Evan Soltas
Jul 9, 2012

Development's Play Book?

In development economics, Dani Rodrik has gained great attention for positing that, as Tyler Cowen has pithily phrased it, "every country is different."

We search in vain, therefore, for a step-by-step development program which can be applied across countries, according to Rodrik:

What should developing countries do to increase their growth rates and speed up the rates at which their citizens converge to the level of material well-being obtained in today’s advanced nations? Around ten or fifteen years ago, there was a fair degree of consensus on how to answer this question ... This consensus has by now largely dissipated ... Few economists now seriously believe that there is a short list of 10 or 20 policy reforms that can be relied on systematically to produce higher economic growth.
Rodrik's argument has been buoyed by the repetitive failure or underperformance of varying development strategies proposed by Western economists -- most importantly, the IMF-World Bank structural adjustment programs. In my past discussion of the state of the field of development economics here, I wondered aloud where development economics could go if it gave up on the prospect of a "short list."

However, I'm beginning to think that Rodrik is wrong, respectfully, i.e. that the repetitive failures did not signal the impossibility of success.

It seems that a group of countries in East and South Asia have figured out a development model -- and that's certainly how the Asian Development Bank sees it -- and have applied it repeatedly with success.It began with the opening of Japan to the West. Despite its political imperialism, Japan succeeded in its policies of rapid economic development by industrialization and technology transfer, which continued after World War II. At that point, it was joined by South Korea, Taiwan, Singapore, and Hong Kong. All four succeeded. Under Deng Xiaoping, China followed, and it continues to follow the more recent evolutions of the South Korean development strategy, right down to the details. (Don't the Chinese car manufacturers remind you of Korea's Kia or Hyundai in the 1990s, or Japan's Datsun in the 1980s?) Vietnam and perhaps also Bangladesh have since jumped onboard, copying the development model in such a way that the low-cost outsourcing jobs are moving directly there from China. On a related note, the successful side of India's development model -- IT in Bangalore -- has been copied by the Philippines.

Examining it broadly, the strategy involves extensive technology transfer, export-oriented development, the implementation of an industrial policy, controls on trade and foreign investment, and government activity to advance education and health care.

Surely there are some differences between the development strategies, but the behavior of these countries is highly suggestive of the view that there is a development model which can be reapplied across countries as though according to playbook.

(There is, of course, the possibility that all of these East Asian countries have had similar binding constraints on development, which may be different in other countries and regions of the world.)