Berg report‘s analysis of the African economic crisis was taken for granted by most analysts of African economies who proceeded to derive generalisations from it and to provide the political explanations for that poor policy performance. In addition yet the Berg report had in many ways falsified economic performance during the preceding two decades.  First and foremost, it underestimated the enormous importance to African economies of external conjuncture and the role of foreign expertise. African economies generally do well when the global conjuncture is good and poorly when it is bad. It is a lesson that the BWIs have gradually learnt as their own stabilisation and adjustment programmes have on several occasions been unscrambled by external factors. As for foreign expertise, this is one variable that is often conveniently forgotten in looking at the malaise of the African state. Nevertheless, international institutions do, on occasion, admit that their role in African policy making has been a major contributory factor to the policies African countries have pursued. Most policies that are today attributed to neo-patrimonialism and rent seeking were the orthodoxy of the day brought to Africa in well-funded and well-manned packages. The lack of policyownership is not a new thing in Africa and, alas, not a thing of the past either.  Second, key economic policies — especially those surrounding import substitution — were not the result of lobbying by rent seekers or capture of the state of these policies. Synthesising the results of a number of studies on the interaction between the economics and politics in several developing countries, Robert Bates and Anne Krueger, who have contributed richly to the public choice school, state: One of the most surprising findings in our case studies is the degree to which the intervention of interest groups fails to account for the initiation or lack of initiation of policy reforms (1993:455). With the exception of a few cases, such embeddedness never really developed in Africa. If there was anything that the state in Africa failed to do it was to allow the local business class effective presence in policy-making. Or, conversely, if there is anything that African business classes failed to do it was to capture state policies. Much of the evidence of capture is deduced from the fact that gains accrue to identifiable groups or sectors. However, the argumentation here 17 | Comparative Public Policy: Developmental States. BTC 2011





often involves a non sequitor. The fact that a group benefits from a particular set of policies does not prove that they lobbied for those policies, let alone that they have captured the state. Dispensation of rent by states does not establish capture by beneficiaries of such rents. Thus, when Mobutu embarked on Zairenisation, transferring foreign-owned firms to nationals, all one can say is that a state awash with revenue from increased commodity prices took some nationalistic measures which benefited some of Mobutu‘s cronies. The true test of capture is the behaviour of the state during hard times. In the African case, key groups benefiting from putatively captured policies (such as the vaunted labour aristocracy) have been dropped from the coalition with surprising ease. Conceptually, state policies were never a class project in Africa. Import substitution was neither the result of successful lobbying by rent seeking groups nor a consciously devised strategy to support the emergence of a national bourgeoisie; and even the small capitalists that emerged almost inadvertently, and at times despite state harassment, were to be abruptly left out in the cold as governments danced to the tunes of the BWIs. Indeed, where intimate relationships emerged they tended to be arbitrary and lacking in reciprocity. There were many historical reasons for the weakness of the African capitalist class vis-à-vis the state. For one, colonialism had suppressed the emergence of such a class so that, unlike the case in India, for instance, the national bourgeoisie played a marginal role in the liberation struggle and could easily be marginalised in policy making. The absence of a group of large indigenous capitalists with sizeable capital, organisational resources and entrepreneurial skills, obviated the need for the new states to form an alliance with such classes for its development project. It also limited the capacity of indigenous capitalists to capture state policies. In addition, only in rare cases have the domestic capitalist classes constituted an important base of state revenue. In the mineral rich economies, the state had access to revenue either by directly owning the mines or by relying on foreign capital. In other economies, the state has had access to peasant revenue without any mediation by a capitalist class, not even a merchant one. Third, despite the many distortions of import substitution, up until the second oil crisis many African economies had performed relatively well. Indeed the performance of some of the countries was of miraculous proportions (for instance, Côte d‘Ivoire, Kenya, Malawi and Tanzania had rates of growth of more the 6 per cent for over a decade, based largely on agricultural and industrial expansion). One interesting feature is that much of this growth was sustained largely by domestic savings which increased from around 15 per cent in 1960 to 25 per cent in 1980. The rates of savings and investments compared well with those of East Asia, although they tended to yield lower rates of growth. The state played a central role in this process even in countries such as Côte d‘Ivoire, Kenya and Malawi. Although the World Bank tended to use the Ivorian case as evidence of the benefits of its proposed adjustment models, the Ivorian state was highly interventionist and dirigiste with the state spearheading development of whole agricultural export activities through parastatals such as SODEPALM, regional development schemes and import substitution industrialisation. In addition so Africa has had examples of countries whose ideological inclination was clearly developmentalist and that pursued policies that produced fairly high rates of growth in the post-colonial era and significant social gains and accumulation of human capital. African bureaucracies were able to extend infrastructure and social senses to degrees that were unimaginable under colonial rule. Moreover, in a significant number of countries, the political élite were able to reach arrangements that provided peace and stability. In addition, in a sense, developmental states are not totally alien to African climes. These experiences need to be critically examined for useful lessons. Fourth, African development strategies were not inward looking in a simplistic hostile-to-trade manner. Nor was the failure to pursue labour-intensive, export-oriented

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strategies a failure to respect comparative advantage. Most development strategies were based on the assumption that, by using the comparative advantage in land, African countries would industrialise by export minerals or other primary products to earn the necessary foreign exchange for industrialisation, which would eventually allow diversification of their export bases. For these land rich economies revealed comparative advantage lay in these land-intensive exports rather than in the labourintensive ones associated with Asia. Such a choice has had enormous implication on the stability, flexibility and social structures of African economies. The inflexibility was re-enforced by the lack of explicit export-investment nexus to diversify export away from monocultural structures. 

Finally, the assumption by the state of an active role in economic affairs was not always the result of hostility to private investment putatively caused by visceral anticapitalist reaction induced by colonial experience. The fact of the matter is that in the immediate post-independence period most African governments pursued what was known as industrialisation-by-invitation strategies in which the attraction of foreign capital played a central role. Protective measures for industry were often part of the package of incentives demanded by or intended to attract foreign capitalists. It was the reticence of foreign investment that pushed African governments towards increased reliance on parastatals and joint ventures and escalation of the battle to attract foreign capital using a battery of invectives. There is some sense in which we may be reliving the same experience as once again African governments pursue beggar-my-neighbour strategies to attract foreign investment in manufacturing with little sign of success. The reticence of foreign investment was accompanied by a suspicion of and hostility towards indigenous capital by African states even in those countries that were avowedly capitalist in their ideologies. 5. New International Order: A new worrisome impossibility theorem comes from debates on globalisation as eerily reminiscent of earlier dependence arguments. The argument is that the current order does not allow many of the policies that constituted the core of the activities of developmental studies. Protection of industries, financial repression, export promotion subsidies are now ruled out by current WTO arrangements. 5.1. Mal-adjusting the African State The significance of these impossibility arguments is that the discursive framework they have engendered has produced a knowledge that has been acted upon by key policy-makers in a self-fulfilling manner. The consequence of these perceptions of the state has been a set of self-fulfilling predicaments. They have led to a set of measures that have so maladjusted African states that they provide proof of the impossibility theorems. To avoid clientelism and rent seeking, the state is squeezed fiscally and even politically. This weakened state then exhibits incapacity to carry out its basic functions (partly because of demoralisation, moonlighting by the civil servants, corruption, etc.). This is then used to argue that the state in Africa is not capable of being developmental and therefore needs to be stripped down further and be buffeted by legions of foreign experts. In addition so we witness in Africa the reinforcement of policies that continue to erode the economic and political capacity of the state even as considerable noise is made about good governance and capacity building, and it to this that we now turn. 5.2. Undermining State Capacity One central tenet of adjustment has involved rolling back the state. While it is true that any kind of response to the fiscal crisis of the state may have justified drastic reductions in state expenditure, both the cognitive framework through which the problem was based and the actual solutions proposed led not so much to the rolling back of the state but to a drastic erosion of its capacity as a state. The intention was to create what Johnson (1987) characterised as a soft authoritarian state whose main task was to create an enabling environment for the private sector by augment19 | Comparative Public Policy: Developmental States. BTC 2011

ing market rationality, reducing risks and uncertainty but not engaging in market distorting interventions that characterised policies of Asian developmental states. Writing on Mozambique, Marc Wuyts (1996) speaks of two processes that weakened the state under adjustment — the squeezing of the state through fiscal constraints and the splitting of the state from increased fragmentation of control over public money between state institutions and multitude of donor initiatives. One could add here the pillage of the state through the stripping of assets and fire sales through privatisation. The literature informing these possibilities has suggested that public expenditure in Africa is too high largely because of a bloated bureaucracy that drains the state coffers. The standard policy prescription was retrenchment of the civil service. While the literature on downsizing has always assumed the simultaneous introduction of performance enhancing measures, the reduction of the civil service in Africa has usually gone hand in hand with declining real wages and uncertainty even for those that remain on the payroll. The effect of all this is captured by Janice Aron thus: (1996:117). The state in Africa has come full circle to the small government of pre-colonial days; but with the additional hysterisis effect from past shocks of a seriously depleted current institutional capability, deterioration in the current quality and scope of social services and infrastructure provision, coupled with a fiscal position highly vulnerable to changes in foreign aid

Apparently alarmed by the damage its proscriptions have caused, the World Bank has become more cautious in its pronouncements about the downsizing of the civil service. A World Bank study noting that among developing countries subSaharan Africa had the lowest government employment as a percentage of the population, had the following observations: (Schiavo-Campo, 1996). In many countries in sub-Saharan Africa, the civil service has sharply deteriorated in almost every way since the 1970s. (Botswana is one of the few exceptions.) Beginning in the 1980s, a succession of fiscal stabilisation programs has reduced government employment in Africa to the lowest level of any developing region. Thus, although additional downsizing may be necessary in some countries, most do not need to shrink the workforce but to overhaul the entire civil service system

No wonder capacity building is now a major buzzword in the donor community. It derives partly from the view that Africa‘s institutions of governance are weak or inappropriate in some sense or other, and that, where the institutions are appropriate, the personnel managing them are poorly trained. This leads to a significant role of technical assistance in aid packages and capacity building programmes for individual African states. The capacity building project is the new justification of technical assistance even as international organisations bemoan their own preponderance in the formulation and implementation of policies in Africa. The brain drain afflicting many African countries is evidence of the fact that low morale and poor pay, rather than technical competence, are the main problem of the civil service in Africa today — itself the consequence of an anti-state ideology. Rather than on capacity building, focus in Africa should first and foremost be on valorisation of existing capacities through better capacity utilisation and retooling of the civil service, reversing the brain drain and repairing the main institutions of training that have been starved to death even as donors set up new ones to produce parochial skills required in their new projects. While the need for curbing authoritarian states is understandable, the incapacitation of the state has been extended to democratically elected ones largely the antistate ideology rarely distinguishes between democratic and authoritarian ones. Indeed, in some of the literature it is suggested that neo-patrimonialism and rent seeking will be accentuated by democracy. Consequently, the designs are to impose restrictions on the new democracies by multiplying the number of authoritarian 20 | Comparative Public Policy: Developmental States. BTC 2011

enclaves (e.g. independent central banks) that lie outside the purview of democratic politics and to limit the choices of elected bodies. (Mkandawire, 2006). 5.3. Proliferation of tasks for weakened states One problem with setting out tasks that even a minimalist developmental state should assume is the absence of theories of social change and development from which it can draw policy instruments. Current theoretical discussion on development is dominated by new growth theories in a manner that does not help matters. The propositions of the new growth theories arise from an extension of the basic Solovian growth model so as to endogenise the various variables that it either assumed away or treated as exogenous — technology, increasing returns scale, human capital, etc. (Solow, 1956). These theories provide a new rationale for government intervention since they assert that the contribution to the overall social production of some investments is higher than their contribution to the income of individual agents, some government policies to foster such activities would be welfare enhancing (Barros, 1993). There has been an explosion of tests of models with the growth in the number of variables only constrained by data availability, there being no theoretical framework for determining relevant variables. This eclectic and rather procrustean explanation of economic growth has the paradoxical implication of increasing the laundry list of what governments should do even as the dominant ideology calls for a minimalist state. Virtually every donor can find a variable in these equations that justifies their intervention. One reason for this is of course because the theories have tended to focus on what Abramovitz terms immediate causes of growth and thus provide little help to understanding the factors behind these immediate sources and the structural determinants that developmental states usually address (Nelson, 1997). This focus on immediate determinants has been encouraged by the preponderance of stabilisation issues in current policy-making, with the result that developmental fundamentals and the institutional arrangements they call forth are subservient to short-term stabilisation policies, which often include the erosion of precisely those institutions that should guide the development process. Now, stabilisation policies require much fewer actors than development strategies. Isolated change teams in the Ministry of Finance or Central Bank can devalue currencies and liberalise foreign exchange markets. However, measures that call for creating and stimulating large numbers of local bureaucrats and private actors are another cup of tea, as the BWIs‘ bureaucrats have gradually and painfully learnt. On the basis of such econometric exercises, the number of things that would constitute a developmental state has increased pretty much at the discretion of individual econometricians. The result is that the state appears as some institution that processes a laundry list of an ever increasing number of items — prices, aid, investment, infrastructure, human capacity, governance, attitudinal and ideological changes, regional integration, stability, democracy, strong government, etc. The performance of African economies has been read off from this framework in a manner that is not particularly informative as to what the state should do since for all its focus on policies a whole range of variables some of which are beyond the control of the state have been gratuitously added to the equations: ethnic diversity, geographical location, size of country, perceptions of the country by foreigners, rainfall, etc. The problem is not only the proliferation of tasks, but the institutional arrangements set up to carry out such tasks. In most cases this has involved parcelling out of the different tasks to different funding governmental and non-governmental agencies, which has simply worsened co-ordination problems. 6. Dis-embedding the state We noted how much of the writing on African states bemoans their lack of autonomy. Both the invidious comparisons of African capitalists with idealised capitalists elsewhere 21 | Comparative Public Policy: Developmental States. BTC 2011

and the fear of capture by rent seekers or patron-client networks have led to a negative and naïve view of the interrelation between public power and private interests, a view that pre-empts or precludes the possibility of building positive coalitions between the state and the business community. The presumption is simply that state-capitalist relationship in Africa can only be collusive and not synergistically and mutually reinforcing or benignly co-operative and collaborative. As a consequence, in the African case the call for state autonomy has been tantamount to a call for isolation by delinking of the state from its social roots while subjecting it to external agents of restraints through a battery of conditionalities and technical assistance. The BWIs have sought to free the state from the capture by distancing it from local vested interests. This alienation of the state is supposed to provide the necessary autonomy to ensure decisions that enhance national interests. Compounding matters has been the hijacking of key state functions by international financial institutions further distancing the state from local capitalists. Indeed, contrary to their self-perception as the guarantors of private capital, the BWIs are a source of extreme insecurity among local capitalists. Wanton liberalisation of markets without careful consultation with business classes, privatisation that provides no special privilege to local capitalists, cessation of directed credit or development finance, high interest rates, all these underscore the distancing of the state from local capitalist interests and the preeminent position of IFI‘s interests and perceptions in policy-making. The comings and goings of BWIs‘ missions are as much a source of uncertainty in the business community as the movements of commodity prices. Will they devalue? Will ministers of finance be changed? Will privatisation be accelerated and thus force the government to engage in fire sales? Should one wait for the Paris Club meeting before investing? Will the government comply to the conditionalities? 6.1. Creating and Taming a National Bourgeoisie Once the question of capitalist accumulation has been raised, then the question that follows, almost trivially, is that of the capitalist class that is to drive the process of capital accumulation in a given country. One thing that emerges clearly from the Asian experience is the significance of the dependence of the state on the activities of the private sector for its development strategy. For all the talk about globalisation, the edification of capitalist accumulation in a specific country ultimately depends on national characteristics (class formation, resource base, etc.) and policies towards both foreign and domestic capital. Historically, this class was referred to as a national bourgeoisie. If capitalist accumulation is to take place, private domestic capital would serve as a catalyst. One reason is that Africa is unlikely to constitute an attractive place for foreign capital for some time to come. It is clear that capital does not flow from the developed to the developing countries on the scale implied by the relative factor endowments doctrine (Eatwell, 1996; Krugman, 1993). There is growing theoretical and empirical material suggesting that the segmentation in global markets is such that certain regions may not benefit from capital movements. The region that is invariably cited is sub-Saharan Africa. Both the global flows of foreign investment and the exigencies of development of national economies place the largest burden of private investment on domestic capital. The point here is that capitalist accumulation will be largely national for much of Africa. Indeed, given Africa‘s very tarnished image, confidence by Africans in the continent‘s future will be of prime value in resuscitating investment. Or, in the words of Michael Chege: (1992: 159). ... in circumstances such as these it is unrealistic to expect a turnabout in private foreign capital inflows, even with reforms. African governments must first cultivate the confidence of their own domestic investors. As with good governance, sensible economics begins at home

Or those of Kennedy: (1988: 191). 22 | Comparative Public Policy: Developmental States. BTC 2011

In the final analysis, only powerful and capable local interests — public as well as private — possess a degree of permanent, all-profound commitment to national need sufficient to generate the momentum required for a successful onslaught against the condition of dependent, distorted and restricted development

Mkandawire (1994) has contended elsewhere that if capitalism is to be politically viable in Africa, it will have to have some national anchoring based partly on the capacity of the indigenous capitalist classes to direct state policy toward their gaining access to labour, land and capital, toward limiting the role of foreign capital, and toward nurturing indigenous capitalist investment by facilitating institutions of stabilising capital-labour relations and supplying technical services and physical infrastructure. For political legitimacy the capitalist class will have to convince critical sections of the nation that its project of capital accumulation is in the national interest. This brings us to the nature and capacity of African capitalist classes to respond to state initiative — a poorly studied area. There are two capacities relevant here. One is the capacity for thriftiness and therefore the possibility to invest and the other is the organisational capacity not only to manage one‘s enterprise, but also to advance a class position and impose self-discipline. It is generally presumed that African capitalists are wasteful. However, compared to similar classes in the successful Asian countries, African capitalists are not bigger spenders. The problem with African capitalists is not lack of thriftiness but lack of faith in their own countries as investment sites and the consequent propensity to expatriate capital abroad. One should stress here that funds held by Africans abroad count in hundreds of billions (Collier and Gunning 1997). As for administrative capacity, the state can play an important role here not only through extension services to business, but in pushing for certain organisation forms that exploit synergy and resolve co-ordination failure and reduce risk. One feature of the debate on the national bourgeoisie is that, while the literature has in some way or another suggested its desirability, it has always run short of presenting the strategy for the creation and strengthening of such a bourgeoisie. One thing stands out clearly — the emergency of a bourgeoisie is not facilitated by laissez-faire régimes that international financial institutions have sought to impose everywhere in Africa. Evidence from a wide range of experiences with capitalist accumulation suggests that the emergence of a national bourgeoisie is fostered or even planned by the state or nurtured by it in a hothouse fashion (Marx 1962). The creation of a national bourgeoisie will pose innumerable political, ideological and even ethical questions. The measures required may include privatisation, but it seems to me that privatisation is probably much less important than stimulation of capitalists to invest in new and competing activities.16 6.2.Reconstructing the State Apparatus In virtually all the writing on the developmental state in Asia, great emphasis is placed on the need for a competent administrative apparatus. We argued above that the jaundiced view of the BWIs towards the state has allowed policies and practices that have stripped state structures to their bare bones. Reconstructing the administrative apparatus is therefore a central task. Here again we have to contend, on the one hand, with mystification of how Asian bureaucracies came about, suggesting that they somehow either come from or are based on some Confucian bureaucratic sense and, on the other, the wanton denigration of the African civil services as irredeemable cesspools of corruption and incompetence. As students of Asia remind us, building these bureaucracies has been a hard fought battle. Both the Asian and African experiences clearly suggest that it is not some cultural-ethnic attribute or some deeply rooted historicity that explains Asian administrative performance, but specific institutional arrangements between states and different classes that have underpinned the high accumulation model. In the words of 23 | Comparative Public Policy: Developmental States. BTC 2011

Evans, East Asian bureaucracies are neither gifts from the past nor easy outgrowths of surrounding social organisation. They are hard won edifices constantly under construction (1997). The way forward does not lie in the wholesale neglect of existing capacities in the quest for new ones, but in the utilisation, retooling and reinvigorating of existing capacities — including reversing the brain drain — and in the rebuilding the educational and training institutions in light of long-term developmental needs rather than the ad hoc manner encouraged by new capacitybuilding fads. In all this, it important to bear in mind the conjuncture within which such states will operate. One of the arguments raised by the World Bank against the wisdom of emulating Asian industrial policy was that in this WTO era, many of the policies would go against trade conventions to which African governments are signatory. This may prove to be the most formidable constraint to the edification of developmental states in Africa and needs to be closely studied. First, on the ideological level, it is important to stress how both globalisation and neo-liberal anomie make the articulation and credibility ideologies of nation building and development extremely difficult. In addition in terms of state capacity, there are widespread concerns that globalisation may severely restrict the room for manoeuvre of individual states in such a way as to make the notion of a developmental state difficult to visualise. We have maintained that most arguments raised on the impossibility of developmental states in Africa are not firmly founded either in African historical experience or in the trajectories of the more successful developmental states. The ultimate result of the misreading of experiences in Africa and elsewhere is that Myrdal‘s notion of the soft state, once applied to Asia, is now presented as an almost exclusively African characteristic (Sangmpam 1993). Having presented key actors as irredeemably greedy, corrupt and captured by rent seekers and economies of affection, the misreading denies us the opportunity to think creatively of modes of social organisation at both macro and micro level that can extricate African countries from the crises they confront. It also leaves the door wide open for unlimited intervention in African affairs and ultimately dissipates whatever enthusiasm the locals may have had for development. Lessons from other parts of the world clearly suggest that appropriate institutional structures did not always exist, but that they could be socially engineered. The aprioristic dismissal of possibilities of developmental states can only be attributed to prejudice or mood. The experience elsewhere is that developmental states are social constructs consciously brought about by states and societies. As difficult as the political and economic task of establishing such states may be, it is within the reach of many countries struggling against the ravages of poverty and underdevelopment. 7. Is the developmental state any longer appropriate? The East Asian financial crisis dealt a seemingly mortal blow to the image of the region generally and to its distinctive patterns of state-business relations in particular. Not only were such relationships routinely disparaged as forms of ‗crony capitalism‘, and synonymous with corruption and inefficiency, but they were seen as incompatible with the sort of dynamic competitive pressures associated with ‗globalisation‘. In short, the sorts of business structures, political practices and social relations that had formerly been seen a sources of competitive advantage in countries like Japan, were now seen as self-serving obstacles to necessary change. In order to assess the merits of this debate, we need to carefully assess the theoretical and pragmatic arguments that were made in support of an effective developmental state, before considering whether such a model is any longer useful. We also need to remember that different countries will inevitably confront very different historical circumstances and developmental challenges, something that makes generalisation more difficult.

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As we saw earlier, the key to an effective developmental state is state capacity, or the ability to formulate and implement developmental policies. For a state to achieve such an outcome it not only needs a competent bureaucracy, it also needs an effective relationship with the domestic business class that will inevitably be at the centre of any successful developmental initiatives. In an influential comparative study of industrialisation in Asia and Latin America, Peter Evans coined the term ‗embedded autonomy‘ to describe the ideal relationship between would-be developmental state‘s and the indigenous business class. Evans, Peter (1995) Adopting a neo-Weberian typology, Evans argued that the successful developmental state needed to be both close to, and distant from, the business class it sort to influence and nurture. In other words, the state had to be sufficiently embedded in society so that it was capable of implementing its goals by acting through social infrastructure, but not so close to business that it risked ‗capture‘ by particular interests and was thus incapable of acting in the wider ‗national interest‘. Ideally, the effective developmental state should be ‗embedded in a concrete set of social ties that binds the state to society and provides institutionalised channels for the continual negotiation and renegotiation of policies‘. (Evans, Embedded Autonomy, p 12) Once again, Japan provides the quintessential exemplar of all that can go right – and wrong – with the developmental state. In its heyday, the Japanese developmental state had precisely the sort of embedded autonomy Evans describes. Key bureaucratic agencies had both the staff and the policy tools to guide the course of development, a process made easier by the bureaucracy‘s close links with Japanese business. Not only were contacts between ‗the state‘ and big business in Japan regular and institutionalised in corporatist-style arrangements that allowed precisely the sort of interaction, monitoring and feedback that Evans considered crucial for effective development, but such relationships were further cemented when former public servants joined private sector companies upon retirement. (Schaede, U (1995) Although there has been a remarkable rethinking about the role of the bureaucracy and its capacity to guide continuing development in Japan, this (Sakaiya Taichi, (1998) sort of ‗infrastructural power‘ (Michael Mann, 1993: 59), was a central component of Japan‘s phenomenally successful post-war renaissance and led to widespread expectations that Japan would soon eclipse America as the world‘s pre-eminent economy. (Fingleton, E 1995) When trying to assess why Japan - and much of the rest of East Asia, for that matter has not realised these expectations, it is important distinguish between those factors that may have undermined the utility of the developmental state from within, and those that have affected it from without. In Japan‘s case, much of the damage appears to have been self-inflicted. On the one hand, the very relationships that were formerly considered to be integral parts of the Japanese success story, especially close state-business relations, are now seen as fundamental obstacles to reform. Critics cite the frequently corrupt relations that exist in key industries like construction, the way such relationships become a drain on the public purse, and the manner in which these formerly functional patterns of interaction have ossified into self-serving obstacles to reform. (Beeson, Mark, 2003) Thus, the Japanese case has a number of implications with potentially widespread significance: first, the institutionalisation of the developmental state may be an essential determinant of its initial effectiveness, but when relationships become too cosy, or insufficiently autonomous, then the dangers of collusion, corruption and non-transparency are all too real. This is especially the case where such relationships have been in place for decades and where the very success of the developmental state means that there is potentially more largesse to distribute amongst privileged insiders. The second point to make is that neither the policy tools nor the vision of the pilot agencies may be as effective or appropriate as they once were. Significantly, however, both of these issues are as much to do with external change as they are with questions of internal capacity or competence. It should be re-emphasised that the market-oriented, deregulatory agenda promoted by the IFIs and the US is a direct threat to the interventionist, state-led economic models favoured in much of East Asia. The big question is whether the distinctive forms of capitalism found in the region,17 of which the developmental state is such a prominent part, can 25 | Comparative Public Policy: Developmental States. BTC 2011

survive in the face of sustained reformist and competitive pressures. Although governments in East Asia have been reluctant to relinquish some of the economic controls and policy tools that served them well in earlier phases of development, the intense pressure to conform with pervasive international regulatory standards and liberalise key sectors of the domestic economy, like finance, has set in train major structural changes which may fundamentally undercut the capacities of developmental states.18 The provision of credit, for example, formerly a powerful form of state leverage over domestic business, is no longer critical in an increasingly liberalised, integrated international financial system where access to global capital markets is a fact of corporate life.19 But it is not simply the capacity of the developmental state to implement policy that is in question: a more fundamental and possibly damning criticism of the developmental state is that bureaucratic elites are simply incapable of guiding the developmental process beyond a certain critical point. In the initial phases of the developmental project, the aspiring developmental state can – if it has the requisite capacity and vision – ‗catch-up‘ with the existent industrial powers. This was the fundamental insight of Gerschenkron‘s influential study of ‗late‘ development: countries following in the wake of the early industrialising nations had the opportunity of replicating successful strategies, borrowing key technologies, and generally accelerating the course of industrialisation. (Gerschenkron, A., 1966) In Japan, South Korea and Taiwan, where the course of development had to a significant extent been laid out by earlier industrialising nations, the successful and rapid catching-up process was testimony to the effectiveness of the developmental state. However, when countries reach the ‗technological frontier‘ and confront the fundamental uncertainty that characterises the course of technological evolution, the benefits and capacities of the state-led approach are less certain. (Fong, G.R., 1998) State planners are clearly not infallible when it comes to deciding which future developments are likely to be at the technological cutting edge and therefore worthy of government support. Callon, Scott (1995) The great comparative advantage of the American system, by contrast, is the availability of venture capital to underpin a plethora of projects in the expectation that some will ultimately prove successful. (Saxenian, A-L., 1994) For those countries that lack the resources of Japan, South Korea or Taiwan, however, this debate may be somewhat academic. It is important to keep in mind that the countries of Southeast Asia, in contrast to their Northern neighbours, not only have less initial resources and capacities with which to guide the process of development, but they face the additional challenge of ‗late-late‘ development in which they must confront the challenge of attempting to break into an established hierarchy of global production that includes both the established powers of North America, Western Europe and Northeast Asia. (Beeson, Mark 2002) In such circumstances the potential efficacy of the developmental state in the contemporary international system becomes even more critical. Does the developmental state have a future? In Northeast Asia the developmental state has clearly done its job and underpinned the economic transformation that has distinguished that part of the region. Although some observers argue that the developmental state can and does still play an important and useful role in directing the course of development, Weiss, L. (2000) many of the institutionalised relationships that were formerly so effective and functional have become selfserving and obstacles to needed reform. Leftwich, A (2000) This does not mean, however, that the developmental state cannot still play a critical role in other parts of the world. On the contrary, as Adrian Leftwich persuasively argues, ‗it seems unlikely that it is possible in the modern world for any society to make a speedy and successful transition from poverty without a state that is some respects corresponds to this model of a developmental state‘. Leftwich, A (2000) The key issues revolve around the degree of state capacity available to would-be developmental states, and the ability of all states to act effectively in an era characterised by increasingly pervasive competitive and regulatory pressures. On the question of whether states generally still have the potential capacity to guide or initiate economic transformation and upgrading amongst the ranks of would-be de26 | Comparative Public Policy: Developmental States. BTC 2011

veloping economies the evidence is mixed, and the very different circumstances of individual states makes generalisation difficult. True, it is possible to make broad brush distinctions between the ‗failed states‘ that characterise much of sub-Saharan Africa where development has proved conspicuously elusive, (Castells, Manuel, 1998) and those of Southeast Asia where there has been significant progress, but even in the latter case there are major differences in approach and outcomes. The developmental process in Southeast Asia is not only complicated by the challenges of late-late development noted above, but the possibility of achieving the sort of embedded autonomy that characterised the pioneering Northeast Asian states is made significantly more difficult by the complex patterns of social and ethnic relations that are found across much of the region. Indeed, Woo-Cumings argues that by contrast with their Northeast Asian neighbours, Southeast Asia‘s aspiring developmental states amounted to little more than ‗protection rings‘ designed to shore up particularistic economic and political interests. (Woo-Cumings, Meredith, 1999) While this may be somewhat harsh and mainly applicable to Indonesia, it does capture an important precondition for establishment of a successful developmental state: a tradition of national social cohesion and identity is a powerful force of legitimation and may help to mobilise the population around a national development project. In addition yet despite Southeast Asia‘s typically complex class structures, the continuing economic and political importance of resource production, and the absence of a state capacity comparable with those of Japan, South Korea and Taiwan,20 significant state led industrialisation has occurred across much of the Southeast Asian region. In Thailand, Malaysia, and even Indonesia, government policy interventions have played a crucial role in encouraging the development of an indigenous manufacturing sector. As Jomo observes: ‗there is little doubt that the structural transformation and industrialisation of these economies has gone well beyond what would have been achieved by relying exclusively on market forces and private sector initiatives‘. (Jomo, KS, 2001)) True, countries like Malaysia and Singapore have been more reliant on external investment than their Northeast Asian counterparts were, but the key point is that policy activism on the part of domestic governments, though investment incentives, subsidies and the like, provided the critical catalyst with which to accelerate the developmental process. The key question now is whether even this more limited form of state activism is any longer feasible or desirable in an increasingly integrated international economy. Answering this question involves making a judgement about the impact of that complex array of forces, processes, and interactions subsumed under the rubric of globalisation. Despite globalisation‘s all-encompassing and consequently imprecise ambit it does point to the very real transformations that have occurred as a result of the increasing disaggregation and trans-nationalisation of production processes, the liberalisation of global finance, and the growth in regulatory agreements that govern international commerce. (Held, D., McGrew, A., Goldblatt, D. and Perraton, J., 1999) For some observers, the increased scale and influence of the international financial sector in particular has created a form of ‗regulatory arbitrage‘ in which governments everywhere compete to attract mobile capital by attempting to provide the most pro-business environments. (Cerny, P, 1996) This view has been popularised by Thomas Friedman, who claims that governments everywhere are locked in a ‗golden straitjacket‘ of policies centred on balanced budgets, shrinking states and economic liberalisation; a failure to subscribe to such policies invites the wrath of ‗the markets‘. (Friedman, Thomas L., 2000) However, it is important to recognise that there remain important differences in the manner in which governments around the world respond to the challenge of international economic openness. Moreover, it is clear that governments in some of the most open economies continue to ‗intervene‘ in economic activity by providing skilled work forces, predictable and effective regulatory environments and more general physical infrastructure in ways that actually encourage rather than deter investment. (Garrett, G., 2000) At one level the idea that states remain critical influences on investment flows, trade patterns and the wider regulatory environment within which they occur is unsurprising: 27 | Comparative Public Policy: Developmental States. BTC 2011

even the most laissez faire form of capitalism relies on the state to enforce the rules and regulations that provide certainty in the ‗free market‘. (Heilbroner, R., 1985) What is less clear is whether the sort of high profile economic intervention favoured by East Asian governments is any longer sustainable: given an international environment in which neoliberal ideas have become highly influential, in which direct state involvement in the economy is being actively discouraged by the powerful IFIs, and in which private sector agencies are increasingly assuming regulatory responsibility for creating the rules and regulations that govern critical areas of the international economy, ( Braithwaite, John and Peter Drahos, 2000), what role – and capacity - is left for the East Asian developmental state and others which would follow its lead? One of the most important contributors to the debate about the fate of the state under globalisation generally, and about the future of the East Asian developmental state in particular has been Linda Weiss. Central to Weiss‘s position is the claim that globalisation is ‗not only, or even generally constraining…but contributes to the expansion of governing capacities through both the transformation of public-private sector relations and the growth of policy networks‘. (Weiss, L ., 2003))The basis of this argument is the idea that states have an ‗adaptive‘ capacity that allows them to innovative and respond creatively to the evolving international political economy. Significantly, Weiss argues that such adaptive processes will be predicated on, and informed by, an existent pattern of institutions that will delimit the range of possible responses and innovations. (Weiss, ibid, p 24) Certainly, institutionally-determined ‗path dependency‘ is an important consideration in explaining both the course and pace of reform in East Asia. ( Beeson, M., 2001)) It is, however, also important to recognise that the sort of institutional infrastructure Weiss refers as providing the underpinning capacity for effective adaptation may not be as developed in Southeast Asia as it is in Northeast Asia, ( Beeson, M. and Jayasuriya, K., 1998)) or across the rest of the would-be developing world for that matter. Whether one describes these different circumstances as enabling ‗cultural‘ factors or, as I prefer, simply the historically contingent patterns of political, economic and social practice that define national and even regional economies, they are plainly critical institutionalised legacies that delimit possible policy responses. Thus, while the developmental state may still be relevant, the potentially tragic paradox is that the countries that might benefit from it most are frequently disabled by the absence of the very institutional infrastructure that might underpin successful development. All states are being affected by global processes. The internal institutional architecture of formerly discrete national polities is being reconfigured by internal and external pressures from ‗above and below‘, with new networks of power and coordination emerging as a consequence – networks that frequently transcend national borders and contain a mix of state and non-state actors. (Jayasuriya, K., 1999) Those states that have the potential capacity to respond most effectively to the specific challenges of an increasingly integrated international economic order are generally ‗post-development‘. This is unsurprising: it has been the existence of effective state capacity that has been the critical historical variable that accounts for development in the first place. Such considerations suggest a number of important conclusions: •

•

•

•

Historically, successful economic development has been reliant on the actions of a developmental state with effective state capacity and the willingness to use it in pursuit of developmental goals; The evolving international regulatory architecture and the prevalence of neoliberal ideas have created a less hospitable environment for developmental states. But those countries that lack the sort of state capacity and leadership associated with the developmental state will find it difficult to break out of subordinate positions in the global economy; Yet the existence of potential state capacity is not in itself a guarantee that it will be effectively utilised or that it will not become an obstacle to, rather than an catalyst for, effective change – especially where the developmental state has accomplished its mission; The state continues to play a critical role – for better or worse – in determining the position of national economic spaces and labour forces in the global economy.

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In some ways, therefore, the debate about the developmental state is misconceived: all states are developmental in the sense that government policy is designed to encourage economic growth; the perennial question remains about the best way to achieve this, especially for economies that are ‗under-developed‘. The developmental state in East Asia has been a critical part of that region‘s remarkable and real transformation, despite the fact that there are important differences between the experiences and capacities in the North and South. Whether the developmental state can remain functional, free of capture by particularistic economic, ethnic or political interests, or capable of guiding the postdevelopment process is a moot point. But its historical role and potential efficacy for those at the bottom of the global economic hierarchy is not in doubt. In light of the above, what might such state capacities look like? Despite the World Bank‘s association with market, rather than state-led development, but theoretically sophisticated report, The State in a Changing World, highlighted many of the potential positives of state intervention. Significantly, the report acknowledged the continuing role states can play in accelerating targeted economic development through industry policies, subsidies and effectively monitored business-government relations, and by investing in basic social services and infrastructure. Crucially, it also highlighted the dangers the developmental state is prone to and the need to provide ‗incentives for public officials to perform better while keeping arbitrary action in check‘. (World Bank, 1997) Thus the fashionable mantra of institution and capacity building has some merit, but so does the fundamental recognition of the continuing importance of the state – especially in responding creatively to the multiple challenges of globalisation. In both the developed and the developing world, good policies are clearly better than bad. (Beeson, Mark, 2001) While we might all agree that investment in education, encouraging the development of more valuable economic process, and curbing excesses in both the private and public sectors are ‗good things‘, achieving them has always been the challenge. It remains so. It is, however, one in which states remain inextricably entwined. 1 For one of the most authoritative and influential accounts of this sort of development in Northeast Asia, see Wade, Robert (1990) Governing the Market: Economic Theory and the Role of Government in East Asian Industrialisation, (Princeton University Press, Princeton). 2 For a very useful discussion of state capacity see, Polidano, C (2000) ‗Measuring public sector capacity‘, World Development, 28 (5): 805-22. 3 For an important examination of the South Korean experience, see Jung-en Woo (1991) Race to the Swift: State and Finance in Korean Industrialisation, Columbia University. 4 See Beeson, Mark (forthcoming) ‗East Asia, the international financial institutions and regional regulatory reform: A review of the issues‘, Journal of the Asia Pacific Economy; Wade, R (2000) ‗Wheels within wheels: Rethinking the Asian crisis and the Asian model‘, Annual Review of Political Science, 3: 85-115. 5 On the fling geese theory and its impact see Gangopadhyay, P (1998) ‗Patterns of trade, investment and migration in the Asia-Pacific region‘, in Thompson, G. (ed.), Economic Dynamism in the Asia-Pacific, (London: Routledge): 20-54. For a critical view of the impact of Japan‘s industrialisation onthe region, see Bernard, M. and Ravenhill, J. (1995) ‗Beyond product cycles and flying geese: Regionalisation, hierarchy, and the industrialisation of East Asia‘, World Politics, Vol. 47, No. 2, pp 171-209. 6 In the Japanese case, for example, see Schoppa, L. J. (1997) Bargaining with Japan: What American Pressure Can and Cannot Do, (New York: Columbia University Press). 7 collectivism." Encyclopædia Britannica. 2007. Encyclopædia Britannica Online. 12 January 2007 "Collectivism has found varying degrees of expression in the 20th century in such movements as socialism, communism, and fascism."; Grant, Moyra. Key Ideas in Politics. Nelson Thomas 2003. p. 21; De Grand, Alexander. Italian Fascism: Its Origins and Development. U of Nebraska Press. p. 147 "Nationalism, statism, and authoritarianism culminated in the cult of the Duce. Finally, collectivism was important...Despite general agreement on these four themes, it was hard to formulate a definition of fascism..." 8 Calvin B. Hoover, "The Paths of Economic Change: Contrasting Tendencies in the Modern World," The American Economic Review, Vol. 25, No. 1, Supplement, Papers and Proceedings of the Forty-seventh Annual Meeting of the American Economic Association. (Mar., 1935), pp. 13-20; Philip Morgan, Fascism in Europe, 1919-1945, New York Tayolor & Francis 2003, p. 168 9 Friedrich A. Hayek. 1944. The Road to Serfdom. Routledge Press 10 Based on Mark Beeson (2006) The vicissitudes and implications of East Asian interventionism 11 For an overview of the literature, see Roxborough, Ian (1979) Theories of Underdevelopment, (London: Macmillan)

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12 There is by now a vast literature on the crisis. See, for example, Robison, R. et al (eds. 2000), Politics and Markets in the Wake of the Asian Crisis, (London, Routledge). 13 Dirigisme is an economy in which the government exerts strong directive influence. While the term has occasionally been applied to centrally planned economies, where the state effectively controls both production and allocation of resources (in particular, to certain socialist economies where the means of production are assets of the state), it originally had neither of these meanings when applied to France, and generally designates a mainly capitalist economy with strong economic participation by government. Most modern economies can be characterized as dirigiste to some degree – for instance, state economic action may be exercised through subsidizing research and developing new technologies, or through government procurement, especially military (i.e. a form of mixed economy). China is the clearest example to date. 14 As opposed to the developmentalists, promoters of new endogenous growth theory argue that there is conditional convergence -- catch-up effect for poor nations to grow faster than the rich ones; if we held constant such factors as fertility rate, human capital and policies (proxied by the share of public spending in GDP). Neo-classical economics underpins that poor countries grow faster than richer ones as there are diminishing returns on capital for the rich. Nonetheless, since, in reality, all demographic, policy and human capital factors are not constant, absolute convergence may not happen. Hence, as we enter the new millennium, African nations are under pressure to open up markets and develop well sequenced new policies. South Africa, Nigeria, Uganda… to name a few seem to make a big difference on how well such convergence has worked. 15 Rent-seeking, a phrase coined by economist Gordon Tullock, means cutting a bigger slice of the business rather than expanding the business and trying to make more money without producing more. Classic examples of rent-seeking are a protection racket taking a cut from the shopkeeper‘s profit; a cartel of firms that control prices; workers demanding higher wages without offering any increase in productivity; and lobbying the government for tax, spending or regulatory policies that benefit a few. Whether legal or illegal, as they do not create any value, rent-seeking activities can impose large costs on an economy. Rent has two different meanings for economists: the first is the income from hiring out land or other durable goods. The other is a measure of market power: the difference between what a factor of production is paid and how much it would need to be paid to remain in its current use. In a competition, there are no economic rents, as new firms enter a market and compete until prices fall and all rent is eliminated. 16 More pertinent to our discussion is that privatisation in Africa should be as a strategy for the transfer of state assets to a strategically placed domestic private capital or as an instrument of creating a national bourgeoisie. However, privatisation in Africa has not been premised on that objective. It has been largely driven by fiscal concerns of the state and ideologically driven pronouncements on the inefficacy of public enterprises and ideological aversion to state ownership and the unfounded belief that state investments always crowd out private investment or are inherently inferior in performance to private investment. 17 For a useful discussion of the differences between different types of capitalism across the world, see Coates, D (2000) Models of Capitalism, (Oxford: Polity Press). 18 Beeson ‗Japan‘s reluctant reformers, op cit; Woo-Cumings, M (1997) ‗Slouching toward the market: the politics of financial liberalisation in South Korea‘, in Loriaux, M et al, Capital Ungoverned: Liberalizing Finance in Interventionist States, (Ithaca: Cornell), pp 57-91. 19 Ironically, it was the liberalisation of domestic finance and the withdrawal of regulatory oversight that was a key component of both the East Asian crisis and the difficulties Korea faced as a consequence of liberalising reform initiatives. (Wade, R and Veneroso, F., 1998) Two further general points about ‗deregulation‘ are worth emphasising: first, even neoliberal capitalism is regulated (Cerny, P. G. 1991) – the crucial question is about its quality, the motivations of those charged with enacting it. The second point to make is that we cannot assume that private sector ‗self-regulation‘ will be any less corrupt – as American capitalism‘s recent problems remind us. (Krugman, Paul, 2002) 20 Singapore is an anomaly in this context and generally considered with the second tier of industrialising economies – Taiwan, South Korea and Hong Kong – rather than with its Southeast Asian neighbours. On the Singaporean developmental experience, see Rodan, G (1989) The Political Economy of Singapore‘s Industrialisation: Nation State and International Capital, (Macmillan, London).

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Case Study

The Arab Spring – jasmine revolution 1. The 1936-1939 Great Arab Revolt and Arab Nationalism The 1936–1939 Arab revolt in Palestine or Great Arab Revolt was a nationalist uprising by Arabs in Mandate Palestine against British colonial rule and mass Jewish immigration. (Hughes, M., 2009) Although the 1936–1939 Arab revolt in Palestine was unsuccessful, its consequences affected the outcome of the 1948 Arab-Israeli war. Initially, the conflict with Zionism helped to make Palestinian Arab society more conservative in cultural, social, religious and political affairs because people were highly motivated to preserve their distinct heritage and identity against the dual impact of British colonialism and Jewish invasion. During the 1930s new political organisations and new types of activist began to appear, marking the involvement of a far broader cross-section of the population; in particular, nationalism. (Morris, Benny, 1999) Traditional feasts such as Nebi Musa began to acquire a political and nationalist dimension and new national memorial days were introduced or gained new significance; among them Balfour Day, the anniversary of the Battle of Hattin (4 July, marking Saladin's recapture of Jerusalem), and beginning in 1930 May 16 was celebrated as Palestine Day. The expansion of education, the development of civil society and of transportation, communications, and especially of broadcasting and other media, all facilitated these changes. (Ibid) Local patriotism centred on individual Arab countries was incorporated into the framework of Arab nationalism starting in the 1920s. This was done by positioning the Arabian Peninsula as the homeland of the Semitic peoples (the Canaanites and Syriacs of the Levant and the Assyrians and Babylonians of Mesopotamia) who migrated throughout the Middle East in ancient times or by associating the other pre-Islamic cultures, such as those of Egypt and North Africa and Horn of Africa, into an evolving Arab identity. Arab nationalism is an ideology celebrating the glories of Arab civilization, the language and literature of the Arabs, calling for rejuvenation and political union in the Arab world associated with Gamal Abdel Nasser and the Arab Socialist Ba'ath Party, which came to power in Syria and Iraq for some years, and its founder Michel Aflaq, premised on a one nation bound together by common heritage. Pan-Arabism is a related concept, in as much as it calls for supranational communalism among the Arab states. One of the primary goals of Arab nationalism was the end of Western influence in the Arab World, seen as a nemesis of Arab strength, and the removal of those Arab governments considered to be dependent for their survival upon Western power. It rose to prominence with the weakening and defeat of the Ottoman Empire in the early 20th century and declined after the defeat of the Arab armies in the Six Day War. (Sela, Avraham, 2002) In the post-World War years, the concept of qawmiyya, a word that has been used to refer to pan-Arab nationalism gradually assumed a leftist coloration, calling for ... the creation of revolutionary Arab unity. Groups who subscribed to this point of view advocated opposition, violent and non-violent, against Israel and against Arabs who did not subscribe to this point of view. The person most identified with qawmiyya was Gamal Abdel Nasser, who used both military and political power to spread his version of pan-Arab ideology. George Habash, the founder of the Popular Front for the Liberation of Palestine, influenced Palestinian Arabs to accept a Nasserist approach to politics. (Sela, Avraham, 2002) Throughout the late 19th century, beginning in the 1860s, a sense of loyalty to the Fatherland developed in intellectual circles based in the Levant and Egypt, but not necessarily an Arab Fatherland. It developed from observance of the technological successes of Western Europe which they attributed to the prevailing of patriotism in those countries. During this period, a heavy influx of Christian missionaries and educators provided what was termed the Arab political revival, resulting in the establishment of secret societies within the empire. (Khalidi, Rashid, 1993) Since then, the Arab revolution has taken various forms including the second revolution that brought military coups and counter coups to the Arab world. Mohammed Bouazizi, a young fruit vendor in the small Tunisian town, helped jump start the revolution by lighting himself on fire in front of the offices of an official who slapped him and tried to take away his livelihood by confiscating a scale Bouazizi used to weigh fruit. The Jasmine Revolution is a society led and people empowered revolution that needs closer examination and scrutiny… 31 | Comparative Public Policy: Developmental States. BTC 2011

2. Arab states turn rogue, the quite disenchantment and The jasmine Revolution 2.1. Genesis Egypt, by far the most populous Arab country has long been known as a centre of stability in a volatile region, but that masked malignant problems which erupted in popular demonstrations against the 30-year rule of Hosni Mubarak on 25 and 28 January. What happens there carries great political weight around the world, especially the Middle East. The National Democratic Party (NDP) monopolised political power through a mixture of constitutional manipulation, repression and rigged elections, cronyism, and the backing of powerful foreign allies. The main drivers of the unrest have been poverty, rising prices, social exclusion, anger over corruption and personal enrichment among the political elite, and a demographic bulge of young people unable to find work. The catalyst was fellow Arabs in Tunisia successfully overthrowing their autocratic ruler, Zine al-Abidine Ben Ali, with a popular uprising on 14 January. Popular anger was fuelled by dozens of deaths at the hands of the security forces, while protesters' voices have been heard thanks to social media and the presence of independent news broadcasters at the scene. Their rallying cries were the people want the fall of the regime, Mubarak, go, and illegitimate, illegitimate. Countrywide protests after Friday prayers on 28 January were met with typically repressive measures by the security police, but the determination and sheer numbers of protesters proved overwhelming. Government tactics appeared to be in disarray. Security police melted away, and heavy military armour appeared on the streets to the cheers of protesters. There followed several days of carnival-like protests centred on Cairo's Tahrir (Liberation) Square, effectively celebrations of the newfound freedom and mutual respect among protesters. It culminated in the so-called march of the million on 1 February. However, a more sinister atmosphere was emerging, as state media reported a wave of looting in Cairo, causing many people to set up armed neighbourhood watch groups to protect their homes. Government loyalists also voiced frustration, especially with the media for giving too much prominence to the protests. On 2 February, pro-Mubarak marchers tried to gain access to Tahrir Square and what had been a peaceful scene deteriorated into vicious stone-and-petrol-bombthrowing street battles. Barricades were erected by the anti-Mubarak side and they appeared ready to dig in for a long occupation of the square until the president resigned. Mubarek‘s rapport with the US was underpinned by a peace treaty with Israel, agreed in the late-1970s after four Arab-Israeli wars in which Egypt was standard-bearer of the Arab cause and billions of dollars of US military aid. Mubarak's autocracy permitted him a free hand to engage with Israeli governments, unhindered by deep public concern about Israel's military and political handling of the Palestinians and Lebanon. The realities of democratic politics could bring about a recasting of those relationships; hence the apprehensiveness of Israelis and Americans as they follow events. There are also major economic implications, as Egyptian industry and the valuable tourism sector have been paralysed by the political unrest. Oil prices have risen amid fears of unrest affecting traffic through the Suez Canal and, in the long term, of a wider regional crisis. 2.2. The campaign for democracy… The protests have included people from all sectors of society, but at the forefront have been young, tech-savvy Egyptians who have never known another ruler of their country. There is no single figurehead or unified leadership; although a number of opposition political figures and groupings are taking part. They include the UN former nuclear agency chief Mohamed ElBaradei and Ayman Nour, a lawyer and leader of the Ghad party, who was jailed after contesting the 2005 presidential election. The Muslim Brotherhood, officially banned but still Egypt's only large-scale organised opposition movement, has also joined the protests. Although the Muslim Brotherhood is signed up to democratic reform and has renounced violence, fears of a swift post-Mubarak lurch towards Islamist rule is the main worry for Western powers and Israel. A "Council of Wise Men" has been formed, including prominent businessmen, lawyers and academics, who see dialogue with the government as the way out of the crisis. 32 | Comparative Public Policy: Developmental States. BTC 2011

Mubarak made concession after concession hoping to appease public and international opinion, but his refusal to step down immediately made the protests more vociferous. His main gambit was to appoint a new vice-president, in the shape of Omar Suleiman, the shadowy head of Egypt's intelligence service, and to cede some powers to him. He has also confirmed he would not stand for re-election, and nor would his son Gamal, who for years was apparently being lined up as a successor to his father. Although talks took place between Mr Suleiman and opposition groups, including the Muslim Brotherhood despite its official ban, they quickly hit an impasse. The government insisted that the street protests should end immediately and life return to normal, while the protesters believed that pressure must be kept up to ensure any reforms are not purely cosmetic. As the protests entered their third week, the authorities changed tone somewhat, describing protesters as honourable people with honourable aspirations, rather than wayward youths.1 The army has always been the key power in a highly fluid, opaque and dangerous situation - able either to shepherd Egypt towards a democratic future of free elections, or to uphold the status quo. In contrast to the security police, it had pledged not to use violence to quell what have been near-universally peaceful protests. This apparently neutrality has won it praise from other governments, concerned about the possibility of a bloody denouement of this crisis. After the 10 February Supreme Military Council meeting, a military communiqué was issued appearing to back the protesters' demands, prompting a day of speculation of a military take-over. It was therefore a shock to protesters when Mubarak gave a state address some hours later not offering his resignation, but expressing more determination than ever to ride out the crisis. Speculation then turned to the possibility of a split in the army, with an old guard backing the old order and younger officers more in harmony with the protesters. The air force, whose aircraft have buzzed the protests' epicentre in Tahrir Square as a show of intimidating force, was believed to have remained loyal to the president. The announcement that Hosni Mubarak had handed control to the Supreme Military Council came as a surprise in one way, but in another way it was remarkable how long he had lasted. Game over was the message from the streets, and protesters were adamant that they would not go home until he left office. But the government hung on, offering various concessions and deploying various tactics to intimidate the pro-democracy crowds, but they only became more numerous and more passionate. It seemed as though the game was up on Thursday, when the army council met without a senior government figure in the chair. But the president came back with one last throw of the dice - in a state address on TV reiterating his position. This enraged the expectant multitude in Cairo's Tahrir Square and around the country, and their zeal perhaps was the final message that the game was finally over. 2.3. Arab Revolution and the Economist’s Shoe-thrower’s Index The Shoe-thrower‘s Index is based on a set of indicators thought to feed unrest and political instability. After assigning weights to each indicator and crunching the numbers, the Economist arrived at the chart below of Arab countries‘ vulnerability to revolution. The index produces some interesting results. Tunisia scores lower than might be expected based on actual events. While an index intended to shed light on future developments shouldn‘t be constructed to fit the past, such curious divergences invite further consideration and attempts to experiment with other prospective indicators. The Economist‘s Shoe-thrower‘s chart is based on the following indicators and weightings. (35% – Population share under age 25, 15% – Number of years in power, 15% – Corruption index (TI), 15% – Lack-of-democracy index (EIU), 10% – GDP per person, 5% – Censorship index (Freedom House), 5% – Absolute number of young