The Developmental State Theory

 

The developmental state theory is one that seeks to describe the manner through which East Asian industrialization took place. It is a description of the considerable connections that are witnessed within the political, financial, and bureaucratic influences within the structures of economic life that have become an essential aspect of the economies of such nations as Japan and South Korea (Caldentey 27). The developmental state is therefore an attempt at understanding the way that East Asian nations were able to industrialize based on the prevalent conditions within their societies. It shows the way that the involvement of the state in the economy was balanced with free market capitalism as a means of not only promoting economic growth, but also the advancement of a scenario where there is a close connection between the government and private sectors in a manner that allows for the government to provide guidance to the private sector. The importance of this scenario can be seen through the mutually beneficial relationship that has developed between the state and private sector. It has made it possible for the government to essentially become involved in the economy through the provision of direct support to businesses as a means of enhancing the ability of the said businesses to bring about rapid development. It is through government interventionism, especially when it came to those sectors of the economy that are deemed critical, that it has become possible for nations such as Japan and South Korea to become industrialized and has allowed for the sustenance of their economies. This paper makes an analysis of the economic development of Japan and its continued relevance using the developmental state theory.

Historically, the developmental state has existed in a diversity of countries including in Prussia during the Bismarck period and Japan during the Meiji period. In Japan, the government followed a developmental framework that was designed by the state as a means of making sure that there was the attainment of desired economic gains. This process involved the favoring of interventionism over the promotion of a liberal market, which had the potential of creating an environment within which it would be difficult for government to control the direction that the economy took. The formulation of the developmental state theory is one that is based on the way that East Asian nations, beginning with Japan, attained industrialization at par with most western nations. The achievement of this goal was directed by the state and was aimed at making sure that there was the promotion of a scenario where there was the advancement of the interests of the state through the economy. Control over the economy was considered to be of vital interests, to such an extent that there was widespread intervention by the state through the provision of expertise and funding. Industrialization in Japan, for example, was aimed at making sure that the nation overcame the potential of western dominance and instead became a dominant power in East Asia in its own right. This process also involved state-sponsored interventions in a diversity of sectors that allowed for the attainment of western education and the change of cultural practices that were considered essential for the attainment of development. In this way, governments within the developmental state model end up playing a vital role in bringing about the attainment of economic growth that aligns with the goals of the state.

Japan became a developmental state following the Meiji Restoration, which resulted in the modernization of the country. This period brought with it drastic changes in the society of this nation because there was an attempt to ensure that a strong state was developed (Lim 2). The strong state was supposed to ensure that there was not only the establishment of a national identity, based on a standard language and with a highly centralized government that would ensure the advancement of national interests. The introduction of a standard dialect was significant because it allowed for the rapid development of the realms of media, education, business and government that helped to consolidate the Japanese nation and give it a common focus. This process can be considered quite significant because it allowed for the promotion of a scenario where there was the state was able to give oversight into the direction that was to be taken by Japan as it sought to attain its developmental goals. It is noteworthy that the government of Japan during this period showed a determination to ensure that it attained industrialization so that it could operate at par with the western nations that had attained or were in the process of attaining dominance over the rest of the world. Japan desired to secure its national interests through rapid industrialization; a task that it was able to achieve within a relatively short time when compared to its western rivals. This nation further became a developmental state following its focus on the rapid development of western education in a bid to ensure that its economic base was made up of the most educated and competent individuals in society.

The developmental state of the Meiji period ushered in the modernization of Japan. It was highly influential when it came to the self-identity of the Japanese, especially with respect with its East Asian neighbors because not only did Japan industrialize at a rapid pace, it also ended up in a situation where it became a colonial power, as seen through the conquest and occupation of Korea. Japan became the first Asia nation to attain modernization which was based on the western model rather than the traditional model that had been dominant in society for centuries, as seen in the case of isolationist China where Confucianism was the dominant philosophy in society. The adoption of the ideals of the enlightenment ensured that Japan was able to establish free public education that spurred its economic growth and made it the most dominant Asian nation. The bureaucracy of the nation was also greatly enhanced through the promotion of training that encouraged duty to the state as well as to the emperor. This ensured that by the end of the Meiji period, the attendance of public schools for western-style education was quite widespread. This ensured that there was an increase in the availability of workers who were not only skilled, but essentially contributed to the industrial and economic growth of Japan. The developmental state that came about in Japan was therefore significant for its growth because it allowed it to become one of the most prominent industrialized nations in the world while at the same time creating a basis upon which its continued economic growth and development was founded.

Japan is a pertinent reflection of the developmental state theory because it falls directly between a centrally planned economic model and the liberal open economic model. The transformation witnessed in this country came about through a conscious effort by its government to make sure that it was able to hold its own in a world that was dominated by western imperial powers. It was a decision by the Japanese government, ushered in by the Meiji Era, to leave behind the traditional way of life that had dominated society and instead adopt the western way of life as a means of enhancing their economic and cultural development. Furthermore, there was the promotion of a scenario where the government undertook the process of making sure that there was the creation of a conducive environment for its citizens to attain the level of education that was given in western nations. This was done so that the Japanese people would be equipped to take on the developmental challenges that lay ahead of the nation as it sought to attain industrialization. It is noteworthy that the interventionist power of the state ensured that it was able to guide investment in a manner that allowed for a single vision for the Japanese economy. This is a form of state involvement in the economy that not only ensured that it aligned with national goals, but also provided the actors involved in the private sector with the means through which to work for their own benefit while at the same time making sure that they worked in the interest of the state. Consequently, the state, through its regulation of the political and economic relationships that supported industrialization, ensured that Japan became an industrialized nation within a short time.

Japan has remained a developmental state where the state provides oversight for the development of the economy. This nation has established a strong bureaucracy which works hand in hand with business interests in a manner that can be considered complementary. The latter is seen through the way that these institutions work together when it comes to the shaping of the policies essential for the attainment of developmental goals. Japan has, since the Meiji era, ensured that there is the establishment of a cooperative behavior between the politicians, businesses, and the government bureaucracy in the establishment of norms that are pertinent to their working together towards common goals. The intervention of the state in this case has been aimed at helping in the attainment of state autonomy while at the same time ensuring that there is the maintenance of effective economic development and growth. It is also noteworthy that Japan has also taken on a foreign policy that is aimed at ensuring that its economic interests are protected. As one of the biggest exporters in the world, Japan considers it as part of its interests of make sure that it makes use of economic diplomacy tools such as development assistance to other nations as a means of safeguarding its markets. It is also essential to note that it has ensured that it remains one of the leaders in science and technology and this has been done through the state promoting this image for both the domestic and international audiences. The state has therefore made sure that it invests in or directs science and technology in a way that allows for the creation of industries as well as supporting Japan’s economy, which is export-oriented.

Japan as a developmental state can also be seen through the way that the state has control over finance. It has also sought to ensure that it maintains control over labor relations while at the same time allowing for considerable autonomy for the economic bureaucracy. This is a linchpin of the nation because it allows for the combination of command structures and incentives aimed at encouraging economic development. The state also plays a vital role when it comes to having control over interest rates as well as the provision of bank loans which have continued to be the primary source of industrial finance. This is opposed to equity capital, which involves the raising of capital from private sources. The substitution of equity capital with state-sponsored loans that are supported with low interest rates, especially during the post-war period, ensured that Japan was not only able to achieve rapid recovery from the devastation of the war, but also become one of the fastest growing economies in the world. Moreover, the state intervention allowed for the inducement of transformative investment decisions which played a critical role in making sure that there is the achievement of rapid industrial development. The involvement of state financial institutions and their willingness to ensure the backing of industrial debt allowed for the expansion of new industries. State oversight also ensured that loans for industrial purposes was allocated through the Japan Development Bank, with the approval of the Ministry of International Trade and Industry, in addition to the provision of tax incentives and the regulation of industrial competition (Caldentey 28). In this way, the Ministry of International Trade and Industry was placed in the position of being able to influence decision-making as well as allowing for the attainment of the goal of promoting the economic interests of the nation.

The development state theory is significant because it has brought with it a number of outcomes in Japan. The first of these is the development of a highly competent bureaucracy, which allowed for the promotion of a scenario where industrial interests benefitted greatly from the advice and actions taken by the state. The bureaucracy allowed for the creation of a planned process aimed at the development of the economy, as seen in the case of the Ministry of International Trade and Industry (Johnson 34). This agency played a critical role in bringing about a scenario where the best economic minds were staffed in the ministry and charged with the task of directing the course of the development of Japan in a manner that was in line with the vision of the state. The high level of legitimacy and prestige that is enjoyed by the Ministry is a sign of the considerable success that it has achieved in the attainment of its objectives. It has utilized the policy tools available to it to not only give it additional authority, but also to make sure that there is the achievement of the goal of the recruitment of outstanding personnel who can further enhance its functions. In this way, Japan has been able to develop considerable state capacity to ensure that there is the effective formulation of its policies for economic development as well as to allow for their effective development. It is through this process that Japan has maintained its position as one of the largest economies in the world while at the same time ensuring that it has global leadership. In this way, a competent bureaucracy has given Japan the policy direction that it has followed towards its continued success.

Another aspect of the developmental state theory is that it allows for the embedding of autonomy within the bureaucratic makeup of the state. This is seen through the way that the state has maintained a strong relationship with the nation’s business sector in such a way that it has a role to play when it comes to giving direction as well as funding for industrial investment (Miao 64). Embedded autonomy is a concept that can be used to describe the relationship between the local business sector and the state and the way that the developmental state, such as that of Japan, has been able to use this relationship as a means of advancing national economic interests. The embedding of the developmental state in Japanese society has ensured that it is better able to influence the economic direction that is to be taken. It makes it possible to bring about a scenario where there is the promotion of national interests in a manner that is acceptable to the population. The state has therefore become a trusted partner to the private sector because it is through its support that the latter is able to thrive. State intervention has allowed for the establishment of a social infrastructure where it is able to provide the private sector with direction without getting directly involved in the running of their operations. This arrangement has ensured that the private sector is able to thrive within an environment where it can rely on continued government support while at the same time undertaking their activities in a manner that best suits their organizational interests. The particular interests of the state are therefore put into consideration without any risk of the state interfering in their operations.

In conclusion, the developmental state theory is significant because it shows the way that Japan was able to industrialize significantly ahead of its Asian neighbors while also maintaining its economic development into the 21^st century. The role of the state in the economy is one that is in line with this theory because it shows the manner through which Japan was able to establish independent institutions that have played a role in providing direction for its economy. However, while there has been state intervention through control over interest rates as well as the provision of loans, the state does not interfere in the internal running of organizations. Instead, it has a competent bureaucracy, especially at the Ministry of International Trade and Industry, which provides guidance to the private sector concerning the direction that should be taken. In this way, a symbiotic relationship between the state and the private sector has developed, which ensures that there is the promotion of both national and private interests. Japan has therefore remained a developmental state and it is because of this that it has become possible for it to remain a dominant industrial power over the decades since the end of the Second World War.