Comparative Politics in a Changing World

Less-Developed and Newly Industrializing Countries

Topics

NICs/LDCs and Equality Imperialism and Colonialism Institutions of Imperialism

Exporting the idea of state Social identities Dependent development

Challenges of post imperialism

Building state capacity and autonomy Forging social identities Generating economic growth

Topics
Prospects for Democracy and Development
Rebuilding state power Supporting civil society Promoting economic prosperity

Challenges for Development

Less-Developed and Newly Industrializing Countries

Defining our terms
Imperialism and colonialism

Institutions of imperialism
The challenges of post imperialism

Prospects for democracy and

development

Newly Industrializing and Less Developed Countries

Third world a very broad group with different prospects

Newly industrializing countries:

Rapid economic growth Tendency toward democracy, social stability

Less developed countries

Economic stagnation or decay Political and economic instability

Imperialism and Colonialism

Imperialism: state extends power to directly control territory, resources, and people beyond its borders Colonialism: physical occupation of territory through military, business, settlers

Colonialism often a central goal of imperialism

From 1500s on, much of world falls under empires, most of which are European

Institutions of Imperialism: Exporting the State

Transfer of the state from the modern world Creation of local bureaucratic structures to consolidate control How these were created differed, depending on the imperial power

Effects? Mixed
Improved infrastructure, standard of living But people not fully incorporated into system as citizens with rights

Institutions of Imperialism: Ethnicity, Nationalism

Introduction/imposition of concepts of ethnicity and nationality were ideas were weak or absent

Basic rights tied to these memberships

Hierarchical classifications often linked to specific membership

But also nationalismconcept of self-rule, of sovereigntywould prove to be a threat to imperialism in long run

Institutions of Imperialism: Gender

Hard to make generalizations given diversity of societies

Some benefits brought to women through modernization, education, social expenditures and public goods (education, healthcare) Others argue that more conservative sex roles fostered by imperial powers that marginalized women

Institutions of Imperialism: Dependent Development

Economic modernization to serve imperial power From subsistence to cash-based economy Mercantilist economytied to imperial markets Primary goods exported, finished goods imported

Local markets often dominated by monopolies

Limited industrialization, infrastructure

Challenges of Post Imperialism

Post imperialism: How to create a modern state, society, and economy?

Building state capacity and autonomy

Forging social identities

Generating economic growth

Building State Capacity

Challenge of creating effective political institutions

Weak capacity
Weak bureaucratic structures after imperialism State politicized by new leaders Cooptation Rent-seeking Clientelism Patrimonialism

Building State Autonomy

Weak autonomy
Autonomy often built on force alone State penetrated by various actors Kleptocracy

Autonomy/capacity affected by power of international actors as well

States Intergovernmental organizations (World Bank) NGOs (Amnesty International)

Result is a weak rule of law, military rule

Forging Social Identities

Making a single nation where none existed before!

Group divisions with economic implications (one ethnic group controls economy)
Group divisions with political implications (battles for political power fall along ethnic, religious lines) Gender divisions a conflict of premodern and modern values Ethnic, gender inequality can hinder development

Generating Economic Growth

How to catch up with the advanced democracies?

Trapped in a system of neocolonialism

Two paths attempted to break this pattern:
Import substitution Export-oriented industrialization

Import Substitution
Influenced by mercantilism and communism Common in Latin America Restrict imports to spur demand for local goods: Tariffs and Non-tariff barriers to make foreign goods less competitive More lax intellectual property rights State role in developing industries, often through ownership (parastatals) Problem of hothouse economy

Export Oriented Industrialization

Influenced by liberalism and mercantilism Common in Asia Concentrate on producing goods for export Tariff barriers to protect local industries Seek out technologies, develop industries for export Use product life cycle: concentrate on simple goods and work up

Problems of corruption
More successful overall in promoting development

Why ISI or EOI?

Why did countries choose one or the other? Latin America: Experience of Great Depression, relationship to US Asia: Experience of Cold War, support from US

Geopolitics matters?

Structural Adjustment
Economic difficulties of NICs and LDCs often leads to structural adjustment

Financial support from International Monetary Fund and World Bank in return for policy changes
Roll back state role in economy, open up markets But evidence of effectiveness mixed More neocolonialism at work?

Building State Power

How can NICs and LDCs build better states? Rolling back state power (structural adjustment) often weakens ability to carry out policies State reform not just in terms of strength, but scopewhat they take responsibility for

Not just improving capacity, but redirecting that capacity toward different goals
One size fits all reforms less likely to work

Supporting Civil Society

Effective states require effective publics How to make civil society: organizations outside of the state Civil society creates web of overlapping interests

Helps check state power and clientelism

Creation of local non-governmental organizations important

Promoting Economic Prosperity

How to grow a less developed economy? Economies dominated by informal sector
Illegal or extralegal Sector often particularly important for women Unregulated, untaxed No access to credit, state protection

Need to develop stronger property rights; problem of dead capital

Microcredit: small loans to help grow informal businesses

Challenges of Development
Past belief that solutions must come from the top down

Greater interest of late in finding bottom-up way to promote democracy, development

Small actions at grass roots level may have greater impact than state-driven policies

Why Has Africa Grown Slowly?

Why Has Africa Grown Slowly?

Paul Collier

Jan Willem Gunning

Slow Growth in Africa

Domestic Destiny External

Policy

Domestic

External

Destiny

Policy

Domestic-Destiny
Tropical/disease Medical intervention has increase population Balanced by AIDS crisis and poverty Poor quality soil Low population density

High per-capita resource endowment leading to higher currency exchange rates Increase chance of civil war (fast money) Reluctance to build economic infrastructure
Many ethnic groups with little mingling and merging. Colonial Heritage and carving of African into small, low populated states.

Domestic - Policy
Undemocratic Governments

Rapid public sector employment with little accountability

Weak infrastructure to support private sector Skill shortages Skills held by ethnic minorities like Indians, Lebanese Inefficient educational system

Poor economic policies like price controls

External-Destiny
Most people live away from major coastal ports and navigable rivers

Political barriers to African trade flow

Narrow range of exportable commodities, e.g. oil, diamonds, cocoa

Aid may have reduced incentives for good governance; and created dependencies

External-Policy
High trade barriers with states outside of Africa

Overvalued exchange rate

Unsustainable external debt

Policy of Destiny?
The dichotomy between policy and destiny is an oversimplification: some external features have been stimulated by domestic policy and vice versa.

Policy of Destiny?
Lower fertility rates, a cause of effect. It is more an effect of growth; the lack of employment opportunities for women has prevented the opportunity cost of children from rising; and the lack of good jobs so not stimulate a demand for education.

Policy of Destiny?
But, landlocked does not have to be a disadvantage. Look at Switzerland. And, some of the best economies in Africa are landlocked, and the worst are on the coasts.

There is more evidence that policy has played a large role in the African demisethere was a period of rapid growth until the 70s.

Policy of Destiny?
Still, this does not mean that Africa is doomed forever It can use its low wages regime to build a manufacturing infrastructure and can also use aid flow to induce growth. Costal Africa can also be stimulated for urban growth.

Domestic or External?
Africa has lost market share in its export performance, and this points the fault at domestic rather than external causes.

In fact, domestic policy not directly related to trade may now be the main obstacle to growth in much of Africa.
Africa has failed to industrialize. Its comparative advantage in natural resources may be working against them.

Domestic or External?
The small domestic market does not stimulate economies of scale that give industrialization its advantage. They also have a huge technology gap. But, transaction costs (government bureaucracy) are high and transportation is not reliable, thus making them an unreliable exporter. The legal systems are also not developed, so investors are reluctant to put up the money.

Will Africa Grow?

Parts of Africa are doing well and others not so well, so it is not as useful to consider Africa as a focus of study any longer.
The pessimistic interpretation of Africas economic future is that Africas problems are: intrinsic, often rooted in geography.

Will Africa Grow?

Altering the exchange rate and trade policies is the easy part, The hard part is to improve public services, and to make Africa a safe place to invest in. And democracy has to gain a stronger foothold.

Political Regimes and Economic Growth

Adam Przeworski is the Carroll and Milton Petrie Professor of Politics at New York University. His recent books include States and Markets: A Primer in Political Economy (Cambridge University Press, 2003), Democracy and the Rule of Law (co-editor, Cambridge University Press, 2003),and Democracy and Development (co-author, Cambridge University Press, 2000).

Political Regimes and Economic Growth

In the past, democracy thought to go against economic growth. The argument is that democracy encourages extension of political power via unions who are more interested in consumption and not so much in investment. Developing states are expected to limit consumption and to re-invest. Thus authoritarian rule was seen as the best system for developing states seeking economic growth.

Political Regimes and Economic Growth

What about the counter argument, that democracy facilitates economic growth?

Political Regimes and Economic Growth

Parts of each argument are true: The rate at which productive factors grow may be higher under dictatorship, but the use of resources may be more efficient under democracy.
The average growth rates for both regime types are likely the same over time

Political Regimes and Economic Growth

Dictatorships exist predominately in poor states. Democracies flourish in wealthy states.
In poor countries where per capita income is under US$3000, there is not much difference between democratic or authoritarian rule.

Political Regimes and Economic Growth

Dictatorships exist predominately in poor

states. Democracies flourish in wealthy states.

In poor countries where per capita income

is under US$3000, there is not much difference between democratic or authoritarian rule.
In states above per capital 3000.00

regime does make a difference.

Political Regimes and Economic Growth

There is no tradeoff between democracy and development, not even in poor countries. Thus, the argument that dictatorship is needed for grown is weak. Poverty appears to leave no room for politics.

Political Regimes and Economic Growth

There is no tradeoff between democracy and development, not even in poor countries. Thus, the argument that dictatorship is needed for grown is weak. Poverty appears to leave no room for politics.