Kicking Away The Ladder: Development Strategy In Historical Perspective - Softcover

Chang, Ha-Joon

Softcover

ISBN 10: 1843310279 ISBN 13: 9781843310273

Verlag: Anthem Press, 2002

Inhaltsangabe

Exposes the attempts by developed countries to 'kick away the ladder' from developing countries trying to join the economic elite.

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Über die Autorin bzw. den Autor

Ha-Joon Chang teaches at the Faculty of Economics and Politics, University of Cambridge.

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'The most important book about the world economy to be published in years.'  Prospect    'This book is a joy: a fantastically useful teaching aid... a very necessary historical conscience in an age of amnesia.'  The Business Economist    'A provocative critique of mainstream economists' sermons directed to developing countries… It demands attention.'  Charles Kindleberger, Emeritus Professor of Economics, MIT    'A scholarly tour-de-force… essential reading for industrial policy-makers in the twenty-first century.'  Lance Taylor, Professor of Economics, New School University    '…a lively, knowledgeable and original contribution to international political economy.'  John Toye, Professor of Economics, University of Oxford    '…an original and immensely valuable contribution to current debates on development.'  Peter Evans, Professor of Sociology, University of California, Berkeley    How did the rich countries really become rich? In this provocative study, Ha-Joon Chang examines the great pressure on developing countries from the developed world to adopt certain 'good policies' and 'good institutions', seen today as necessary for economic development. Adopting an historical approach, Dr Chang finds that the economic evolution of now-developed countries differed dramatically from the procedures that they now recommend to poorer nations. His conclusions are compelling and disturbing: that developed countries are attempting to 'kick away the ladder' by which they have climbed to the top, thereby preventing developing countries from adopting policies and institutions that they themselves used.

 

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Kicking Away the Ladder

Development Strategy in Historical Perspective

By Ha-Joon Chang

Wimbledon Publishing Company

Copyright © 2003 Ha-Joon Chang
All rights reserved.

ISBN: 978-1-84331-027-3

Contents

Chapter 1. Introduction: How did the Rich Countries Really Become Rich?, 1, 
Chapter 2. Policies for Economic Development: Industrial, Trade and Technology Policies in Historical Perspective, 13, 
Chapter 3. Institutions and Economic Development: 'Good Governance' in Historical Perspective, 69, 
Chapter 4. Lessons for the Present, 125, 
References, 143, 
Notes, 161, 
Index, 181, 

CHAPTER 1

Introduction: How did the Rich Countries Really Become Rich?

I.I. Introduction

There is currently great pressure on developing countries from the developed world, and the international development policy establishment that it controls, to adopt a set of 'good policies' and 'good institutions' to foster their economic development. According to this agenda, 'good policies' are broadly those prescribed by the so-called Washington Consensus. They include restrictive macroeconomic policy, liberalization of international trade and investment, privatization and deregulation. The 'good institutions' are essentially those that are to be found in developed countries, especially the Anglo-American ones. The key institutions include: democracy; 'good' bureaucracy; an independent judiciary; strongly protected private property rights (including intellectual property rights); and transparent and market-oriented corporate governance and financial institutions (including a politically independent central bank).

As we shall see later in the book, there have been heated debates on whether or not these recommended policies and institutions are in fact appropriate for today's developing countries. Curiously, however, many of those critics who question the applicability of these recommendations nevertheless take it for granted that these 'good' policies and institutions were used by the developed countries when they themselves were in the process of developing.

For example, it is generally accepted that Britain became the world's first industrial superpower because of its laissez-faire policy, while France fell behind as a result of its interventionist policies. Similarly, it is widely believed that that the USA's abandonment of free trade in favour of the protectionist Smoot-Hawley Tariff at the outset of the Great Depression (1930) was, in the words of the famous free-trade economist Bhagwati, 'the most visible and dramatic act of anti-trade folly'. Yet another example of the belief that developed countries attained their economic status through 'good' policies and institutions is the frequent claim that, without patents and other private intellectual property rights, these countries would not have been able to generate the technologies that made them prosperous. The US-based National Law Center for Inter-American Free Trade claims that '[t]he historical record in the industrialized countries, which began as developing countries, demonstrates that intellectual property protection has been one of the most powerful instruments for economic development, export growth, and the diffusion of new technologies, art and culture'. And so on.

But is it really true that the policies and institutions currently recommended to the developing countries are those that were adopted by the developed countries when they themselves were developing? Even at a superficial level, there seem to be bits and pieces of historical evidence that suggest otherwise. Some of us may know that, in contrast to its eighteenth or twentieth-century nature, the French state in the nineteenth century was quite conservative and non-interventionist. We may also have read about the high tariffs in the USA, at least after the Civil War. A few of us have heard somewhere that the US central bank, the Federal Reserve Board, was set up as late as 1913. One or two of us may even know that Switzerland became one of the world's technological leaders in the nineteenth century without a patent law.

In light of such counter-evidence to the orthodox view of capitalism's history, it is fair to ask whether the developed countries are somehow trying to hide the 'secrets of their success'. This book pieces together various elements of historical information which contradict the orthodox view of the history of capitalism, and provides a comprehensive but concise picture of the policies and institutions that the developed countries used when they themselves were developing countries. In other words, what this book is asking is: 'How did the rich countries really become rich?'

The short answer to this question is that the developed countries did not get where they are now through the policies and the institutions that they recommend to developing countries today. Most of them actively used 'bad' trade and industrial policies, such as infant industry protection and export subsidies – practices that these days are frowned upon, if not actively banned, by the WTO (World Trade Organisation). Until they were quite developed (that is, until the late nineteenth to early twentieth century), they had very few of the institutions deemed essential by developing countries today, including such 'basic' institutions as central banks and limited liability companies.

If this is the case, aren't the developed countries, under the guise of recommending 'good' policies and institutions, actually making it difficult for the developing countries to use policies and institutions which they themselves had used in order to develop economically in earlier times? This is the question that this book hopes to address.

1.2. Some Methodological Issues: Drawing Lessons from History

The nineteenth-century German economist Friedrich List (1789–1846) is commonly known as the father of the infant industry argument, namely, the view that in the presence of more developed countries, backward countries cannot develop new industries without state intervention, especially tariff protection. His masterpiece, The National System of Political Economy, was originally published in 1841.

List starts the book with a lengthy historical discussion. In fact he devotes the first 115 pages of his 435-page text to a review of trade and industrial policies in the major countries of the western world up to his time. Included in his survey were the experiences of Venice (and other Italian states), the Hanseatic cities (led by Hamburg and Lübeck), the Netherlands, England, Spain and Portugal, France, Germany and the USA.

Many of these accounts go almost completely against what most of us know (or think we know) about the economic histories of these countries. Particularly striking to the contemporary reader are List's analyses of Britain and the USA – the supposed homes of liberal economic policy.

List argues that Britain was actually the first country to perfect the art of infant industry promotion, which in his view is the principle behind most countries' journey to prosperity. He goes as far as saying that we should 'let [whoever is not convinced of the infant industry argument] first study the history of English industry'. His summary of the British road to industrial success is worth quoting at length.

[H]aving attained to a certain grade of development by means of free trade, the great monarchies [of Britain] perceived that the highest degree of civilisation, power, and wealth can only be...

Details zur Ausgabe

• Verlag: Anthem Press
• Erscheinungsdatum: 2002
• Sprache: Englisch
• ISBN 10: 1843310279
• ISBN 13: 9781843310273
• Einband: Taschenbuch
• Anzahl der Seiten: 187
• Kontakt zum Hersteller: Nicht verfügbar
• Verantwortliche Person: gpsr@libri.de; gpsr@libri.de; ; Friedensallee 273; Hamburg; 22763; Deutschland