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2/15

Role odels and

Policy Rights

ALICE

AMSDEN

Professor

Massachusetts

Institute

of

Technology

FASTER ECONOMIC DEVELOPMENT WAS ONCE associated with a good theory but

in

the

prosperous Golden Age that

followed

World

War

II from roughly

1947 to

1980 poor

countries

tended to

learn from each other

not from

abstractions.

They

experimented

with policies and institutions based on those

of

an outstanding role model.'

As

this form

of learning evolved, economic growth rates in

nearly all

Third World

regions

reached

unprecedented

heights. For

the first time

in modern

history Third World economies

grew

faster

than

First

World

economies,

as

seen

in

Table

1

Then

in

the

counter-age

of

203

economic

Liberalism, from 1981

to

the

2000s,

when

developing

country policymaking

became tightly tied to theories

of

market behavior growth rates in

almost

all regions

fell.2 Intolerance

of non-market provisions in the areas of

trade

industry ownership

and employment

became a

hallmark of

a new globalism,

as the former

colonial

pow-

ers returned to

their ideal of

universalism, a one-policy

agenda

for

rich

and poor

countries alike no matter how many or diverse;

this

was the only cost-effective way to

govern them. Yet

the survival of

role models

depends

on policy rights, or the freedom

against possible foreign opposition from

Washington

to

the World

Bank to choose

the policies that role models

themselves

once followed,

towards foreign

investment

and

capital

controls

or

trade

agreements

and

job

formation.

Given

their thirst

for diversity

in

a

world

celebrating

one particular set

of

market policies

for all, the question arises

of

whether or not

role

models

have

been

left in limbo

and

with

them an empirically

grounded deductive way of

thinking about

economic growth?

ALICE AMSDEN is the Barton L. Weller Professor

of

Political

Economy in the

Department of Urban

Stud-

ies

and

Planning at

the

Massachusetts Institute

of Technology. She was recently appointed

by

the

United

Nations

secretary-general

to

a

three-year seat on the UN Committee on Development Policy.

Her work

focuses on

issues

of development and poverty eradication.

Copyright @ 2 9 by

the Brown

JournalofWorld ffairs

FALL/WINTER 2 9 *

VOLUM

XVI ISSU


3/15

ALICE AMSDEN

Today's

global

culture

celebrates electoral

rights,

education

rights,

human

rights,

housing

rights,

health

rights and women's

rights-anything

but country-specific policy

rights.

Developing countries

discovered role models

among their

peers, in geographical

proximity. This

tendency

gave rise

to

two

regional

clusters of

role

models,

with pure

theory left to influence

mostly

fiscal and monetary policies-even so,

countries

like

Brazil, China and India tend to follow

fiscal

and monetary policies based on their ow n

histories,

not

abstract theories.

The Organization of the Petroleum Exporting Countries OPEC) is associated

with a price cartel.

But

the

OPEC

development model also revolves around a profes-

sionally managed state-owned

oil

company,

which

was formerly a private multinational

concession,

nationalized after

political

independence. In East Asia,

import-substitution

industrialization

ISI) became

the basis of

a

role model radiating from

Japan,

in

which

domestic

markets

were

seized from

foreign

companies, and

then exports

were

extracted

from import substitutes to enter foreign markets. Latin America, with both oil wealth

and

manufacturing experience, combined the two

models.

Africa,

without

manufactur-

ing experience or oil-until recent

discoveries-could not

break into

either circle.

The

shift in the

cognitive

approach

to

economic development, away from de -

ductive market

theories towards

inductive

role

models,

was an

integral

part

of

the de-

204 colonization

process that followed World War II, starting in 1947 with India's

political

independence.

A

culture

of

anti-imperialism pushed independence beyond

politics

into

economics,

in

what became a novel nationalist approach

to

late development, with

nationally owned and controlled companies (private or public) at

its

core.

The

edge

of the envelope was the

Latin

America

missed

the

cathartic

effectb

Chinese Revolution 1927-1949) that ex

of twentieth-century

decolonization.

propriated

not

only

foreign governments

but

also foreign firms, as did India

using

tamer

tactics, such as acquiring British firms,

exhausted from

depression and war, at firesale

prices.

Korea and Taiwan inherited

the investments of

Japanese-owned zaibatsu when

Tokyo

conceded

military

defeat.

Indonesia

acquired

Dutch

companies

when the Dutch

government fled after a long nationalist

struggle.

In contrast, the Philippines was one

of

the first of

its generation

to

gain political independence,

from the United States, but

never

showed

the

door to U.S.-owned

firms.

A

large

stock

of

inward foreign investment

was

also

true of

Latin America,

which

missed

the cathartic effect of

twentieth-century

decolonization. Multinationals that

arrived

in

Latin America

before World

War

Tw o

simply remained, although some electric

power

industries and railroads

were

national-

ized.4 With implacable foreign firms, there was crowding out

of

private nationally

owned

companies

in

industries

like automobiles.'

By

this

account,

fast-growing

East

THE

BROWN JOURNAL

OF

WORLD

AFFAIRS


4/15

Role oded

and Policy

i hts

Asia

(excluding the Philippines) is more nationalist than Latin America.

The

Middle

East, by appropriating

the

concessions

of the

world's largest oil

companies,

named the

Seven

Sisters, shows

a

degree

of

nationalism

that is easily equal to that of

East

Asia.

By

the

same

reckoning, both

East

Asia

and the Middle

East enjoy

more

policy

rights

than Latin America, or more freedom to decide, against foreign opposition, if any,

which

nationalist economic measures to introduce. The strength

of

role models today

thus depends on the

strength

of heir policy rights. The

greater

their rights, the greater

their latitude

to choose

the policies

best

suited

to raising

their global

competitiveness,

income and wealth to the

level

of

their

role model.

If the two great role models

of the

late-twentieth century, OPEC and ISI

had

failed, if they had not raised

national

incomes and

spread

to

other

countries, then as

the world

returned

to an open-market

system

after

1980 policy rights

would probably

have

expired. But they

did

not fail,

and

that

did

not

happen.

Washington,

the World

Bank, and

the

World Trade Organization are quick

to

label

the

role models

of

the Far

East

and

Middle East

s failures.

After

the

East

Asian financial crisis of 1997 Asia's role

model

was pronounced

dead, and once

oil

was discovered

outside the Middle East, the

OPEC

cartel,

let

alone the

OPEC development

model, was

relegated to

the

dustbin

of history. True, income growth

in

the Middle East and Asia slowed under neo-liberal

policies, but hardly to a crawl, and

not

at all

in

ndia and China,

whose

reforms, like

the policy framework of the

two

role

models themselves,

were

a

mixture of market 205

and

state,

and

whose

demand

for

raw

materials,

2000

through

2008

created

a

boom

in Third World mineral

economies.

Instead of failing, the

East

Asian role model

has

adapted

import substitution

to mature high-tech industries.'

The OPEC development

model, apart from

the

OPEC cartel, has

inspired

the Bolivaristas

Venezuela, Ecuador,

Bolivia, and a

total

of eleven Latin

American

countries), the resource-rich BRICs (Brazil,

Russia, India and

China),

and

40 poor

oil-producing countries

(about one-third of

the developing world still at the

bottom

of the hydrocarbon value chain. The top

ten

companies

in oil and gas reserves are all

state-owned,

and

from the

developing world.

National oil companies threaten to do to the U.S. oil, g s and petrochemical industries

what Japanese factories-and now

Korean

and Chinese

factories-once

did

to

the

U.S.

car and

electronics

industries.

National role

models

have

survived the return to

power

of a theory-driven global

regime

because

this regime, however monolithic in

appearance,

is being fractured in

practice

by

its own institutional

wear and

tear.

It started to

unravel once

the

de-colo-

nized generation

began to compete

in world markets.

As developed countries

felt

the

heat of new competition, they ran helter-skelter, seeking more

leeway

in

setting their

own policies to strengthen industries back home. The upshot is a large underground,

or

demimonde,

where

countries promulgate

free

trade

by

day

but

practice

state-pro-

FALL/WINTER 2 9 *

VOLUM

XVI,

ISSUE


5/15

ALICE AMSDEN

motion of industries by night.

acktracking

is

most evident in international trade, the backbone of globalism.

Protective

tariffs remain low, but trade is no longer

free, s

theoretically defined. De-

spite the

rhetoric,

regional

trade agreements

like

NAFTA

favor

member

countries

over

non-members, the antithesis of

a evel

playing field.

As

India

noted openly at

a

WTO

meeting, it is

well

documented that

Regional

Trade Agreements are proliferating

and

most

of

global

trade isconducted on preferential terms. ' The World Trade Organization

itself,once a

bastion of

transparency, is opaque in its governance.

According to the Ma-

laysian

delegate,

Well,

[the WTO]

issupposed

be democratic-it

ismember

driven,

and

every

member has

a

vote

So it has all the elements of

a

democratic

institution,

on

paper at least... In

practice,

there

have been complaints

that the

agenda

is

dictated

very

few

powerful countries. '

The usiness tandardof India reported that a demand

from

the

WTO s then director, Mr.

Pascal

Lamy,

for a 30

percent

pay

hike at

a

time

of

global

wage

deflation, was

not

handled democratically

by

the WTO s budgetary com-

mittee, but was decided

against

by rich

members

behind closed

doors.'o

In the milieu

of

the demimonde, where ll policymakers enjoy a

degree of

free-

dom,

role models

survive.

The

practical

question

is how

effective are

they likely

to be

in

running

an

underground pro-industry policy?

We would

argue

that the effectiveness of

nformal

policymaking depends on two

2 6

rather disconnected influences: first, the quality of

key government economic bureau-

cracies;

and

second,

their

relationship

to

the

grassroots

anti-poverty

movement, which

attempts to return decision- making

power

to local people.

The

higher

the quality

of

national universities, national civil service entrance exams; and the greater the national

orientation of high government officials, measured by the geographical locus of their

tertiary

degree,

then the better

will

be policy coordination. The more cooperative

rela-

tions

are between anti-poverty activists

and government economic planners (most

now

democratically elected), the more effective policy implementation will be.

Below we discretely draw

the curtain on the demimonde, show

some

data on

the education of top economic bureaucrats (in the BRICs), and finally,

note

the need

for a stronger alliance between bureaucrats

and

activists.

NOBODY GAvE

DAMN

The

first generation ofpost-Independence leaders

was

able to en joy nearly

unrestrained

policy

rights

because, s Richard

Nixon observed,

nobody

gave a

damn.

The de-

veloping

economies

were

less

interesting to

Wall

Street

or Washington than Western

Europe, the target

in

the 195 s of American

multinationals, just

s

Meiji

Japan

was

less

interesting to

investors

than

Reconstruction profiteering

after the

American

Civil

THE

BROWN JOURN L OF WORLD

FF IRS


6/15

Role

oded

and

Policy Rights

War.

1

But s

Japan

recovered from military defeat and

its

exports boomed, and s com-

petition from the whole

Japanese role model aureole commenced,

everything

changed.

Suddenly the United States gave a big damn.

Today's regional

trade

agreements

signal

the tensions

of

universalism,

of

a

shoe

that

is

too

tight

for too

many

feet.

TH

MIMON

Poor countries were

divided over

the WTO's

formation in

1994-some gained,

some

lost,

so

no

consensus emerged

over

what to do.

Instead,

dissatisfied countries

sought

autonomy with subterfuges.14

As

they descended into

a

demimonde, the

habituees

they

rubbed shoulders

with

were none other than the

advocates

ofopen markets. Hypocrisy

in any demimonde is

r nk

One

American subterfuge was

the

military

industrial

complex-a

term

in

President

Eisenhower's 1961 farewell address.'

The United

States Department of Defense

and

National Institute

of Health are

mainstays

of

U S

private manufacturing, subsidizing

industries ranging

from batteries and aerospace to bio-tech and agriculture. Manufactur-

ers and

the military

bonded after

the American Revolution.

Ironically, modern factory

management

had

its genesis in the

United

States (the most pro-market

country

in

the

world in

the Government Springfield

Armory in

Massachusetts.

Defense industries are

not adjudicated

under

WTO

rules, and

so governments

are

free to promote

them. 7

Despite big

armies

in

Russia,

India and

China,

developing countries invented

different subterfuges. They used

both piecemeal

artifices s well s

multi-billion

dollar

science

parks to undertake the technological and organizational experimentation neces-

sary

to move into higher skilled industries. The difference between the military-indus-

trial complex model and the

science

park model is that the former builds

technologies,

while the

latter builds

technologies

with, inter-connectedly,

specific nationally

owned

firms. R D

is

also

not

adjudicated

by

the

WTO,

so

science

parks

can

promote new

industries and firms so long s there is money.

Piecemeal policies in the demimonde may

have

failed in

droves,

but

some

were

highly effective in raising skilled

employment. The

Indian government allowed

the In-

dian-owned pharmaceutical

industry

to violate foreign product

patents, but not

pro ss

patents, which contributed

to e fficient

manufacturing and cheap

drugs (the adjudica-

tion

of

healthcare

industries

under

the

WTO is ambiguous).

Besides pharmaceuticals,

developing

countries have called for

the

relaxation of

intellectual property rights on

climate

friendly technologies under

the United

Nations Framework

Convention on

Climate Change-all industries

related

to the environment

can

be state-supported.

Regarding foreign capital flows, while financial liberalization was the

primary

factor

behind

East

Asia's

1997

financial

crash, Korea

was

forced to

keep

its

financial

markets

FALL/WINTER 2 9

VOLUM

XVI, ISSUE

I


7/15

ALICE AMSDEN

open

after an IMF bailout. The Finance Ministry

responded

by using modern technology

to monitor

every

financial flow on a minute-to-minute basis to reduce risk and quicken

government

response,

in

effect, closing markets after hitting a ceiling. To reduce export

dependence on the

U S

market,

Korea offered subsidies to

companies

that

exported to

other destinations

(in

distress, countries can protect their

balance

of payments).

Thus, WTO members are themselves responsible for weakening their own ba n

on subsidies by agreeing not to

adjudicate

large

chunks of

what was once

called indus-

trial policy.

One of the fastest

growing

sectors

in

the world economy

is energy

and

the

environment, and any

country

with money can

vigorously

promote

them without being

taken

to

court for

violating

WTO provisions.

Chinese

government research subsidies

are increasing

rapidly

for electric car designs, for example; and

tax

credits are planned

for consumption

of

alternative energy

vehicles.

The

world

over, states

and municipali-

ties can offer

perks to

businesses

to influence

their location

decisions. Poor

regions

in

Thailand

use

subsidies

to attract automobile assemblers. The U S state

of

Massachusetts

bankrolls

the

movie business and

the

life

sciences, and allows not-yet-profitable

start-ups

to

convert

tax credits into

cash.

Subsidies

can flow

to

science

parks, R&D

institutes,

high-tech industries, and small-scale enterprise-without

these exceptions,

probably

no

developed country

would have joined the WTO. Planners can use land

grants

to

promote regional

development,

and

government

procurement

officers

can

attach

condi-

208

tions on firms that

compete

for public contracts:

when Korea built a

high-speed rail,

it

insisted

that

every

bidder

transfer

enough technology

to enable Korean

companies

in their

own

right to

bid

on

overseas

high speed

rail

projects.

Hyundai

Rotem, Korea's

premier high-speed

rail

manufacturer now has contracts

to

build commuter

rail

systems

in

Canada, Turkey, and

the

United

States.

American trade officials viewed China's

export tax rebates

as a form

of

protection,

but, surprisingly,

tax

rebates

did not violate

World Trade Organization

provisions. '6

To

avoid

a clash,

both giants

agreed

to

offer developing

economies S20

billion

in sub-

sidized

export

credits to help them buy

more Chinese

and American goods, flagrantly

violating

the

WTO equal

treatment principle for

all other

countries.

If

anyone says neo-liberalism lives,

they

are

right

insofar

as that is the law.

they

say,

neo-liberalism is

dead,

that is right, in

a

sense, as well-the law is increas-

ingly

evaded.

NATIONAL BUREAUCRATS

If

a

country

pursues

free market policies, its chief

economic bureaucrats

must

be

trained in a U S or British economics department. If by contrast, a country's policies

are

role

model

driven,

then

its

bureaucrats must

be experienced in

building heterodox

THE

BROWN

JOURNAL OF

WORLD

AFFAIRS


8/15

Role oded

and Policy

ights

institutions-those

deviating from free

market

prescriptions-and implementing

them in national contexts. The

latter

type

of

bureaucracy,

t

turns out,

has

survived in

at

least

Korea and the BRICs, despite

5 years of

liberal attempts at taking the state

back out.

The orientation of top economic civil servants may be proxied by

where

they

earned

their

graduate degree,

if any. If top officials in

the

ministry

of

finance, industry

and central bank all

study for

their masters or Ph.D

degrees in

leading U.S.

econom-

ics

departments, t is

reasonable to expect

that their

policy

preferences will

fall

on

the

orthodox side.

By

contrast, countries whose

civil

servants

must pass rigorous

exams, and

whose local universities are

able

to train them at world standards, are likely to

operate

successfully

with an activist state.

Following

World

War

II, little public money existed

in

the

de-colonized world

for sending promising public

officials

abroad for

schooling.

Even today, civil

servants

in poor countries, even India, are just beginning

to

have foreign

degrees,

while

national

universities still suffer

from

financial

hardship;

this is evidence

of

poverty

rather

than

nationalism.

The role

model

for a

national

orientation is perhaps Korea, because

of

its

mix

of local and foreign degrees, made

possible by

the high quality of its

own

universi-

ties (as in all the

BRICs ,

where civil servants can get a

first-rate

education,

not

just in

economic

modeling but also in national economic and diplomatic history.

Korea

now gives the

appearance of

being wholly

Americanized.

Japan's

popula-

209

tion

is

about three-times

that

of

Koreas,

but

since

at

least

1970,

Koreans

outnumber

Japanese earning economic

Ph.Ds in

the United States:

in

2000, the ratio of A-TKFs

(American-trained Korean economists) to A-TJEs (American-trained Japanese

economists) was

39 to 16.1

Nearly 100 percent of

the tenured faculty in the

econom-

ics

departments

of

the best Korean universities is U.S.-trained, and about

9

percent

of economists in

a leading

macroeconomic think-tank, Korea Development

Institute,

hold U.S.

degrees.

Nevertheless,

unlike Koreas

a

universities which lack

diversity

its

economic

bureaucracies are

more balanced.

In

2009, a orientation

is

perhaps

Korea.

typical pattern

of

foreign

and local degrees was

evident

in

Korea's

Ministry of

Strategy

and

Finance:

the Minister

and two

Vice Ministers all held higher degrees from

both

foreign and local universities, suggesting a mixture of influences.

In Brazil, nearly all high-level officials in

the

Ministry

of

Finance and Ministry

of

Planning

hold Brazilian Ph.Ds; the

one U.S.

degree

is

from

a radical

U.S.

university

(New

School

for Social Research).

In

Russia, not

only do

the

economics

ministries

not

have

foreign-trained economists, they probably do not

have

any

economists. Ex-

plains one researcher, most senior officials would actually be engineers, scientists, and

mathematicians, with

degrees

from the

Soviet's

best universities. 2

0

India's

economic

FALL WINTER

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ALICE AMSDEN

ministries,

like

Russias, have

ahigh ratio of domestic to foreign

degrees,

although

this

is changing, as more money is available

for

study abroad.

Despite

China's

rapid

West-

ernization,

its finance ministry and National

Development and

Reform Commission

are

almost

totally

run

by

elites

from

China's

own

best

universities.

There is thus a well-educated national

civil

service in the BRICKs

(including

Korea) to coordinate a later stage

of

development policies, those that

have

gone

un-

derground.

TH UNDERGROUND

AND

THE GRASSROOTS

As

governmental organizations were marginalized,

non-governmental

organizations

(NGOs)

mushroomed, part

of a

vast grassroots

anti-poverty

movement

that

has

come

to unite World

Watch,

for

example,

amonitor of the environment,

the

World Bank,

the Ford Foundation and other elite bodies with large field offices, and unpaid vol-

unteers

in

the thousands, including students,

scientists

and engineers, working with

local counterparts to improve how poor people are

clothed,

housed and fed.

Activists

are

politically

diverse

(witness the November 1999

Seattle demonstrations

against the

WTO , yet elite aid networks are generally hostile towards

state

activism, and want a

redistribution

of

power over poverty from top-down to bottom-up. Amartya Sen, a

21 Nobel economics laureate, described the top-down

approach

as

fierce,

meaning

tough

on

the

poor,

and the

grassroots

approach,

to which

he

has

contributed

so

much,

as

friendly ( congeniality

is

exemplified

by

such things as mutually beneficial exchanges

[of which Adam Smith spoke eloquently], or by the working of

social

safety

nets,

or

of political

liberties, or

of

social

development ).

But

redistribution, however friendly has

been

a

disaster

in

fact:

extreme

poverty

has

not fallen at

all

in

many

developing

regions

in

th

l st

5 years f course,

things

might have

been

worse if the

grassroots

had

not

grown, but by the same logic,

things

might have

been much

better if governments

hadn't been

squeezed out of irrigation,

rural

electrification (China excels as a role model), and industrialization (to

create

paid

workers

instead of

volunteers .12

As

seen

in

Table 2,

based on World Bank

data

for

1981 to 2 5 and

established

estimation

techniques,

abject

poverty has

not fallen in

Latin America or Africa,

despite

the enormous effort and

energy

directed there.21 The

welfare

of

the poor may

have

increased, leading to a

rise

in life expectancy. But the

failure

of poverty rates

to

fall suggests

that higher

life

expectancy increases

population

growth rates which,

in Malthusian

fashion,

lead

to diminishing

returns. The

poor

live

longer but don't consume more.

The failure to reduce abject poverty

can

be

traced

to an abstraction, a strong belief

that supply

creates

its

own

demand. 24

Like

Say,

grassroots

activists

imagine

incorrectly

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Role oded

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i hts

that what awaits a supply of better clothed, housed, and fed workers is the demand

to

employ

it

at

a

living

wage.

Yet if unemployment already exists, then to invest more

in

workers' capabilities may

create

more unemployed job seekers, not more

jobs.

2

5

Call

thiw

the

Kerala

Effect,

after the

South

Indian

state

which

has

experienced

rising

educational attainments

but not

decreasing poverty. With sluggish demand, people

may simply be forced

to hire themselves

at

starvation

wages, and enter into mutually

beneficial exchanges as Sen puts it at

near subsistence

rates of

return.

While education

and

development

are

closely

linked

if

more

money

is poured

into tertiary

education,

graduates

are likely

to add to the

educated unemployed, or the

exodus of talent

abroad.

For one,

educated

unemployment in Indonesia

is

estimated

to

have

exceeded 787 800

in 2007.26 Thus,

jobs

do not necessarily make an

appearance

simply

because

the supply

of qualified

jo seekers improves as a result

of grassroots

activism. The demand

side

must

also

be

improved,

and this

requires

the government.

CONCLUSION

Amidst the paroxysms

that

accompanied

de-colonization after World War II indepen-

dent countries extended their newly won

political freedoms into

the economic

realm.

They exited the market model and entered adeductive world

where

they learned from

role

models

(the OPEC group

in the

hydrocarbon industries

and Japan

in electronics

211

and

automobiles). They experimented

with

novel

policies and

institutions

to

escape

past failures and to develop,

which

at the time meant increasing

productivity

raising

the number of paid jobs to near full employment, and achieving balance of payments

stability.

As

role models advanced, economic growth in income and per

capita

income

soared

to unprecedented heights see Table

1

To

implement

a

role

model

rather than amarket theory is

to

be

pragmatic,

and pragmatism necessitates policy rights, or the freedom to implement a range

of

development provisions that may

face

foreign opposition on the

grounds

that they

deviate from market theory.

Yet

today's

global culture celebrates

property rights, elec-

toral

rights,

education

rights,

human

rights,

housing

rights,

health

rights

and

women's

rights-anything but

country-specific policy rights,

which the

de-colonized generation

struggled long and hard to achieve.

Does

this

mean

that the role model is ruined as a

cognitive

form of

development,

and

civilization is returning

to

the colonial age,

when

Britain

adopted

a

universalist

economic approach to

govern its

large and diverse empire? Can

heterogeneous role

models survive in today's ideological straightjacket?

The

answer to this question is empirically grounded, like role models them-

selves.

Powerful developing countries,

the

BRICs

and

other

emerging

economies

con-

FALL/WINTER 2 9 VOLUME XVI ISSUE I


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ALICE AMSDEN

tinue

to implement heterodox economic policies in

a

dense demimonde,

rubbing

shoulders

with

developed

countries,

all searching for clever new ways to promote their

own

industries-a

competition which is arguably

healthy

compared to protectionism

using

tariffs.

To

coordinate underground

policies, these

countries

still have

what

it

takes:

an able national economic bureaucracy, locally trained and tested. The big challenge

is poverty alleviation and adding a top down

angle

to the grass roots

approach,

which

failed in the

last

5 years to decrease

Africas worst

indigence see Table

2).

fwe

gingerly

look 5 years out, and

imagine

what the world economy will look

like, we already know twill not conform to the

classification

t followed after

World

War

II where countries belonged either to the First

World,

Second World (Soviet countries ,

or

hird

World.

The

Second category isalready gone, and the Third category isunlikely

to vanish

in

a

velvet revolution, but

a

big chunk of the

de-colonized

generation,

in

terms of land mass and

population,

is

now floating between worlds.

If

underground

policy making continues, and if government bureaucracies

remain

national

in

orienta-

tion

which is

almost

certain, then the global

economy of

2 35 is

likely

to exhibit a

high degree of

diversity although just

how

much is

not

yet

clear.

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TABLE 1.

GDP

GROWTH RATE

AND GDP P R

CAPITA GROWTH RATE, 1950 2000

Region GDP Growth

Rates

GDP

Per

Capita Growth

Rates

1950-1980 1980-2000 1950-1980

1980-2000

Western Europe 4.20 2.20 3.2

4

2.0

6

United

States

3.47

3.45

1.79

1.93

Japan

7.10 2.65 5.50

2.12

Developed

4.12 2.46 3 0

6

1.97

Countries

Average

astern

urope

5.46 0.41

4.31 -0.85

and USSR

Latin

America

4.75

2.32

2

15 0.55

Asia

East Asia

6.90

5.83 4.11

3.43

South Asia

3.98

5.05

1.21

2.49

Middle

East 8.04

2.03

3.01 0.47

Africa

North

Africa 5.32

Africa, South

of 3.70

Sahara

3.56

2.61

2.30

1.20

1.25

-0.12

Developing

5.06 3.02

2.04 0.75

Countries

Average

Source: World Tables, Johns Hopkins University (1980, 1994) and

WorldDevelopmentIndicdtors

World

Bank

(2002),

http://www.worldbank.org.

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ALICE AMSDEN

TABLE 2.

POVERTYS PERSISTENCE

IN AFRICA AND

LATIN

AMERICA, 1981-2005

Poverty Gap

index

x100)

Region 1981

1990 1999

2005

East

Asia

and

Pacific

A)

35.5

18.2

10.7

4

Of

which

China

(B)

39.3

20.7

11.1

4

Eastern

Europe

and

Central

Asia

[C]

0 4

0.6

1.6

1.1

Latin

America

and

Caribbean

D)

4

3.6

4.2

3.2

Middle

East

and

North

Africa

E)

1.6

0.9

0.8

0.8

South

Asia

F)

19.6

15.2

11.7

1 3

f

which India

G)

19.6

14.6

11.7

10.5

Sub-Saharan

Africa

H)

22.9

26.6

25.7

21.1

Total

I)

21.3

14.2

10.9

7.6

Percentage

below

1.25 / day

Region 1981

1990 1999 2005

East

Asia

and Pacific

A)

77.7 54.7 35.5 16.8

Of which China

(B)

84

60.2

35.6

15.9

Eastern Europe and

Central

Asia [C]

1.7

2

5.1 3.7

Latin

America

and Caribbean D) 11.5 9.8 10.8 8.4

Middle East and North Africa E)

7.9

4.3 4.2 3.6

South

Asia

(F)

59.4

51.7 44.1 40.3

Of

which India

G)

59.8 51.3

44.8

41.6

Sub-Saharan

Africa H)

53.7

57.9 58.2 51.2

Total

I)

51.8 41.6

33.7

25.2

Source:

Shaohua

Chen and Martin

Ravallion Policy

Research

Working Paper 47 3:

The

Developing

World Is Poorer Than We Thought, But No Less Successful in the Fight against

Poverty,

Policy Research

Working

Paper, no. 47 3 August 2008 ,

World Bank Development Research

Group,

http://go.wxorldbank.

org/BXEZCODA10.

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Role oded

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NOTES

1.

This

article

is

based

on a

book in

progress

entitled, A Farewell to Theory:

Developing From

Role

Models.

2.

As

is

well

known,

growth

rates

in

India and

China

soared

in

the

later

period,

noted

later.

3. In 1938,

Mexico

became the first

developing

country to nationalize its oil industry.

4 Argentina's first

European multinational,

Pirelli, established a subsidiary in 1917 that survives

today'

5. Alice H. Amsden, Escape

from

Empire: e Developing Vorld ourney brough Heaven and Hell

(Cambridge:

MIT Press,

2007).

6.

Mature high tech

refers

to innovative products that are already being sold in world markets

but

whose

demand is still growing

fast. Alice H. Amsden and

W W

Chu, Beyond

Late

Development.

Taiwan

LUpgradingPolicies

(Cambridge:

MIT Press, 2003).

7.

Alice

Amsden, Farewell o 7heory: Developing om Role

Wodels

(Cambridge: MIT

Press, 2010),

8. Third

World Network, India submits proposals on

strengthening the WTO,

SUNS

6739

13

July

2009.

9. Fatoumata

Jawara

and

Aileen

Kwa, Behind

the

Scenes

at the

WTO:

The

Real

World ofInternamtional

Trade

Negotiarins(London: Zed Books, 2003).

10. Third World

Network,

WTO

head

Pascal Lamy rebuffed on

own pay

rise

attempt, SUNS

6743

17

July

2009.

11. Alice

H. Ansden,

scape rom Empire:

The Developing Worldi journey brough Heaven

and

Hell

(Cambridge:

MIT Press, 2007).

12. E.

Herbert Norman,

Japan

Emergence

as a Vodern State

(New York:

Institute of

Pacific

Relations,

1940).

13. Alisa di Caprio, 'The Impact ofAsymmetric

Free Trade Agreements on Middle-Technology

Devel-

oping Countries

(doctoral

dissertation,

MIT

Department

of

Urban

Studies

and Planning,

2007).

5

14. Alice

IH.Amsden and Takashi Hikino, The Bark

is

Worse thanrthe

Bite:

New' TO Law and Late

Industrialization,

The

Annalh

of

theAmeran

Academy

ofPolitical

and

Social

Science

570,

no.

1

(2000).

15. The term

is

attributed to President Dwight D. Eishenhower,

former Five-Star

General, in his farewell

address to the American

nation on

17

Januar'

1961.

16. Mark Landler,

Treasury's Lead Role in

China

in Flux,' New York

Times

1

December

2008.

17.

U.S. Fact Sheet: Fifth Cabinet-Level

Meeting of

the

U.S.-China

Strategic

Economic

Dialogue,

U.S.

Treasury Department, 5

December 2008.

18. A

1985

study anticipated the

continuation of state economic interventionism

under a liberal world

economy.

Peter

B.

Evans and Dietrich

Ruescheineyer, Bringing he State

Back In

(Cambridge: Cambridge

UP

1985 .

19. Data are from University of Michigan UMI) statistics on Ph.D. dissertations completed in the

United States. Data were collected by Joo-Young Kwak,

who

used discretion to decide if

a

thesis was writ-

ten

by a

Japanese national,

Korean

national,

or

Korean

American (excluded from

data).

20. Statement by

Yevgeny

Kuznetsov, who collected data

for

Russia. Data were collected

for

other

countries

as

follows: Korea, Joo young Kwak and Kyung-Min Nam; Brazil, Mansueto Almeida; India,

Rajendra

Kumar;

and China,

Jinhua Zhao. All

based

on published or unpublished

government

data.

21.

Amartya

Sen,

Developmentas

Freedom (New York: Anchor Books, 2000): 35-36.

22. Rural Electrification

in China 1950-2004,

Stanford University Program on Energy

and

Sustain-

able Development Working Paper no. 60 (December

2006),

23. Poverty rates fell fastest in

East

Asia,

with few

grass

roots volunteers,

to only

18

percent in

2005

from a level

estimated to have been

80

percent in

1981,

when Asia was the world's poorest region. The

comparison between fierce China and friendly India tells the same tale. The

number

of people in

China

living in poverty

fell

to 207

million

in 2005 from 835

million

in 1981,

while

there

was

an increase

in poverty in India,

from 420 million in

1981

to 455 million in 2005.

24. Jean Baptiste

Say,

a

nineteenth

century

economist

later

discredited

by Keynes,

proposed

a

law, now

called Say's Law, to the effect that under full employment, markets

act

in such a

way

that an economy's

FALL/WINTER 2 9 *

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ALICE AMSDEN

production will all be

bought,

without any

unsold inventory.

25 Sen.

26.

LO

LABORSTA, http://laborsta.ilo.org.

27.

Alice

H.

Arnsden, Says Law,

overty

Persistence

nd

Employment

Ne

glect,

fourn l

ofHuman

Development

and

apabilities

11 no. 1

2010).

6

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