Old and New Means for Development

There is no uni-linear way for development and paradigm shifts in development theory can strengthen once not well-heard arguments or recall the solutions from the ‘bad old days’. The emergence of institutions and the return of elites as major players in the development theory show this.

From the past experiences of IMF and the World Bank, it was acknowledged that one-size actually fitted none. Although John Williamson updated his ‘ground-breaking’ one-size fits all ‘the Washington Consensus‘ approach in 2004 nearly after two decades, his naive attempt brought nothing but ‘the post post Washington Consensus Consensus’.

With ‘the post consensus’ era, the development literature became full of vast literature on institutions and elites. Although these two term might be thought of having distinct features, they support and nourish each other.

When the sole-market based approaches to development were not able to explain the failure of development initiatives, institutions began to matter. Douglas North was among the forefront believers of institutions. In a conference speech, North argued that people did not act rationally throughout the capitalist world history, therefore rather than the sole market-based solutions he stressed the importance of institutions to regulate the market. His works brought new scholars around him after he and Ronald Coase founded the ‘International Society for New Institutional Economics’ at Washington University (St. Louis) in 1997. With the new millennium, the rise of institutional theory continued. After North’s endless efforts to stress the vitality of institutions, thanks to works of Acemoglu and Robinson reasons for prosperity or the fail of the nations was linked not to geography, culture, ethnicity, or religion but to institutions. In their book Why Nations Fail? (2012), they argued that inclusive political institutions supported the economic development and exclusive political institutions ended up with economic downturn. Institutions were thought of leading not only to economic decline but also political decay as Fukayama mentioned in his two-volume book The Origins of Political Order (2011; 2014). He argued that in the absence of rule of law, state building, and an accountable government political decay was inevitable.

The return of the elites to the development lexicon coincided with the increasing importance on the institutional literature in terms of the timing. After the market-based development efforts came to a dead-end, political settlements with elites pop-up as an issue. The “all-directional” (Daloz, 2003) elites were suddenly became prominent nominees to lead the development pathway. Though suitable partners for the middle-way approach to development was not just created recently, they were the change-makers and successful implementer of developmental projects throughout the history of the Asian Miracle economies. Kuomitang, once the corrupted elite ruling party of China then the transforming body of Taiwan is an obvious example in the history of development. Thanks to Kuomitang, Taiwan built inclusive and sound institutions that continues the rise of the little island as one of the most innovative land and technology hub of the world. Similar to Kuomitang’s success to transform Taiwan, Leftwich (2010) stressed the transformative role of the ruling elites in the other two Asian Tiger economies namely South Korea and Singapore. Authoritarianism along with the development commitment among the elite rules of South Korea under the military regime and Singapore under People’s Action Party explained the high developmental records, plus the efficient bureaucracies created. Amdsen also mentioned the efficient establishment of state institutions such as Economic Planning Board to foster economic growth in South Korea in her seminal work Asia’s Next Giant: South Korea and Late Industrialization (1989). Chang (2010) pointed out Industrial Development Bureau as a pilot agency for developmentalist goal formed under the elite rule of Taiwan.

The fallacy of the one-size fits all market-based development policies caused the emergence of new players as well as the return of the forgotten change-makers in development theory. While in the first look it is hard to think about the elites and institutions together, an historical approach to the developmental states of Asia showed that political settlements or elite bargaining may work well for the institution building which then leads to economic development.

 

 

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