Heterodox Approaches to a Post-Pandemic World; What would Alice say?

Image Copyright: Steve Dunwell

This project draws upon the research and writings of Alice Amsden, the former MIT Barton L Weller Professor of Political Economy, to explore global public policy issues on mixed media platforms. An aspect of this project includes a podcast series hosted by DUSP Alumna Neeta Misra (PhD ‘08), a former advisee of Amsden, who builds upon Amsden’s research and work which  promoted industrial policy, employment, and trade for emerging economies. The project and podcast are based in Washington DC and include syndication in India to the oldest business magazine, Businessworld and South Africa, two countries she has lived and worked in.

Misra holds a BA from San Francisco State University, a MA from Cornell University , a doctorate from MIT, and a post-doctorate from the University of Cape Town, Department of Economics, Development Policy Research Unit (DPRU). Currently, she leads Policy Matters, a mixed media public policy initiative focused on highlighting policy innovation and application. 

Policy Matters and its corresponding podcast Policy Chatters engages with policy experts on key global policy issues and out of the box and innovative public policy practice. The series was founded eight years ago at Businessworld Magazine in India to develop partnerships between the private sector and corporate social responsibility (CSR) funding and the development sector using the Sustainable Development Goals (SDGs) as a platform. The initiative promotes evidence-based policy making, and developing a  synergy across CSR programs for tracking indicators for health, nutrition and climate change along with other SDGs for 2030. Since this time the series has evolved to include audiences in the US and South Africa to share policy making ideas and practice across organizations and multilateral institutions. 

The Role of Elites in Economic Development

Elites have a disproportionate impact on development outcomes. While a country's endowments constitute the deep determinates of growth, the trajectory they follow is shaped by the actions of elites. But what factors affect whether elites use their influence for individual gain or national welfare? To what extent do they see poverty as a problem? And are their actions today constrained by institutions and norms established in the past? This volume looks at case studies from South Africa to China to seek a better understanding of the dynamics behind how elites decide to engage with economic development. Approaches include economic modelling, social surveys, theoretical analysis, and programme evaluation. These different methods explore the relationship between elites and development outcomes from five angles: the participation and reaction of elites to institutional creation and change, how economic changes affect elite formation and circulation, elite perceptions of national welfare, the extent to which state capacity is part of elite self-identity, and how elites interact with non-elites.

https://doi.org/10.1093/acprof:oso/9780199659036.001.0001

Escape from Empire: The Developing World's Journey through Heaven and Hell

The American government has been both miracle worker and villain in the developing world. From the end of World War II until the 1980s poor countries, including many in Africa and the Middle East, enjoyed a modicum of economic growth. New industries mushroomed and skilled jobs multiplied, thanks in part to flexible American policies that showed an awareness of the diversity of Third World countries and an appreciation for their long-standing knowledge about how their own economies worked. Then during the Reagan era, American policy changed. The definition of laissez-faire shifted from "Do it your way," to an imperial "Do it our way." Growth in the developing world slowed, income inequalities skyrocketed, and financial crises raged. Only East Asian economies resisted the strict prescriptions of Washington and continued to boom. Why?

In Escape from Empire, Alice Amsden argues provocatively that the more freedom a developing country has to determine its own policies, the faster its economy will grow. America's recent inflexibility—as it has single-mindedly imposed the same rules, laws, and institutions on all developing economies under its influence—has been the backdrop to the rise of two new giants, China and India, who have built economic power in their own way. Amsden describes the two eras in America's relationship with the developing world as "Heaven" and "Hell"—a beneficent and politically savvy empire followed by a dictatorial, ideology-driven one. What will the next American empire learn from the failure of the last? Amsden argues convincingly that the world—and the United States—will be infinitely better off if new centers of power are met with sensible policies rather than hard-knuckled ideologies. But, she asks, can it be done?

https://doi.org/10.7551/mitpress/2802.001.0001

Beyond Late Development: Taiwan's Upgrading Policies

In this book Alice Amsden and Wan-wen Chu cover new ground by analyzing the phenomenon of high-end catch-up. They study how leading firms from the most advanced latecomer countries like Taiwan have increased their market share in mature high-tech industries and services.

The profits that true innovators in these industries once enjoyed have already declined, but profit rates are still above average. The latecomer firm that succeeds in capturing these rents earns "second-mover" advantage. Amsden and Chu examine the successful second movers in electronics and modern services. The critical factors, they show, are the government policies and large-scale firms that drive skills, speed, and scale. R&D in Taiwan was usually undertaken in conjunction with government labs, which prepared the way for local production of the next hot, mature product. Speed in ramping up at the firm level depended on project execution capabilities and access to capital. Scale proved to be an absolute entry requirement in modern service sectors, and was crucial to win subcontracts from leading foreign firms and to secure key components from world-class suppliers in the electronics industry.

The authors challenge current orthodoxy along two lines. First, they argue that government played an important role through interventions that went beyond the market model and overcame the limitations of networking. Interventions possibly promoted mature high-tech even more than mid-tech. Second, the entrepreneurs in Taiwan were nationally owned large-scale firms rather than multinational companies.

MIT Press

The Rise of "The Rest": Challenges to the West From Late-Industrializing Economies

After a century of struggle, a dozen non-Western countries with pre-Second World War manufacturing experience succeeded in entering the orbit of modem industry. The rise of ‘the rest’ was historically unprecedented. For the first time, countries without the competitive asset of proprietary, pioneering technology became economic powers. How industrialization among these prime latecomers succeeded, why it followed a novel path, and what some countries did to advance farther than others are the questions this book addresses. The same seed was contained in the rise of all the rest, a seed that had first germinated in Japan and then grew as might plants in clay pots of differing sizes and shapes, spanning Latin America (Argentina, Brazil, Chile, and Mexico), the Middle East (Turkey) and Asia (India, China, South Korea, Taiwan, Malaysia, Indonesia, and Thailand). To industrialize by borrowing already commercialized technology, devoid of the radically new products and processes that had enriched the North Atlantic, the rise of the rest involved intense learning, an extensive role for the government, and the formation of specific types of business enterprise. Indeed, the rest's unique reciprocal control mechanism differed from Adam Smith's invisible hand and served to reduce government failure and firm mismanagement. By the 1990s, two distinct varieties had taken root: all the economies of the rest had become more globalized, but the ‘integrationists’ (epitomized by Mexico's affiliation to the North Atlantic Free Trade Agreement (NAFTA) and Argentina's adoption of a dollar-based currency board) were characterized by heavy reliance on foreign direct investment and minimal local expenditures on skills (as measured by research and development), while the ‘independents’, led by China, India, South Korea, and Taiwan, were notable for their nationally controlled firms and surging investments in technological capabilities. Which subspecies of the rest would succeed, and which would serve as the model for later industrializers (‘the remainder’), are questions that challenge the twenty-first century and are analysed in this book, which is arranged in three main parts: sinking behind, 1850–c. 1950; sneaking ahead, c. 1950–; and squaring off, c. 1980–.

https://doi.org/10.1093/0195139690.001.0001

The Market Meets Its Match: Restructuring the Economies of Eastern Europe

Under free-market shock therapy, the economies of Eastern Europe have plunged into crisis. Shortages may have disappeared, but so have social services, a living wage, and equitable income distribution. Political unrest increases apace as output plummets. Why so much stagnation, inflation, and de-industrialization, and what can be done to turn this risky state of affairs around? This book, the first critique of the free-market economic policies that have jolted Eastern Europe, addresses these questions in penetrating detail. The authors also propose a sensible approach to reform, including a restructuring of the state itself so that it can play a more positive role in this difficult transition. With close attention to the history and institutional realities of the region, The Market Meets Its Match explains the failure of the simplistic market medicine administered in the first five years of transition. Merely “getting the prices right”―lowering wages and raising interest rates and energy prices―won't improve competitiveness, the authors argue, as long as nonlabor costs such as the quality of goods, product design, outmoded technology, and inefficient distribution channels remain problems. Easing these bottlenecks requires long-term capital accumulation and profit maximization. The institutions necessary for such growth have not developed under Eastern Europe's new “pseudo-capitalism,” as the authors demonstrate, and “pseudo-privatization,” while distributing state property to citizens, has not provided them with the capital and technology they need to succeed. This book shows that the market mechanism alone will not transform Eastern Europe's potentially productive enterprises into international competitors without careful government coordination and support.

Harvard University Press

Asia's Next Giant: South Korea and Late Industrialization

South Korea has been quietly growing into a major economic force that is even challenging some Japanese industries. This book examines South Korean economic growth as an example of “late industrialization,” a process in which a nation's industries learn from earlier innovator nations rather than innovate themselves. Discussing state intervention, shop-floor management, and big business groups, the reasons are explored for South Korea's phenomenal growth, paying special attention to the principle of reciprocity in which the government imposes strict performance standards on those industries and companies that it aids. It is shown thereby how South Korea, Japan, and Taiwan were able to grow faster than other emerging nations such as Brazil, Turkey, India, and Mexico. The book is arranged in three main parts: Part 1 surveys South Korean history and the origins of state policies that led to the successes of its late industrialization; Part 2 examines the ways in which the South Korean management and workforce were transformed into major factors in the growth of its industry; and Part 3 discusses the creation of comparative advantage in several industries and the reasons why only one kept pace with expansion while the others drove it.

https://doi.org/10.1093/0195076036.001.0001

Alice Amsden: A Reasoning Revolutionary in Development Economics

Learning to develop requires a shift from relying on pure deductive theories to relying on inductive live experiences in real time. If emerging economies are to continue to surge, if less developed countries are to step up their output, they need a mutinous mind, a soul of sedition and a revolution in reasoning about economic development. -- Alice Amsden (2012)

Alice Amsden was a fierce intellect, an assiduous connoisseur of history and an ardent field researcher. She used history, sector-specific fieldwork and national case studies to build a theoretical vision of the foundations of successful economic development. Her 1989 book Asia's Next Giant: South Korea and Late Industrialization is probably the single most cited work on East Asian development. Her 1979 article, 'Taiwan's Economic History: A Case of Etatisme and a Challenge to Dependecy Theory' presaged Chalmers Johnson's (1982) conceptualization of the 'developmental state', and her work became central to thinking on the developmental state.1 She paved the way for a generation of thinking on political will and concerted policy-making efforts as key elements in East Asian industrialization.

1. See Haggard's (2108) review of theories of the developmental state.

2. Examples would include Chang (1994), Evans (1995), Haggard (1990), Kim (1997), and Wade (1990). 

https://doi.org/10.1111/dech.12655

Bringing Production and Employment Back into Development: Alice Amsden’s legacy for a new developmentalist agenda

Building on Alice Amsden’s legacy, the article criticises the currently dominant view of development for its neglect of production and employment. To remedy its shortcomings, the article introduces a new theoretical synthesis that sees development as a process of production transformation, led by the expansion of collective capabilities and resulting in the creation of good quality jobs and sustainable structural change. Within this new developmentalist framework, the article highlights the policy challenges, the opportunities and the trade-offs associated with reconciling industrialisation, generation of good quality jobs and

https://doi.org/10.1093/cjres/rsw029

Revisiting Development Theory: Alice H. Amsden’s impact on the field

On 14 March 2012, we lost a great intellectual, Professor Alice H. Amsden. The relevance of her work in development economics and development theory more broadly rests on extensive research and policy engagement in developing countries across the world where she identified crucial, though controversial, insights into the theory and practice of development in a polarised global economy of rising income and wealth inequality. Most memorable, perhaps, are her contributions on the East Asian miracle and “Late Industrialization”, in which Alice Amsden derived rigorous case studies and unconventional reflections on the process of economic development. She posed serious challenges to orthodox economic theory and normative policymaking over more than two decades. Also critical, however, is her broader contribution in The Rise of “The Rest” (Amsden, 2001), for which she is credited as one of the first scholars to predict and explain how diverse countries across the so-called “global south” had emerged as leading economic powers despite a lack of a competitive asset of proprietary, pioneering technology.

https://doi.org/10.1093/cjres/rsw034

Introduction to the Series

This podcast series builds on the work of Professor Alice Amsden, former Barton L. Weller Professor of Political Economy in the Department of Urban Studies and Planning (DUSP) at the Massachusetts Institute of Technology (MIT), and a leading heterodox economist. She was globally renowned for her work on industrial development and policies in developing countries. Her early research focused on the late industrializing economies of East Asia; she would later apply her theory of development to other regions. She challenged orthodox economic and normative policy making, in particular, the Washington Consensus; a Neo-liberal, one size fits all approach to policymaking agreed upon between the International Monetary Fund (IMF), The World Bank, and the U.S. Department of the Treasury. Professor Amsden posited that the more freedom the developing countries had to set their policies the faster they grew. In an interview, she explained why she was drawn to East Asia “I am usually driven by injustice and hypocrisy, rather than by a two-sector model, although that is always in the background”. She would add, “learning to develop requires a shift from relying on pure deductive theories to relying on inductive live experiences in real-time. If emerging economies are to continue to surge if less developed countries are to step-up their output, they need a mutinous mind, a soul of sedition, and a revolution in reasoning about economic development.”

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Industrial Policy and Techno Nationalism

Podcast with Dr. Alisa Di Caprio that is part of a series on the academic research and work of Alice Amsden, formerly the Barton L. Weller Professor of Political Economy at the Massachusetts Institute of Technology. Alice was a leading heterodox economist who published extensively on industrial strategies for emerging markets. Alisa is currently the chief economist at R3, a blockchain platform company. She does the macroeconomic and strategic analysis for digital assets, central bank digital currencies, payments, and trade. Previously, she was a Senior Economist at Asian Development Bank in Tokyo and Manila. As the resident trade and technology economist, she spearheaded the institutional innovation program as well as trade digitization efforts. she also calculated the global trade finance gap from 2013-2017. Her Ph.D. is in International Development with a focus on labor economics. She studied with Alice Amsden from 2001-2007 and co-authored a book with her in 2008.

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Feminist Economics Today

Professor Myra Strober is a labor economist and Professor Emerita at the School of Education at Stanford University. She is also a Professor of Economics at the Graduate School of Business at Stanford University (by courtesy). Myra’s research and consulting focus on gender issues at the workplace, work and family, and multi-disciplinarity in higher education. She is the author of numerous articles on occupational segregation, women in the professions and management, the economics of childcare, feminist economics and the teaching of economics. Myra’s most recent book is a memoir, Sharing the Work: What My Family and Career Taught Me About Breaking Through (and Holding the Door Open for Others) 2016). She is also co-author, with Agnes Chan, of The Road Winds Uphill All the Way: Gender, Work, and Family in the United States and Japan (1999).

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Globalization, Inequality, Reforming International Financial Systems

Neeta Misra speaks with Professor Rolph Van Der Hoeven Emeritus Professor at the International Institute of Social Studies, Erasmus University at the Hague. 

Previously, Rolph Van Der Hoeven was Director of ILO’s Policy Coherence Group, Manager of the Technical Secretariat of the World Commission on the Social Dimension of Globalization in Geneva , Chief Economist of UNICEF in New York and policy analyst for the ILO in Ethiopia and Zambia.

His work concentrates on issues of employment, inequality and economic reform, topics on which he has published extensively.

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Employment and Industrial Policy: India

This podcast focuses on employment and industrial policy in India with guest Professor Jayan Jose Thomas.

Jayan Jose Thomas is a Professor of Economics at the Indian Institute of Technology Delhi, where he has been employed since July 2010. His research deals with various issues related to development, mainly labour, industrialization and the macroeconomy. He teaches courses on macroeconomics, Indian economic development, international economics, and planning and development. Jayan is a former Member of the Kerala State Planning Board. While India has been the primary focus of his research, Jayan has been maintaining a lively academic interest on China and East Asia as well. He has worked extensively using Indian and international data sources, conducted field studies, and also worked with archival material. His research papers have appeared in journals including World Development, Development and Change and Economic and Political Weekly. He contributes regularly to media outlets, including the Hindu, Frontline , and Livemint, and his research has been cited in the Government of India’s Economic Survey, BBC, and the New York Times . His previous academic positions were at the National University of Singapore, Indian Statistical Institute, Kolkata, Madras School of Economics, and Central University of Kerala. He has worked on research projects for the International Labour Organization (ILO) and United Nations Population Fund (UNFPA), and is currently a China-India Visiting Scholar Fellow with Ashoka University. He received his B. Tech in Industrial Engineering from Kerala University and Ph.D. in Development Economics from the Indira Gandhi Institute of Development Research, Mumbai.

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Compressed Development and Innovating Industrial Policy: Post Pandemic Perspectives

Our guest on Policy Chatters is Professor Antonio Andreoni. He is a Professor of Development Economics at the Department of Economics, SOAS University of London. He is also an Honorary Professor at the Institute for Innovation and Public Purpose, University College London, and Visiting Professor at the South African Research Chair in Industrial Development, University of Johannesburg.

Antonio speaks with Policy Chatters on his research on production dynamics, technological change, the social conditions of innovation; structural transformation, financialization, and the political economy of industrial policy. He also talks about the influence that Alice Amsden’s work has had on his research and his application of her work to climate change, compressed development, and late green industrialization and the changing geo-political situation within which industrialization is occurring.

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