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 21st
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.