Part II: Countries — the typology in action

Part II uses in-depth country examples and multi-country descriptive statistics to explore the typology introduced in Part I. As the examples underscore, each country-type identified by the typology is aligned with a specific set of political realities, and is supported by a critical mass of influential actors with a stake in the prevailing institutional arrangements. All good things need not come together — rather, the strengths of one country-type can be mirrored as the weaknesses of the other.

Along the dominant trajectory, leaders championing development promise that they can ‘make government work’ – and that this can, in turn, unlock private investment and thereby accelerate economic growth. Chapter 4 explores how top-down dominance can set development in motion, using the examples of South Korea and Ethiopia. The discussion of Korea focuses on the quarter century from the early 1960s to the mid-1980s, an era of hyper-rapid-growth under authoritarian rule, with strong state intervention in the economy. For Ethiopia, the relevant period began with Meles Zenawi’s accession to power in 1991. In both countries, top-down hierarchical rule has been associated with major gains in growth and poverty reduction. But the gap between dominant-trajectory rhetoric and reality can be very large, with very high risks of capture and predation by dominant leaders. Notwithstanding the risks, many countries continue to pursue the dominant path.

Along the competitive trajectory, early stages of development can be characterized by a paradoxical combination of rapid growth and open, but seemingly dysfunctional governance. The time horizons of political leaders are shorter; their hold on power is more fragile; political elites within the ruling coalition continually maneuver to sustain stability and to assure the continuing loyalty of clients. Yet, as chapter 5 explores using the examples of Bangladesh and Zambia, personalized competition can, sometimes, provide a workable platform for economic development. Continually, one or another constraint might threaten to short-circuit the process – but incremental reforms can do ‘just enough’ to keep things moving, addressing specific capacity and institutional constraints as and when they become binding, somehow defying the odds and sustaining continuing dynamism.

Chapter 6 explores the typology from a dynamic perspective – using country examples, and drawing on a voluminous conceptual and empirical literature. Its focus is less on distinctive patterns of incentive and constraint, and more on how the momentum of virtuous circles which link governance and growth can be sustained. Two points are highlighted:
• First, institutions can evolve incrementally – as the historical experience of the United States illustrates. For most of the nineteenth century, the American government was rife with patronage and corruption. But the country’s institutions also provided a framework within which a century later, as the economy and society changed and pressures for better government grew, a progressive movement for fostering public sector reform could emerge.
• Second, over the long-run, stable democratic institutions rest on a platform of broad-based economic and political inclusion. A contrast between patterns of institutional change in South Africa and Korea, subsequent to each country’s democratization, underscores the centrality of inclusion for democratic sustainability.
Chapter 7 uses descriptive statistics to map a variety of patterns of institutional change among 41 countries which grew rapidly between 2000 and 2010 along the dominant, intermediate and competitive trajectories.

The importance of sustaining forward momentum emerges as a central policy implication of a long view of governance. For many countries, resilience to shocks builds through cumulative interactions between governance and growth. In such settings, if momentum stops too soon, virtuous circles can all too easily go into reverse, wiping out hard-won gains. But the practical implications of this conclusion cannot be derived mechanistically. The process of development is a knife edge. Too much pressure for change risks derailing the positive momentum of virtuous circles; but with insufficient attention to things that need to be changed, the process risks grinding to a halt. In crafting a way forward, no simple reform dictum can substitute for in-depth country-specific knowledge and informed judgment.

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