Bringing the Local State Back into Development: The ‘Local Developmental State’ and the Promotion of Sustainable Economic Development and Growth from the Bottom-Up
53 Pages Posted: 23 Oct 2017
Date Written: October 21, 2017
After having banned all discussion of the ‘developmental state’ concept during the high period of global neoliberalism (1980-2008), the Great Recession that began in 2008 forced the international development community to begin to urgently reassess the concept in order to deal with the mounting economic, social and political crises (see Crespi, Fernández-Arias and Stein 2014; Salazar-Xirinachs, Nubler and Kozul-Wright, 2014; UNCTAD, 2016a). Most attention in this revival of interest in the developmental state has followed the line that began with Johnson’s (1982) pioneering work on Japan, through to the seminal work on South Korea by Amsden (1989) and Chang (1994) and on Taiwan by Wade (1990), which is to say that it has overwhelmingly emphasized the role of (suitably redesigned) national-level developmental state institutions. This approach is misleading, however, because a great part of the historic success attributed to the ‘developmental state’ model was actually brought about thanks to the intervention of sub-national state institutions – that is, thanks to what we now call the ‘local developmental state’ (Bateman 2000, 2001, 2005, 2010: 166-2010, 2015, 2016; Bateman and Chang, 2012; UNCTAD, 2016b: 117-119). This revised understanding highlights the ‘bottom-up’ institutional push provided for structural transformation and industrial development imparted by sub-national governments. Important examples of such ‘local developmental state’-type pro-activity include experiences from post-war West Germany, northern Italy, the Basque country of Spain and Japan, followed by many East Asian states from the 1950s onwards (Malaysia, Thailand, Vietnam), and also by several Latin American countries (Argentina, Brazil, Chile, Colombia and Mexico). Finally there is China, which provides perhaps the most impressive example of the ‘local developmental state’ in action (see Thun, 2006: Ou, 2013), and might even constitute a ‘Beijing/Shanghai consensus’ model to replace the failed ‘top-down’ market-driven ‘Washington consensus’ neoliberal model of development. This paper assesses the historical experience, core capabilities and potential transferability of the local developmental state model. In the context of the ongoing intellectual and material collapse of the global neoliberal model, but especially in view of the failure of low productivity market-driven individual entrepreneurship and self-employment projects to act as the source of value and development progress (Bateman, 2010; Nightingale and Coad, 2014; Naudé, 2016), the argument is made that the local developmental state model should become a key foundation of local-level policy efforts and the judicious promotion of the ‘right type’ of high productivity enterprise development projects, in both the developed and developing countries, required to bring about a sustainable and equitable development trajectory ‘from the bottom-up’.
Keywords: local developmental state, productivity, industrial policy, SMEs
JEL Classification: L16, L25, L26, L53, O14, O17, O25, O38
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