Organizer and Chair: Adam Segal, Cornell University
Discussant: Elizabeth Remick, Tufts University
The standard explanation for successful development in East Asia has usually been that of the activist state accompanied by good macroeconomic fundamentals. Studies which use the national level as the unit of analysis often conclude that vibrant economies are the result of central governments, free from societal pressures, intervening in selected industrial sectors at the national level. These studies, however, are unable to link successfully specific policies with performance beyond making generalizations about the ubiquitous "developmental state." Moreover, in many of the Asian countries currently undergoing rapid economic transition, it is not the central state, but local actors that have the most influence on the emergence of new markets.
The papers on this panel avoid these problems by shifting the level of analysis to the sub-national, or regional level. In China, India, Japan, and the Russian Far East, the central government has given local governments both the incentive and the autonomy to experiment with different methods of promoting economic growth. Consequently, within a single national economy, different local governments confront a similar set of challenges, but often experiment with a variety of potential solutions. Local governments may actively organize a particular economic sector, while others may rely more on the market. The result is an ideal laboratory for comparative political economy; different case studies are drawn from a single country, but because of regional autonomy, local government policies vary. A comparison of the different regions allows us to more effectively assess the causality between particular policies and economic outcomes.
Local Power and International Cooperation in Northeast Asia
Katherine G. Burns, Massachusetts Institute of Technology
In the 1990s, local governments in major Northeast Asian countries, Japan, China, and Russia have acquired new powers to address issues of local development. One of their most important activities has been to forge autonomous economic ties in the international arena. This paper asks the question: Why are some local governments more successful at entering the international arena than others? The paper develops a comparative framework for analyzing the efforts of local governments in the region and draws on case studies from Northeast Chinese provinces, Russian Far Eastern provinces, and Japan Sea prefectures. Using both international and intranational comparison, the paper analyses local government policies over a range of economic, domestic political, and international variables.
From State to Market via the State Governments: The Political-Federal Logic of Liberalization in India
Aseema Sinha, Cornell University
India initiated economic liberalization policies under the aegis of a minority government in 1991. Ever since, despite "weak" central governments, the reform process has gained political and economic momentum with parties and groups across the ideological spectrum continuing to support it. However, scholarly writings on India share a pessimism about the success of economic adjustment measures in India. Each of them have bemoaned the fact that India is liberalizing slowly. This paper will address this paradox by arguing that the explanation lies in understanding the political institution of federalism, or the vertical balance of power, which in India, is distributing the process of liberalization. Contrary to the conclusions of the dominant literature on the politics of liberalization that focuses on regime characteristics (authoritarian vs. democratic) the process of economic liberalization does not form a coherent and integrated whole, affecting nation-states uniformly, rather it is spatially mediated and regionally differentiated. This paper will characterize how the democratic federal political structure in India refracts the dynamics and impact of liberalization. I will do so by focusing on three States (provinces) within India—Gujarat, West Bengal and Tamil Nadu—and analyze why and how liberalization effects different sub-national units within nation-states in diverse ways.
I will argue that in India reforms continue to consolidate because the costs and benefits of liberalization lie located at the regional level. Since each regional government is evolving new and innovative techniques of participating in the liberalization process, the reforms continue to gain momentum despite a weak center.
Constructing High Technology Industries in Shanghai and Beijing
Adam Segal, Cornell University
Since the early 1980s, in order to promote industrial innovation and an indigenous technological capability, the Chinese central government has encouraged the growth of non-governmental high-technology firms (minban keji qiye). The outcomes of this attempt to create new firms have been uneven, and efforts to create competitive high-technology enterprises in the biotechnology and information industries have succeeded in Beijing, but failed, so far, in other parts of the country.
This paper shows that the policies of local governments explain these economic outcomes. Local authorities in Shanghai and Beijing have played a major role in creating new markets supportive of specific types of high-tech firms. As in other sectors, the central government has adopted an experimental approach to science and technology reform, decreasing funding to research institutes, fostering links between scientific units and industrial enterprises, and encouraging scientists and other technical personnel to be more directly involved in production. Min ban firms have been broadly defined in party and state documents, allowing local governments a great degree of freedom to interpret what "min ban" exactly means and what type of markets they should create. Non-governmental technology firms have been more successful in Beijing because the municipality has fostered an interpretation of "min ban" created rules, and supported relationships that increased the initiative of non-state actors. By contrast, the Shanghai local government fostered a definition in which a small number of larger state-owned enterprises dominated the economy, fragmenting technological networks and reducing innovative capability.
The Development of an Industrial Sector in China: The Case of Autos
Eric Thun, Harvard University
This paper is an analysis of the manner in which three cities in China have attempted to develop their respective automobile sectors. Although Beijing, Guanzhou, and Shanghai have all stated a desire to make the auto industry a "pillar" of the local economy, they have taken very different approaches to doing so. Success has varied widely: Shanghai has been very successful, Guangzhou has failed, Beijing’s effort has been dismal. I argue that success in Shanghai is not simply a result of Shanghai having a stronger heavy industry base, but a consequence of effective local government policy and a well-connected network of manufacturing enterprises.
I argue that the manner in which economic activity is organized is a key determinant of the ability to successfully nurture a supply base in the auto industry. The creation of large industrial conglomerates is currently very popular in China, but despite superficial similarities between the auto conglomerates in each of these cities, their internal workings vary dramatically. At an early stage of development, Shanghai developed a structure which allowed it to more successfully meet high capital requirements, foster learning, and promote cooperation in the auto supply network. It is of critical importance to understand how this process worked, not only because of the lessons which can be learned by others, but because Shanghai’s story is far from over: the same elements which were key strengths during the initial developmental period could be key weaknesses during later stages.