The Evolution of the Asian Developmental State

Hong Kong and Singapore

J. J. Woo

• Publisher: Routledge
• Year: 2018
• eBook ISBN: 9781351629737
• Topic: Politics & International Relations
• Subtopic: Asian Politics
• Index: Politics & International Relations

Many East Asian states have undergone profound economic transformations over the last two decades. Singapore and Hong Kong especially have adapted to shifting economic and technological conditions by transforming themselves into 'smart developmental states'. In these cities, the proliferation of digital technologies has given rise to new growth sectors and opened up new areas of political contestation within these early proponents of the developmental state model.

Providing a theoretical and empirical discussion of the Asian developmental state model, the book assesses the evolution of the developmental state model, considers recent developments in the field and evaluates the development state's continued relevance as a conceptual framework for understanding the politics of economic development. Focusing on digital and technology-enabled economic activities in Hong Kong and Singapore, the author explores the various policies that allow developmental states to stimulate economic growth, ensure organizational coherence, and engage businesses and other stakeholders.

This book will be of interest to scholars and researchers of political economy and economic development in Asia as well as business professionals and other practitioners.

1 Introduction

Beginning in the 1980s, rapid economic development in Asia has given rise to the speculation that the twenty-first century will be an ‘Asian Century’, with economic and political power gradually shifting eastwards (Kohli et al. 2011, Mahbubani 2008, 2009, 2014, 2014). Much of this was fuelled by the ‘East Asian Miracle’ of the 1990s, which was characterized by rapid economic growth in Japan, China, and the four ‘newly industrialized economies’ of Hong Kong, Singapore, South Korea and Taiwan (Stiglitz and Uy 1996, Stiglitz and Yusuf 2001).

Not only did the East Asian Miracle result in extensive poverty reduction and more equitable distribution of income among these East Asian economies (Page et al. 1993, Asian Development Bank 2002), it also raised fundamental ideological questions over the extent and nature of state intervention in economic policymaking (Wade 1990, Henderson 1993). In contrast to the neoliberal approaches to economic governance that had held sway in many Western developed economies, economic development in East Asia has from the start featured centralized state planning and extensive government interventions in markets.

At the heart of this centralized model of economic governance and development is what is known as the ‘East Asian Developmental State model’, or ‘Developmental State model’ in short.¹ This book will provide a theoretical and empirical discussion of the developmental state model, with a focus on the two cities of Hong Kong and Singapore. It aims to address recent developments in the field and assess the continued relevance of the developmental state as a framework for understanding the politics of development in East and Southeast Asia.

The core argument of this book is that there is a need to update and adapt the developmental state model to reflect an increasingly complex and technologically driven knowledge economy. Indeed, this book is driven by the following research questions:

• Is the developmental state still relevant in today’s globalized knowledge economy?
• How have developmental states such as Hong Kong and Singapore adapted in response to the global shift towards a digital and knowledge-based economy?
• How do the two cities’ smart city strategies contribute to developmental goals?
• What does this twenty-first-century ‘smart’ developmental state look like?
• What are the conceptual adaptations and modifications required in order to ensure the continued relevance of the developmental state model?

However, and with many East Asian economies undergoing profound transformations from manufacturing-based and export-led economies to a services and knowledge-based economy, the developmental state model, with its traditional focus on industrial planning, is receiving less attention in scholarly research and discourse on Asian economic development. There has therefore been a decline in scholarly studies and theorizing on the Asian developmental state, especially in light of evolving political-economic realities.

As political scientist Richard Stubbs has articulated in the title of his 2009 article ‘What ever happened to the East Asian Developmental State?’ this is by no means a rhetorical question. Rather, there is a need to take stock of the developmental state in the twenty-first century, both as theoretical construct and empirical reality. This book will seek to achieve this, by examining the developmental state and its evolution in the context of Hong Kong and Singapore, both of which are city-states that are known to be strong proponents of the developmental state model, albeit with variations in their interpretation and implementation of the model (Huff 1995, Low 2001a, Painter 2005).

Before discussing the two cases, however, it is important to establish a clear understanding of the developmental state that will guide the discussions that follow in the rest of this book. In the following section, I will provide an overview of the existing literature on the Asian developmental state. In this instance, a geographical focus on Asia is necessary, as the aim is to understand the developmental state as it pertains to Asian cities such as Hong Kong and Singapore. This is followed by a brief discussion of the two cases, a section on the research and methodology that underpins this book, and a chapter-by-chapter outline of the rest of this book.

The Asian developmental state: a concept

The origins of the developmental state can be traced to Chalmers Johnson’s 1982 work on Japan’s Ministry of International Trade and Industry (MITI), in which he argued that economic development in Japan was driven by extensive state intervention, through the role of an elite and insulated state bureaucracy and the coordination of pilot organizations such as MITI (Johnson 1982). The developmental state model would prove highly applicable to other East Asian states, given their similar trajectories of economic development, in what was known as the ‘flying geese’ pattern of development (Korhonen 1994, Kojima 2000, Kasahara 2013).

This would spark off a flurry of scholarly research on the developmental state model in East Asian countries such as South Korea, Taiwan, Hong Kong and Singapore through the 1980s and 1990s (Lim 1983, White 1984, Evans 1989, Haggard 1990, Wade 1990, Kim 1993, Douglass 1994, Kohli 1994, Moon and Prasad 1994, Perry 1997). While these case studies sought to identify and adapt the various aspects of the developmental state that Johnson had identified to other East Asian economies, efforts at further theorizing on the developmental state were in no way lacking.

Much of this theoretical work was, and continues to be, focused on understanding the sources and exercise of state capacity by Asian developmental states (Evans 1985, 1989, Woo-Cumings 1999, Cheung 2008, Lee 2009, Evans 2014). This is particularly the case with regard to understanding a developmental state’s capacity to mobilize and direct economic and socio-political resources (White 1984). Also of particular interest to many of these scholars is the ability of developmental states to control, influence or ‘discipline’ firms into cooperating with the state’s industrialization efforts and policies (Grabowski 1994).

Much of this focus on state strength or capacity has to do with an association of the developmental state model with political authoritarianism (White 1984, Douglass 1994). It should, however be noted that the developmental state model is much more than simply a justification of authoritarianism, since in most cases state interventions tend to conform to market principles, rather than contradict or subvert them (Johnson 1982, Wade 1990). Understood through the lens of the developmental state model, government interventions in economic development tend to be exercised through market-based tools such as capital re-allocation or implicit subsidies.

This again places the focus on economic bureaucracies such as MITI, since these tend to be staffed with economists who are well attuned to the various market-based tools for spurring economic development. A more significant implication of this focus on state capacity is an associated desire to understand the various organizations, channels and mechanisms through which state authority and interventions are exercised and transmitted to industry and societal actors. This has meant a need to develop a more systematic and comprehensive understanding of the various components of a typical developmental state.

This is provided by Leftwich (1995), whose oft-cited article identifies the six major components of a typical developmental state:

• A developmental elite
• Relative autonomy of the state
• A powerful, competent and insulated economic bureaucracy
• A weak and subordinated civil society
• Effective management of non-state economic interests
• Repression, legitimacy and performance

Much of the discussion that will follow in the rest of this book draws extensively from Leftwich’s formulation of the developmental state, especially regarding the six components that he has identified, although the other studies discussed above are important in guiding the discussion as well. While theoretical development and research on the developmental state model tailed off in the 2000s, with the 1990s typically seen as the peak of theoretical and empirical studies on the subject, there has recently been a revival of sorts, especially with the onset of the 2008 Global Financial Crisis and a consequent refocusing of attention on the role of the state in policymaking (Wade 2010, Howlett and Lejano 2013, Capano et al. 2015).

Indeed, and despite expectations to the contrary, particularly those arising from neoliberal sources, the developmental state has proven exceptionally resilient, even in the face of seismic shifts in the global political economy, such as globalization, financialization, economic liberalization, and even the institutional and ideological challenge of neoliberal politics, particularly in terms of the ‘Washington Consensus’ (Beeson and Islam 2005, Hayashi 2010, Wade 2010, Jessop 2016). Furthermore, structural shifts in the global economy, such as the emergence of the knowledge economy, have resulted in the reconfiguration, rather than the decline, of the developmental state (O Riain 2000, Low 2003a, Chu 2009).

In light of these ongoing ‘reconfigurations’ in the modern, or ‘postmodern’, developmental state, there is a need to devote closer attention to the theoretical implications of these reconfigurations, even as the exact nature and extent of these reconfigurations require deeper empirical examination. This book aims to achieve both these aims through a theoretical and empirical study of the twenty-first-century developmental state, as exemplified by Hong Kong and Singapore. In doing so, I seek to provide an updated conceptual understanding of the developmental state model, as it pertains to the digital and knowledge-based economy of today.

Methodology and design

The findings of this book are derived from field research in the two cities, conducted over the past four years. This research began as an inquiry into the financial services sector of the two cities, seeking to understand the various policy drivers of the two cities’ rise to prominence as leading Asian financial centres (Woo 2015a, 2016a). However, my research revealed a deep socio-political component to economic and financial sector development in the two cities, particularly in terms of their approaches to economic governance (Woo 2015b, 2015a, Woo and Howlett 2015).

In particular, it became increasingly clear that state capacity remains an important determinant of successful economic development in the two cities (Woo 2014, 2016b, 2016a, Woo et al. 2016). In light of these, there was a need to devote closer attention to the governance systems that drive policymaking and economic development in the two cities. As I discuss below and in Chapters 2 and 3, both Hong Kong and Singapore have been associated with the Asian developmental dtate model of economic governance and development. It is therefore within this context that this book is situated.

Derived from the work of political scientists and developmental studies experts, the developmental state model is strongly geared towards understanding the political systemic aspects of economic governance and development. As discussed above, this includes elements such as embedded autonomy, performance legitimacy and elite governance. Paradoxically, the bureaucratic insulation that lies at the heart of the developmental state model requires the state to possess a significant extent of political clout and authority.

As a consequence of this focus on politics and governance, along with my training as a political scientist, this book takes a qualitative case study approach in understanding the developmental state model in Hong Kong and Singapore. This involves the collection and analysis of qualitative data, both primary and secondary, that includes in-depth interviews with senior policymakers and industry professionals, official reports and publications from governments, firms and research institutions, as well as the existing body of research and writing on the subject.

Taking such a qualitative approach is crucial for studies on political and economic development in Asia, where interpersonal connections or guanxi play a crucial role in determining or influencing policy decisions (Leung et al. 1996, Wilkinson 1996, Ewing et al. 2000, Hamilton-Hart 2002, Woo 2015b). The analysis of qualitative data allows for the formulation of ‘thick’ descriptions that are pa...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Contents
• Dedication
• List of figures
• List of tables
• Acknowledgements
• Preface
• 1 Introduction
• 2 Developmental states
• 3 Singapore Inc.
• 4 Hong Kong
• 5 Becoming smart cities
• 6 Conceptual and theoretical implications
• 7 The smart developmental state
• Index