Snippets on development

Photo by Kelly Lacy

On East Asian Development Model

In its crudest form, capitalism is understood as a phenomenon of market forces for private profits. Deriving its root from laissez faire, it sees the role of state as uncalled for. State interventionism in the form of taxes, subsidies or regulation is antithetical to its pursuit of free enterprise. It is inferred that competitive forces and self-regulation by the markets are the surest augury of economic development. Allocation of resources for competing use cases is principled on price mechanism. The right to freedom - in its truest expression, is the cornerstone of this ideology. As such, a climate of democratic polity and individual liberty is prerequisite for its flourishing.

Post-war global economy witnessed shades of structural experimentations across swathes of the globe to undo damages of the past and chart a road to future prosperity. In the backdrop of the Cold war, two predominant blocs of thought and praxis surfaced - one driven by capitalism and other by communism. The communist bloc upheld the supreme role of state through nationalization of assets and central planning - a diametrically opposite thesis to that of capitalism.

In East Asia, there emerged a novel synthesis - state-led capitalism, which led to dramatic growth rate and steep decline in income inequality. The state played a proactive role to propel the growth of private enterprise through dynamic policies and strategic interventions. The countries in question are: Japan, The Four Asian Tigers (Hong Kong, Singapore, South Korea and Taiwan), and the newly industrializing economies (NIEs) of Southeast Asia (Indonesia, Malaysia, and Thailand). They experienced high rates of productivity growth, particularly in agriculture. Supported by a high rate of domestic savings, the growth rate of physical capital exceeded 20 percent of GDP on average between 1960 and 1990. (World Bank) Manufactured goods saw high exports growth. For example, the share of world exports of manufacturing goods increased from 9 percent in 1965 to 21 percent in 1990. (World Bank) Macroeconomic stability imbued confidence in private investments. The financial system managed to mobilise large-scale domestic savings which looped into high productive investments. Education was focussed on primary and secondary levels, and geared towards labour market skills. Rural economy was undertaxed to give more elbow room for growth. Innovation was driven by benefits of technology transfers and managerial know-how.

Widely known as “The East Asian Development Model,” it has never ceased to pique the interest of scholars and practitioners alike for years to come. An exemplar of sound public policies ‘to get the fundamentals right’ for ensuring market-focused transformation and customized policy interventions, the role of state stands out in this model.

The East Asian Development Model’s replicability to developing economies is an interesting consideration. To make it work, one needs to be mindful of the context and circumstances in which it was successful. Also, to the fact that it is not a monolithic idea in a singular sense. According to Dwight H. Perkins of Harvard University, the model encompasses three distinct formats of development, as adopted by different sets of the East Asian countries to suit their own priorities.

Apart from that, it has operational shortcomings which are not without untoward political implications in a democratic welfare state.

There are noteworthy lessons for India from the East Asian Development Model playbook. Political stability, broad based ease of doing business, and streamlining of supply chains can help revival of private investments, which plummeted to a 16-year low in 2019. Business intelligence sharing amongst government and business, on the lines of deliberation councils, can be beneficial to tap new opportunities. Promotion of manufacturing exports can absorb surplus labour from low productive agricultural sectors. Skills development initiatives can be modernized for innovation contextual to the fourth industrial revolution. Land reforms can be initiated for ensuring minimization of wealth inequality. Women empowerment can accelerate fertility rate decline and enhance economic contribution.

The East Asian Development Model is critiqued for its autocratic decision-making process. For a democracy like India, confidence-building measures and assurance of shared prosperity will be decisive of its successful implementation. Selective intervention for credit access and industrial promotion might raise eyebrows for propriety. Maintaining fair and robust institutional governance and transparency of dealings can help assuage fears of undermining public interest. Post-Uruguay Round, state intervention might invite political opprobrium from free-market fundamentalists, which will put negotiation and persuasion skills of policymakers to test. Overall, the model is relevant to India but should be taken with a grain of salt. The best model of development is one which is self-determined in the light of cultural precedents, lived realities and common aspirations of the people.

On ‘development from below'

According to a World Bank report, the global extreme poverty rate stood at 9.2 percent in 2017. Despite years of relentless efforts by institutions like the World Bank, IMF and the United Nations, development challenges still manage to haunt millions of people. In this frame of reference, ‘development from below’ is a philosophical approach of thinking about development issues, dominant ideas, power relations, and value systems. Limits of trickle down theory has necessitated to evaluate alternative discourses which are more realistic and sustainable. Integrity of institutions of development - be it state, NGO’s, private enterprises, political groups etc. lies in their ability to facilitate development for all. However, historical records have demonstrated how they can be hijacked by elites who then steer them towards their own vested interest, leading to chronic poverty and perpetual inequality. 

One of the classic examples of development from below is participatory rural appraisal which aims to involve grassroots actors for defining and implementing development goals in a bottom-up fashion. Robert Chambers, who refined this line of thought, saw it as an approach which incorporates the knowledge and opinions of the target community in the planning and management of development projects and programmes. Involvement of the community is seen as a process of making them self-reliant and self-sufficient so that external assistance is not needed anymore for their continuing prosperity. Development interventions and solutions are designed for problems by encouraging the community members to take up lead roles, thereby making them agile, contextual and flexible. The study of local context and culture becomes paramount to understand the entry point towards this approach. 

Development in its conventional notion is critiqued as an occidental import sustained by hegemonic forces. The essence is derived from a normative political and economic ideology with scant regard for contradictory positions. The ideals of modernization as understood by Western intellectuals is considered as the gold standard for growth and development. Post-colonialism has enabled  revision of this notion and reinvent development efforts. In this process, post development theories have significantly contributed to the reform. Arturo Escobar, in his book - Encountering Development: The Making and Unmaking of the Third World, illustrates how the industrialized nations of North America and Europe come to be seen as the appropriate models to be emulated for post-World War II societies in Asia, Africa, and Latin America. It reflects a concerted tendency towards what I call a ‘monoculturization of civilization.’

Studying perspectives of ‘development from below’ becomes important for they have wide-ranging implications to society and culture. Shared prosperity is unattainable if the existence of social differentiations - in terms of gender, caste, sex, race, class, sexuality, religion, region, disability etc. are not taken into account. These factors operate with their own micro power relations and stall development outcomes in devious ways. To a certain extent, a reductionist thought process to elicit stark differences helps in identifying the factors and reverse their damaging powerplay. Nature of power stands revision in the light of ‘development from below,’ which has far-reaching political dimensions. Resistance to mainstream conception of development i.e. client-patron relationship, can trigger social unrest and economic upheaval from those who stand to lose their long held position of authority and control. As such, a closer look at perspectives help to minimize conflict and ensure better outcomes for all.

Excessive emphasis on local - a critical component of ‘development from below,’ is not without its shortcomings. An insular attitude towards external development might subdue scientific worldview and brew regressive ideas in an attempt to redefine knowledge systems. Without a strong development alternative, it might even lead to a limbo, creating worse outcomes. Anti-universalism credo of ‘development from below’ might foster an inferiority complex wherein each and every form of assistance is seen as an unequal exchange. The need to have a fine balance between ‘the self’ and ‘the other’ cannot be stressed more for the case of  ‘development from below.’