DEVELOPMENT AND
TRANSFORMATION: THE PLACE OF
STATE-OWNED ENTERPRISES (SOES)
IN THE DEVELOPMENTAL STATE
Development and transformation: the place of stateowned enterprises (SOEs) in the developmental state
1.
Introduction
State intervention in the economy has long been a subject of contestation located within the
ideological parameters of socialism and capitalism as binary opposites. In the contemporary
political economy discourse the concept of a developmental state emerges as an alternative
paradigm from which the role of the state beyond the ideological confines of socialism and
capitalism is determined. A developmental state is propagated as viable option for the
developing countries in their strategic positioning for the challenges of the twenty-first
century. At the core of a developmental state agenda is the imperative of socio-economic
development, which is also a foundational objective of state-owned enterprises (SOEs). In
this the intersection between the SOEs and a developmental state becomes an important area
for policy consideration. In much of scholarly and policy discourses in defining the role of
the state in the economy the SOEs feature prominently.
The SOEs are also referred to as Public Enterprises (PEs), State Enterprises (SEs),
Government Business Enterprises (GBEs), Government Owned Corporations (GOCs) and
Parastatals (PSs). Sometimes these terms are used interchangeably. Ferreira (1993:08)
explains that the SOEs are commonly defined for reporting purposes as distinct legal entities
established as business organisations by government, owned wholly or partly by the state, to
carry out its commercial activities and are supposed to earn the bulk of their revenues from
the sales of products, goods or services they trade in. This definition is drawn largely from
the United Nations (UN) publication titled A System of National Accounts (SNA). SNA
(1968:78) characterises the SOEs as being “publicly owned and/or controlled enterprises
primarily engaged in non-financial activities which are (i) incorporated public corporations…
or (ii) large unincorporated units (government enterprises) that sell most of the goods or nonfinancial services they produce to the public”. The International Monetary Fund (IMF)’s A
Manual on Government Finance Statistics offers a perspective on the SOEs. They are defined
as those enterprises that are recognised as business entities that are
independent of their owners [governments] by virtue of legislation,
administrative regulations, or registration, [and] are generally expected to
have complete profit and loss statements and complete balance sheet
accounts on the financial assets and liabilities, as well as the real assets,
involved in the business; however, they may also include government
agencies which are mainly engaged in selling industrial or commercial goods
and services to the public on a large scale without maintaining these
accounts.
Gumede (2011:19) writes that “given their strategic position, the public enterprises [SOEs]
can play a critical role …in catalysing socio-economic transformation”. To this the
fundamental question is how best could the SOEs be used to deliver a developmental state
and advance its agenda? Not much has been written to specifically provide an answer to this
important question. Perhaps this could be understood within the context of the fact that, as
Short (1984:110) puts it, in spite of “a growing awareness that public enterprises can be a
major source of macroeconomic problems, there is a shortage of analytical work on [their]
macroeconomic role and impact”. Ariyo and Jerome (1999) concur with Short’s observation.
So is Ferreira’s study of 1993 on the performance of public enterprises in South Africa,
Zambia and Zimbabwe during the last two decades.
In their article titled Privatization in Africa: An Appraisal, Ariyo and Jerome (1999:201-213)
argue that even in the previous studies not adequate attention was paid to identifying and
addressing factors that affect the outcome of SOE reforms in Africa. Short (1984:110)
attributes this to “scarcity and inadequacy of data on public enterprises”. This presupposes a
lacuna in the existing body of knowledge in relation to the question that the paper asks. The
paper attends to this vacuity. Its attempt to proffer answers is contextualised to South Africa.
It examines the intersection between the SOEs and the South African developmental state to
determine the interplay between the two seeks to deliver the latter. The paper seeks to locate
the place of SOEs in the developmental state, henceforth contributes to the broader debate on
development and transformation. It considers the history of SOEs in South Africa. This is
important for systematising the logic of the discourse. Thereafter, the definitional aspects of a
developmental state are analysed to determine whether a common understanding of what it
means exists. This is followed by the attempt to determine typical outcomes or outputs of a
developmental state.
Against this background, the mandate of the SOEs is considered to answer the question
whether its execution produces the outcomes or outputs of a developmental state. Subsumed
in this exercise is the analysis of SOEs operations in terms of their contributions to certain
specific developmental goals, which, among others, include rural development, education,
job creation, and poverty eradication. In the context of the results of such analysis, the paper
continues with a discussion on the factors that hinder the SOEs from contributing optimally
to development. Towards the end the paper offers recommendations on what SOEs could do
to increase their contribution in delivering a developmental state. The discourse on the place
of SOEs in the developmental state in South Africa is important for informing policy
direction particularly within the context of the presidential injunction that all state-owned
enterprise should be reviewed to ensure that they are better aligned with the country’s
developmental state agenda. For, as Foucault put it, “discourse is power, because it is from
such discourse that policy options are formulated” (in Magubane 1999:24).
SOEs are necessarily concerned with state-ownership or control of national assets and the
role of the state in the economy. These aspects have always been the subject of contestation
located within the ideological debate on capitalism and socialism, with their attendant
concepts such as globalisation, liberalisation and marketization. They are part of the broader
discourse on the structural transformations of national economies and are therefore inevitable
contextual verities that this discourse on the SOEs in a developmental state considers at the
outset to build a theoretical foundation from which attempts to realise the objective of the
paper flow. It is an exercise in contextual setting, which also, more importantly reflects on the
ideological antecedents of a developmental state.
2.
Ideological context for the emergence of State-Owned Enterprises
(SOEs) and the antecedents of a developmental state
Shiva (2002) writes that “the real issue of our times is how to reinvent the state”. This is not
an easy task. For, as Unger (2001:14) explains, “in the vast majority of historical situations”
in the making of society through politics, “the struggle over what [that] society will
become…in the future” has always been an endless contestation characterised by binary
discourse in theorising the state along the ideological paradigm of either socialism or
capitalism. But, as Hobsbawn (2010:56) puts it, “socialism has failed; now capitalism is
bankrupt - so what comes next”? Sklar (1988) further asks, is there anything beyond
capitalism and socialism? In a similar way Vickers (2007) also posits the question, are the
any other options for particularly the developing countries? These are the real questions of
our times concerned with how to reinvent the state. Subsumed in them is the contestation on
whether the state or the market should be given more space to function as the main engine of
development and transformation. Often at the centre of the discourse on reinventing the state
is the role of the SOEs. For, as Bertucci (2007: iii) puts it, the SOEs are “the principal
suppliers of social services” and “the main sources of employment in many countries”. The
question on how best the SOEs could be used in setting the economy on a path of sustainable
development and growth is a subject of ideological contestation with some perspectives
rooted in socialism whereas others in capitalism.
McLean (1996:459) defines socialism as “a political and economic theory or system of social
organisation based on collective or state ownership of the means of production, distribution
and exchange”. It is a form of social organisation guided by the principles that undergird
communism (Nkrumah 1970:73). The contrast of socialism is capitalism, which refers to “an
economic system based on the private ownership of the means of production, distribution and
exchange, characterised by the freedom of capitalists to operate or manage their property for
profit in competitive conditions” (World English Dictionary 2009). Capitalism is a “system
of generalised commodity production in which wealth is owned privately and economic life
is organised according to market principles” (Heywood 1997:402) whereas in the case of
socialism the underlying principle is that of communalism. Nkrumah (1970: 73) describes
communalism as the “social-political ancestor” of socialism and argues that, in contrast with
capitalism, is a means to social equity and social justice.
The ideological conflict between socialism and capitalism is, according to Sklar (1988:01),
“more than 150 years old in the industrial countries of Europe and North America”. In other
parts of the world in the twentieth century the discourse on socialism and capitalism merely
altered the terms of the debate rather than the essence of its substance. It centred on “the
economic merits of privately-owned productive capital and the justice of profit-taking as a
right of such ownership” (Sklar 1988:01). Socialism jettisons private ownership of productive
capital as a source of exploitation linked to feudalism, slavery and colonisation. SOEs in
socialist regimes are used to ensure that the state assumes ownership and control of the
productive capital to play a key role in the economy. This is achieved through the
nationalisation, which in simple terms, means “the transfer of private assets into public
ownership” (McLean 1996:336). In the ideological context of socialism SOEs pursue noncommercial ambitions. This is in contrast with the capitalist system which its fundamental
preoccupation is on profitability. But, is the use of SOEs either for non-commercial ambitions
or profitability an appropriate approach for restructuring the economy? Often this question is
answered in binary terms.
Most countries that pursued a socialist agenda and nationalisation programmes as its
attendant imperative failed in their effort to restructure their economies in a manner that
ensures sustainable growth and development. This is more so in the developing countries.
Following the exigencies of the Second World War and subsequent decolonisation of Africa,
most African countries whose leadership was highly influenced by Marxist theory of
revolution pursued socialist agenda. SOEs were used to “address market deficits [and] capital
short-falls, promote economic development, reduce mass unemployment and/or ensure
national control over the overall direction of the economy” (Khan 2008:03). Ferreira
(1993:06) explains that “Zambia established an economic structure based on extensive state
ownership, together with government intervention and controls over almost all aspects of the
economy”. In Zimbabwe nationalisation programmes were pursued to assert state control of
the economy whereas in South Africa the nationalist party government, following its election
in 1948, used the SOEs “to contribute to the process of industrialisation and economic growth
by direct intervention in the economy” (Ferreira 1993:05).
The use of SOEs “to increase capital formation, produce essential goods at lower costs, create
employment and generally contribute to economic development of the nation state”(Khan
2008:03) became part of the post-colonial states character in asserting their role in the
economy. However, largely in the eighties, it turned that the structure of ownership and
control of the economy by the state through the SOEs is not yielding positive outcomes. Their
dismal performance in discharging their mandate became a burden on public revenue as the
loans advanced to salvage them and the annual Treasury subventions became irrecoverable
(Ariyo and Jerome 1999:201). In the study of the United Nations Department of Economic
and Social Affairs titled Public Enterprises: Unresolved Challenges and New Opportunities,
Khan (2008:03) finds that “rising corruption, management inefficiencies, overstaffing
(without due regard to their economic viability, many governments treated public enterprises
as easy conduits for job creation and a convenient vehicle for patronage distribution),
inflation and rising current account deficits of the 1980s, exposed serious government failures
and the limits of public enterprises as major players in economic development”. Does this not
presuppose an ideological limitation of socialism and nationalisation as the attendant
imperatives? Hobsbawn (2010:56) proclaims that “socialism has failed”.
The collapse of communism in Eastern Europe in the 1980s marked the failure of socialism,
and, with the end of Cold War, heralded the emergence of neo-liberalism. It is important to
note that some scholars contest this view. They argue that what happened to the countries in
Eastern Europe has nothing to do with the ideology that they professed, but owe more to their
histories (see Hill 1992:08; Kondlo 2010:03). Neo-liberalism assumed intellectual
proportions of ideological orthodoxy to supplant socialism, which, as a form of organisation,
is guided by the principles that undergird communism (see Nkrumah 1970:73). It influenced
the epistemological foundation of the development studies, which, as Genzier (Gordon
2004:79) explains, “emerged in elite, First World universities as an attempt to offer their
vision of modernisation over the Marxist ones of the U.S.S.R., Communist China, and Cuba;
their model was resolute: a capitalist economy and elite (oligarchical) democracy”. It is
embedded in positivist paradigm of thinking premised on the fallacy of single realities rather
than multiple theoretical propositions from which the social world could be constructed and
understood (see Mqolomba 2011:56-57).
Mahao (2009:76) correctly observes that neo-liberalism is “extolled by leading theoreticians
as signifying the end of history and ideology because, in the view of its exponents, humanity
has at long last reached the summit of history and ideological development, beyond which it
cannot traverse”. In the book The End of History and the Last Man Fukuyama (1992: 04), an
American philosopher and scholar, proclaims that neo-liberalism marks “the end of history as
such, the end point of man’s ideological evolution and the universalization of Western liberal
democracy as the final form of human government”. He contends that it is only the market
economy and a democratic political system that can bring about sustained economic growth
and development. This is characteristic of the resoluteness of Euro-American scholarship on
development thinking rooted in uni-polar paradigm of neo-liberal orthodoxy. Its contention is
that there is no alternative to neo-liberalism.
Thinking about development along uni-polar paradigms is not new in the political economy
discourse. It reiterates the modernisation theory of the 1960s “that Western economic and
political liberalism represented the good society itself, and that it constituted the broad
historical convergence point of diverse developmental trajectories” (Leftwich 1993:605). In
this respect, Leftwich concurs with Mqolomba (2011:56), whose characterisation of the
epistemology of development is that, “though there have been gradual shifts in the thinking
on development ranging from development as an economic growth (1950s) to development
as economic growth and poverty alleviation (1960s) to development as economic growth,
redistribution and structural change (1980s and 1990s), much of the development discourse,
as led by the Bretton Woods Institutions, has been dominated by linear and uni-polar lenses”
exemplifying the global hegemonic power of the West and the attendant intellectual
imperialism. Sadar’s (1999:44) caution is edifying:
The power of the West is not located in its economic muscle and
technological might. Rather, it resides in its power to define. The West
defines what is, for example, freedom, progress and civil behaviour; law,
tradition and community; reason; mathematics and science; what is real and
what it means to be human. The non-Western civilisations have simply to
accept these definitions or be defined out of existence.
As propagated largely by Euro-American scholarship, neo-liberalism was, through the
influence of the Bretton Woods institutions on the domestic policies of the developing
countries, used as an ideological paradigm prescriptive of how the post-Cold War state
should be patterned. It is the ideological foundation of the Structural Adjustment Programmes
(SAPs) of the 1980s, whose aim was to “shatter the dominant post-war, state-led
development paradigm and overcome the problems of development stagnation by promoting
open and free competitive market economies, supervised by minimalist state”(Leftwich
1993:607).
The SAPs introduced economic reform strategies that sought to reduce government
expenditure (Ariyo and Jerome 1999:201), “transform economic structures and institutions
through varying doses of deregulation, privatisation, slimming down allegedly oversized
public bureaucracies, reducing subsidies and encouraging realistic prices to emerge as a
stimulus to greater efficiency and productivity, especially for export”(Leftwich 1993:201).
This impacted profoundly on the role of the state in the economy and necessitated a serious
rethink of the SOEs, whose reform, according to Ariyo and Jerome(1999:201), “gained
considerable momentum in developing countries following its endorsement by the
multilateral financial institutions as a major component of economic adjustment policies”. As
a result of their poor performance, which is one of the major reasons that necessitated the
economic reforms of the 1980s as introduced by the SAPs, the SOEs in the developing
countries went through a large-scale process of privatisation.
In simple terms privatisation refers to the transfer of state-owned assets to the private sector,
either by sale or contracting out (McLean 1996:406). It is the opposite of nationalisation,
which, as explained above, is rooted in the socialist ideology that propagate the idea of state
control of the economy. Privatisation is the imperatives of capitalism, the ideology that
propagates the notion of a minimalist state. Neo-liberalism is a subset of capitalism, which,
with large scale of privatisation of SOEs in the 1980s and 1990s, asserted its triumph as an
ideological paradigm for constructing a post-Cold War state. Privatisation of the SOEs
reduced the role of the state in the economy. Because of the perception of its success in
Britain and other developed countries (see Ariyo and Jerome 1999:201; McLean 1996:406),
coupled with the collapse of the Soviet Union, which, according to Khan (2008:03),
“removed ideological and political barriers that hindered capitalist/market-oriented reforms”,
the privatisation of SOEs was pursued with vigour in the developing countries.
Ariyo and Jerome (1999:202) observe that, “toward the end of the 1980s, Africa became a
seemingly fertile ground for privatisation”. Even countries whose system of government was
more inclined to socialism privatised their SOEs. For instance, in 1985 the socialist regime of
Tanzania divested several sisal plantations (Ariyo and Jerome 1999:201). In Zimbabwe most
industries that were created or nationalised by the state during the Second World War were
sold to the private sector after the War. This resulted in the structure of ownership of
productive capital dominated by the market characterised by extensive multinational
presence. Since its independence in the 1980s Zimbabwe inherited such structure of capital
ownership, until recently.
In South Africa the nationalist party government in the mid-1980s published a White Paper
on Privatisation and Deregulation, which clearly set out its intention to privatise the SOEs.
This move was, however, intercepted by the regime change in 1994, when the African
National Congress (ANC) took over from the National Party in governing the country. It
introduced the Reconstruction and Development Programme (RDP) as the policy framework
for socio-economic development. The approach of RDP to development and transformation
lay largely in substantial investment in the economy. However, with the introduction of
Growth, Employment and Redistribution (GEAR) strategy in 1996, the ANC-led government
capitulated to neo-liberalism, moved away from the RDP, and adopted privatisation as one of
the strategic policy tools. Much about this aspect is considered in the discussion below on the
history of SOEs in South Africa.
The case studies on privatisation in Tanzania, Zimbabwe and South Africa are but a few
examples of the many trajectories of development and transformation that involved changes
in the relationship between the government and the private sector in the areas of control and
ownership of productive capital as happened in Africa following the introduction of the SAPs
in the 1980s. In their study on privatisation in Africa, Ariyo and Jerome (1999:202) found
that
The number of countries implementing or about to implement divestiture
programs increased from 14 in 1985 to 43 by 1992, an increase of over 90%.
Of the 1,343 planned, on-going or completed privatisation programs
worldwide in 1988, Africa accounted for about 35%. On the other hand,
divestiture activity has been unevenly spread within Africa. By 1988 four
states – Guinea, Cote d Ivoire, Niger and Uganda – accounted for over half
the divestitures either completed or underway, while three-quarters of those
still at the planning stage were in Ghana, Nigeria, Senegal and Togo. By the
end of the decade, West African states had registered the largest incidence of
privatisation programs, and so had the Francophone countries as a group.
Francophone African countries have sold assets or equity in eight times as
many firms, placed management contract in twice as many, and liquidated
more than four times as many as have Anglophone nations. For example, of
the 200 enterprises in existence in Guinea in 1985, all but 20 had been sold
to the private sector or dissolved by the end of 1992.
In 1997 privatisation activities in developing countries were at their peak (Khan 2008:04).
This means that the size and functions of government activities got substantially reduced.
Ariyo and Jerome (1999:202) explain that 11.7 % of the 143 loans that the World Bank made
available for structural adjustment costs contained a privatisation component. The extent of
privatisation of SOEs differs from one country to another. Zambia appears to be one of the
few countries that did not subscribe to the neo-liberal project of privatisation as prescribed by
the Bretton Woods Institutions. It “established an economic structure based on extensive state
ownership, together with government intervention and controls over almost all aspects of the
economy – a policy regime that it maintained and intensified” for a very long time(Ferreira
1993:06).
All these cases of privatisation of the SOEs as cited in the above exposition, which are but
some of the many, exemplify the pernicious influence of neo-liberalism in defining the role
of the state in the economy. It is capitalism by democratic design. Neo-liberalism asserts the
triumph of capitalism in constructing the post-Cold War state. For, it sought to reform
capitalism rather than, in a revolutionary sense, change it. The social political ancestry of
capitalism is embedded in imperialism. Nkrumah’s (1970:72-74) articulation of the concept
of reform is edifying to contextualise the contention propagated:
The essence of reform is to combine a continuity of fundamental principle,
with a tactical change in the manner of expression of the fundamental
principle. Reform is not a change in the thought, but one in its manner of
expression, not a change in what is said but one in idiom. For in reform,
fundamental principles are held constant and the details of their expression
modified. In the words of Marx, it leaves the pillars of the building intact.
Indeed, sometimes, reform itself may be initiated by the necessities of
preserving identical fundamental principles. Reform is a tactic of selfpreservation.
Neo-liberalism is capitalism in different form, emerged in different conditions, and exists in
different circumstance, namely the post-Cold War context. Slavery, exploitation and
feudalism are some of the factors that historically characterised capitalism. They are
instruments of colonisation. So, in the context of the foregoing, the fundamental question is,
how can neo-liberalism legitimate its ideological proposition as the template for constructing
a prosperous and peaceful world characterised by economic growth while its social-political
ancestry is capitalism, which is linked to the instruments of colonisation? Neo-liberalism is a
disguised colonial project of social transformation. It is the anti-thesis of social equity and
social justice. Can this perhaps be understood as the reason for its failure to bring about
economic growth and the developmental outcomes that its proponents talked about?
In their study of 1999 as referred to above, Ariyo and Jerome find that the benefits of
privatisation of the SOEs, a neo-liberal project of the Bretton Woods institutions, were still
yet to be felt, particularly in Africa. Implied in this finding was the question “whether
business conducted by the state can be more efficiently run or, indeed, whether it is socially
desirable to encourage the private sector to undertake such business instead” (Ferreira 1993)
through the privatisation of the SOEs. Subsequent studies indicate that neo-liberalism as the
ideological context for the privatisation of the SOEs failed to situate the challenge of socioeconomic development in the correct historical context in Africa. To argue for the
implementation of privatisation of the SOEs just on the basis of its perceived success in
Britain in “raising large sums of money to offset public borrowing, weakening the power of
the public sector trade unions, widening share ownership, giving the management of former
nationalised industries normal commercial autonomy, and reducing the burden of decisionmaking imposed on government by public ownership” (McLean 1996: 406-407) was a naïve
approach to socio-economic development and transformation in Africa.
The contexts of the developed and developing countries are totally different. Contrary to the
fallacy that neo-liberalism “has universal developmental relevance for all cultures and
societies in the modern world” (Leftwich 1993:605), the importation of the solutions applied
successfully in one context to the other context without a critical consideration of the
peculiarities of the latter is most likely to result in fatal consequences. This is the case of fatal
remedies rather than smart solutions (see Minogue 2003). Leftwich (1993:620) argues that
“the economic and political liberation of the minimalist state as the universally appropriate
means of development is deeply flawed”. It trivialises the role of the state in the economy to
that of just merely being a night watchman for capital. The inadequacy of neo-liberalism as an
ideological paradigm for constructing a state with the capacity to contend with the exigencies
of the twenty-first century such as globalisation was exposed by the contextual realities of the
contemporary circumstances, which necessitate state intervention in the economy.
Globalisation is a reality of the changing world. It requires a serious rethinking of the role of
state in the economy, particularly in the developing countries, to halt a possibility of their
marginalisation in the globalisation processes. For, the markets failed.
Fukuyama’s contention that neo-liberalism mark the end of history is proved to be what
Macedo (1983:183-204) calls a “pedagogy of big lies”. Neo-liberalism is an example of
misplaced universalism. It failed. We are instead now witnessing a continuation of intellectual
curiosity in “search for human ideological paradigm” (Netshitenzhe 2011:66) from which
efforts to construct a twenty-first century state with the capacity to successfully pursue socioeconomic development and transformation could be located. As the Economic Commission
for Africa (2003:02) puts it, “globalisation requires reinforcing state capacity”. This is
important to ensure that the state is strategically positioned to drive the national development
agenda and provide leadership in its pursuit. With its development strategy anchored on
maintaining macro-economic stability, lowering inflation, cutting deficit spending, and
reducing the scope and cost of government by, among others, privatisation and deregulation
of state-owned enterprises, the SAPs reduced the role of the state in the economy. This
weakened the state and, according to the Economic Commission for Africa (2003:02), its
retreat in providing social services such as health, education and housing “was detrimental for
many African countries”. Mkandawire (2010:59) writes that a perspective that “the state
cannot or must not play a central role” in the economy “has sanctioned the weakening of
already weak states” in Africa.
Scholarship and existing body of policy literature is divided in answering the question on the
impact of the SAPs in effecting development. On the one hand, Euro-American scholarship
and the Bretton Woods institution literature largely credit the SAPs for stabilising the
economies of the developing countries whereas African scholarship generally contests this
perspective and attributes the political and economic crises that most African countries
experienced to their neo-liberal ends, namely minimalist state. Because of the limited scope of
this paper, it is not possible to analytically delve deeper into the merits of each side of the
contention regarding the impact of the SAPs on the developing countries, save to point out
that, as the Economic Commission for Africa (2003:02) puts it, “it is now being
acknowledged that states with weak institutions are not well prepared to face the adjustment
costs of globalisation” and other exigencies of the contemporary world. Mkandawire
(2010:59) explains that
After years of focus on stabilisation, it is now generally agreed that economic
growth and development should be placed squarely back on the policy agenda
in Africa. This is partly because the high growth rates and structural change
are essential both to extricating Africa from the quagmire of its lost decades
and to meeting the aspirations of an increasingly vocal citizenry clamouring
for a decent livelihood. Such a social agenda demands serious
reconsideration of the role of the state.
The Bretton Woods institutions development thinking subsequently capitulated as it now
considers the centrality of the state in terms of its role in the economy. Smith (2008:156)
makes a very interesting observation that “by 1990 the World Bank and International
Monetary Fund (IMF) were ready to acknowledge, contrary to their earlier hostility to state
planning and public enterprise, that the state was crucial to the achievement of economic
growth and industrialisation”. So much so that in the World Development Report of 1991 the
World Bank unambiguously stated that:
Intervention by the [state in the economy] is not undesirable in itself. On the
contrary, many sorts of intervention are essential if economies are to achieve
their full potential. An abbreviated list of indispensable interventions would
include the maintenance of law and order, the provision of public goods,
investments in human capital, the construction and repair of physical
infrastructure and the protection of the environment. In all these areas (and
arguably more) markets ‘fail’ and the government must step in. But the
countless cases of unsuccessful intervention suggest the need for caution.
Markets fail, but so do governments. To justify intervention it is not enough to
know that the market is failing; it is also necessary to be confident that the
government can do better. (p.131)
In the subsequent World Bank Report of 1997 reiterates the importance of the role of the state
in the economy as a partner in development. This marks an important paradigm shift from the
earlier thinking that emphasised the markets as the key drivers of development, where the
state was pushed to the periphery and the markets assumed the centre. The World Bank
Report of 1997 contends that the “markets and states should not be viewed as opposites, but
as complementary, the state’s role being essential for putting in place the appropriate
institutional foundations for markets”. It further underscores the importance of building state
capacity in positioning its role of being a partner in development. The Report cautions that
“unless states can improve their effectiveness and invigorate public institutions, their
prospects may be bleak”; and, “increasing public strife, rampant corruption and the collapse
of many states are likely to be the results”.
In most advanced economies of the world, including those that are well-known for their promarket economy stance that subscribes to the idea of a minimalist state such as the United
States (US) assumed a more interventionist role in the economy to salvage the private
businesses that faced the hardships of survival as bequeathed by the global economic
meltdown. A minimalist state is a fundamental faux pas in the twenty-first century. Mantashe
(2011:60) observes that the global economic meltdown has shifted the world back to
Keynesian logic of economics. Coupled with “a new configuration of global power at the
beginning of the [twenty-first century] following the rise of China and India, and the return to
power of Japan and Russia (Kondlo 2010: 03), which mark “the return of great nationalism”
(Kagan 2008:10), “the incidence of the global economic meltdown seems to give impetus to
the idea of the return of the state” as manifested in the “proliferation of state interventions in
the economy”(Kondlo 2010:03).
Based on the empirical analyses of Bismarckian Germany, Japan after the Meiji revolution,
Attaturk’s Turkey, the Soviet Union after 1917, twentieth-century Sweden, China for the first
quarter century after the revolution, Taiwan, Korea, Thailand, post-independence Mauritius,
Singapore, Malaysia and Botswana after 1960, Leftwich(1993:620) concludes that the
“successful modern transformative episodes of economic development, from the 19th century
to the present, have almost always involved both a strong and an active state to help initiate,
accelerate and shape” the course of development. In the contemporary development discourse,
this type of state, which is interventionist in character, is termed a developmental state. It is
increasingly emerging in various scholarly and policy studies that seek to answer the real
question of our times, which is concerned with how to reinvent a state.
The concept of a developmental state is bandied about so much in the contemporary political
economy discourse with propositions that is “what comes next” (Hobsbawn 2010:56), “what
is beyond capitalism and socialism”(Sklar 1988:01), or what is an option for the developing
countries(Vickers 2007). Following its success in East Asian nations “as one of the greatest
industrialisation transformations after the Second World War” (Gumede 2009:43), a
developmental state emerges as an ideological paradigm from which answers on how to
reinvent a state for the challenges of the twenty-first century are sought. Johnson (1999:36)
asserts that “the developmental state exists and is in the process of altering the world balance
of power.” Against this background, the question that the paper asks is what is the place of
SOEs in the developmental state? The attempt to provide an answer is contextualised to South
Africa, which is currently characterised by the commitment to styling the country along the
imperatives of a developmental state. It is, for reasons of contextualisation, preceded by the
history of SOEs in South Africa.
3.
History of State-Owned Enterprises in South Africa
4.
The concept of a developmental state
With insight into the history of the SOEs in South Africa, the question that now needs
attention is, how can they [SOEs] be strategically utilised to deliver or advance a
developmental state agenda? But before this question is considered, it is important that we
understand what we mean by a developmental state. Smith (2005:156) states that “the concept
of a developmental state is the objective of state-building [that] first appeared in the late
1960s”. However, in theorising the state, Leftwich (2005:143) dates the evolution of a
developmental state to a much earlier period. He explains that a developmental state is the
East Asian model “pioneered in Japan after 1870, and especially after the 1920s, which had
been replicated in some other countries like Korea and Taiwan” (Leftwich 2005:143). This
East-Asian model of statehood has sometimes been referred to as ‘managed capitalism’ or
‘governing the market’ (Leftwich 2005:143).
Onis (1991:109) locates the theoretical foundation of a developmental state in structuralism.
As a development theory, structuralism is premised on “the belief that market failure is a
pervasive feature of the underdeveloped economy with the corollary that the state has an
important role to play in correcting it” (Onis 1991:109). In spite of its long history, the term
developmental state as used to describe the East Asian model of state intervention in the
economy emerged only in the 1980s. It was coined by Chalmers Johnson when researching
the Japanese industrial policy. Johnson’s study resulted in the 1982 publication MITI and the
Japanese Miracle: The Growth of Industry Policy 1925-1975. In this seminal work, Johnson
analyses factors that undergird Japan’s successful post-war reconstruction and industrial
renaissance.
By introducing the concept of a developmental state in the Japanese industrial policy Johnson
sought “to go beyond the contrast between the American and Soviet economies”, which “had
become a feature of virtually all the canonical works of the American side during the Cold
War” (Johnson 1999:32). The reason behind Johnson’s study of the Japanese industrial policy
is edifying particularly for acquiring contextual insight into the meaning of the concept, which
he “invoked to characterise the role the state played in Japan’s extraordinary and unexpected
post-war enrichment” (Johnson 1999:33-34). Since Johnson’s introduction of the concept of a
developmental state, a rich body of literature on it evolved. The concept of a developmental
state is a much bandied about subject. It engendered so much controversy and is largely
misunderstood. Some stream of rejoinders largely from the Anglo-American scholarship
dismisses it as heretical, refusing to accept that the Japanese miracle is the consequence of
state intervention in the economy. This needs to be understood within the context that
Johnson’s concept of a developmental state challenged the doctrinaire orthodoxy of the West.
In the article titled The Developmental State: Odyssey of a Concept, Johnson engaged the
critiques of a developmental state that they are largely based on the misunderstanding of the
concept, which is sometimes distorted and confused with other concepts to mean what it is
not. Some consider a developmental state simply as a service delivery state. This is
conceptual reductionism. It eschews the essence of the ‘originative historical context’ of the
concept. The Anglo-American scholarship regards developmental state as Soviet-type
socialism in the East Asian context whereas in other instances a developmental state is
conflated with a democratic state – where the supposition is that these concepts are
synonymous. Does this presuppose that there is no common understanding a developmental
state? To answer this question the definitional aspects of a developmental state are
considered. This is preceded by, for contextual reasons, the attempt to identify a conceptual
framework largely from ‘original and authoritative body of scholarship’ from which the
definitions of a developmental could be analysed. It is against the results of such analysis that
subsequently it is determined whether there is a common understanding of the developmental
state.
4.1.
In search of a conceptual framework
Going back to the original source for scholarship on the concept Chalmers Johnson’s work is
instructive. Johnson (1982:19) states that a developmental state is interventionist in its design
and character. It is a state that is rationally configured to make it possible and necessary to
influence the direction and behaviour of the markets and pace of economic growth and social
development. A developmental state is described as a “plan-rational state” that guides
economic development by, among others, promoting technology transfer, planning industrial
structure and providing incentives for achieving set targets (Johnson 1982:19). It shapes
socio-economic development by intervening in the development process to achieve
“substantive social and economic goals” (Johnson 1982:19-20). With the concept of a
developmental state Johnson described the history of the Japanese industrial policy rather than
prescribes the conditions for a state to achieve sustainable development and high economic
growth. A developmental state is therefore a descriptive rather than a prescriptive concept.
The thesis that undergirds Johnson’s concept of a developmental state is that the post-war
Japanese’s ‘economic miracle’ is the consequences of conscious and consistent policies
characteristic of Japan’s interventionist role in the economy dating back from at least 1920s.
These aspects are said to comprise the essence of the concept of a developmental state:
technocratic autonomy, inexpensive, efficient and effective public service, staffed by the
nations’s brightest and best servants functioning without constraints, and capable of being
innovative in carrying out their responsibilities, and the ability to engage in the perfection of
market-conforming methods of state intervention in the economy to maximise business
performance in the private sector (Johnson 1982:38-39). A developmental state encourages
and shapes co-operation with the private sector. It “involve[s] a much closer symbiosis
between the state and private sector” (Leftwich 2005:143).
A key aspect in defining a developmental state is that of state intervention in the economy. In
Flexible Rigidities: Industrial Policy and Structural Adjustment in the Japanese Economy,
1970-1980, Ronald Dore (1986) metaphorically contextualises the variable of state
intervention and sheds some light into what it entails in the context of developmentalism: “the
Japanese do n’t believe in the invisible hand”. It is largely on this basis that the AngloAmerican scholarship dismissed the concept of a developmental state on the basis that state
intervention in the economy is the source of underdevelopment. Dore (1986:01, 06) engaged
the Anglo-American scholarship and asked a fundamental question: “why on earth, then
should Japan, an economy which almost flaunts its rigidities as a matter of principle, be the
most successful among the OECD [Organisation for Economic Cooperation and
Development] countries at dynamically adjusting to these challenges – absorbing the oil-price
rises, controlling inflation at a low figure, and shifting the weight of its industrial structure
away from declining to competitive industries?”
The Anglo-American scholarship responded that it is either Japan got “the prices right” or is
“toying with socialism” and predicted that soon would “show signs of Soviet-type
misallocation of resources and structural rigidities” (Johnson 1999:34). This indicates that a
developmental state is a highly contested concept, especially when the variable of state
intervention is invoked in its definition. Such contestation is, however, important in clarifying
its conceptual essence. In trying to understand a developmental state,
The issue is not of state intervention in the economy. All states intervene in
their economies for various reasons…The United States is a good example of a
state in which the regulatory orientation predominates, whereas Japan is a
good example of a state in which the developmental orientation predominates.
A regulatory, or market-rational, state concerns itself with the forms and
procedures – the rules, if you will – of economic competition, but it does not
concern itself with substantive matters. (Johnson 1982:17, 19)
So, defining a developmental state just simply as an interventionist state without any sense of
context could be misleading. The reasons for such interventions are the ones that determine
whether a state is either developmental or not. Following Johnson’s concept of a
developmental state, various scholars wrote about it and consequently a coherent body of
knowledge on it emerged. Such body of knowledge has different orientations in their
emphasis in defining the concept. As Habib (2009:on-line) observes, in some literature the
attempt to define a developmental state is “mainly descriptive detailing the particular policies
that generated the positive socio-economic outcomes” whereas other definitional perspectives
“tend to have a more institutional focus emphasising the embedded but relatively autonomous
character of the state, which speaks to the structural linkages and social interactions between
political and economic elites”.
Mkandawire (1998) argues for the synthesis of policy and institutional dimensions of the
concept of a developmental state when defining it. He explains that the essence of the concept
of a developmental state is ingrained in its ideological and structural components. The
distinction of a developmental state from other types of states is embedded in this ideologystructure nexus. Ideologically, a developmental state is defined as that type of state “whose
underpinnings is developmentalist in that it conceives its mission as that of ensuring economic
development, usually interpreted to mean high rates of accumulation and industrialisation”
whereas “the state-structure side of the definition emphasises [state] capacity to implement
economic policies sagaciously and effectively” (Mkandawire 1998:on-line). It is a state which
is able to set developmental goals, create and sustain a policy climate and an institutional
structure that promotes development.
Mkandawire synthesises ideology and state-structure components of the concept. This
approach focuses on both the policy and institutional dimensions of a developmental state.
Edigheji (2006: 04) argues that a developmental state cannot only be defined in terms of its
goals but also in terms of the institutional attributes which enable it to act authoritatively in
formulating and implementing programmes in order to achieve its goals”. This is a very
important contribution. It sets a conceptual framework from which a developmental state
could be defined and understood. Evans (Edigheji 2006:01) states that, “in defining a
developmental state, the trick is to establish a connection between development impact and
structural characteristics of the state – their internal organisations and relations to society”. In
this Evans introduces a very important aspect that Johnson omitted in the conception of a
developmental state – the relationship between the state and society. Johnson’s concept of a
developmental only focused on the political, bureaucratic and economic elites as the strategic
forces or drivers of a developmental state. This is probably because of the fact that the
concept originated in an authoritarian environment where organs of civil society such as
labour movements were suppressed.
With the notion of embedded autonomy, Evans underscores the importance of social forces as
the basis of a developmental state. It is from this perspective that Mkandawire (2001:27)
looks at the developmental states as “social constructs brought about by states and societies”.
Evans (2009:09) concurs in the statement that “developmental states must be vehicles for
socially defining and choosing societal goals, in addition to being instruments to achieve
them”. He further explains that it is this “function that puts effective participation in
democratic deliberation at the top of the list of the capabilities the developmental state must
foster”. Mkandawire (1998, 2001) and Evans (1995) broaden Johnson’s concept of a
developmental state and appropriate to it a context that bears relevance to democracy. This
marks a conceptual shift from Johnson’s developmental state as a “soft authoritarian state”
(Edigheji 2006:03).
But, taking into account the fact that the concept of a developmental state as an ideological
construct originated in an authoritarian context in East Asia, is it not oxymoronic to associate
it with democracy? For, democracy is the opposite of authoritarianism. The concept of a
developmental state did not evolve in a democratic society. To this extent some argue that a
developmental state cannot be associated with democracy whereas on others conflate it with a
democratic state – where the implication is that these concepts are synonymous. In the article
titled South Africa’s “Developmental State” Distraction Bond (2007:on-line) states that the
concept of a developmental state is a diversification of authoritarian politics associated with,
as Leftwich (1993:613) puts it, the “post – 1960 success stories of economic growth in the
Third World – Brazil, South Koreas, Taiwan, and more recently, Thailand and Indonesia”.
Most major success stories of a developmental state in the East Asian countries “have not
occurred under the conditions remotely approximating continuous and stable democracy:
quite the opposite” (Leftwich 1993:613). This presupposes that “it is not a democratic state,
although it would be desirable it could as well be that, but a developmental state which is key
in ensuring successful sustainable development” (Leftwich 1993:613). Following Leftwich’s
logic, it could be argued that democracy is not necessarily a condition for development. It
could, however, be an outcome of development. A developmental state is therefore not a
synonym of a democratic state, but, at the same, it is not the anti-thesis of democracy. In this
regard Onis (1991:121) asks a fundamentally important question: “where democratic values
and institutions as well as widespread political participation emerge as central objectives in
their own right”, is the transfer or replicability of the East Asian state forms desirable in the
first place? This question presupposes that there is no intersection between a developmental
state and democracy. It is at this point that Onis differs with Leftwich and other perspectives
that do not look at the developmental state and democracy in binary terms.
Onis (1991:121) states that in “countries which have experienced a long trajectory of
democratic development it would be inconceivable for the state to withdraw entirely from the
distributional realm and focus exclusively in growth and productivity”. But, on this point Onis
(1991) seems to have misunderstood the concept of a developmental state. Its goal is not only
limited to economic growth. It also seeks to, more importantly, achieve substantive social
goals, which are distributional by nature and could therefore address particularly the
substantive aspects of democracy. The contention of the paper is that a developmental state
and democratic state are different concepts that mean different things. However, this should
be not misconstrued as an attempt to pursue a binary discourse where the state is considered
in terms of two broad conceptual terms, that is a developmental state on the one hand and a
democratic state on the other hand. For, democracy is not the anti-thesis of a developmental
state. Fakir (2005) argues against the tendency to understand these concepts in binary terms as
a false dichotomy. This is a very important contribution towards unpacking a developmental
state.
Following Fakir’s (2005) logic, a developmental state can be a democratic state; conversely, a
democratic state can also be a developmental state. This means that a developmental state and
democracy can co-exist and complement each other; hence some scholars are now beginning
to talk about a democratic developmental state (see Edigheji 2005, 2010; Evans 2010;
Mkandawire 2010; Fine 2010; Butler 2010; Creamer 2010; Roberts 2010). Other key aspect
that undergirds the conceptualisation of a developmental state embedded in the state-structure
dimension of the concept is state capacity. As explained above, state capacity is concerned
with the ability of the state to implement policies in pursuit of a developmental state agenda.
Edigheji (2007:01) comprehensively defines state capacity:
As the ability of the state to act authoritatively to transform the structural basis
of the economy to achieve economic growth, reduce poverty and income and
wealth inequalities. In other words state capacity …implies the capacity of the
state to foster inclusive development, including enhancing the human
capabilities of all citizens. Inclusiveness and social justice is, therefore central
to this conception.
Mkandawire (1998) categorises state capacity into various subsets [institutional, technical,
administrative and political] from which most definitions that subscribe to the state-structure
conceptual paradigm evolve. A strong state capacity is critically important in crafting a longterm vision around which social and market forces could be mobilised to advance a
developmental state agenda. In this the state assumes the centre stage and uses its authority
with some degree of autonomy from social and market forces. This, however, does not mean
that the social and market forces are pushed to the margins of periphery. For, they are
important in forging a social compact for developmentalism. To guard against a possibility of
degenerating into a predator state in using its autonomy, “a developmental state must have a
social anchoring” (Mkandawire 1998:on-line). This perspective finds expression in Evans’
(1998) notion of ‘embedded autonomy’. It means that a developmental state is embedded in
society. However, such embeddedness should not cloud the autonomous character of the state
and its responsibility in providing leadership in the pursuit of a national vision and a common
developmental agenda
From its conception by Johnson, a clear conceptual framework from which a developmental
state could be defined and understood was set. Such conceptual framework, which got
enriched and refined by the works of other notable scholars as such as Evans(1995) and
Mkandawire (1998, 2001) who subsequently made a significant contribution to the
conceptualisation of a developmental state, underscores the importance of establishing a
“connection between development impact and structural characteristics of a developmental
state” (Evans 1995). As explained above, Mkandawire (1998) refers to this conceptual
framework as ‘ideology-structure nexus’. To this extent, an important question is whether the
attempts to define a developmental state take into account this conceptual framework?
4.2.
Developmental state – a definitional question
An array of definitions of a developmental state in the existing body of literature exists.
Dassah (2011:05) observes that there is no generally accepted definition of a developmental
state. This is in spite of the fact that, from largely the original and authoritative body of
literature, as referred to above, a conceptual framework from which a developmental state
could be defined and understood is clearly set. Leftwich (1993: 620-621) defines a
developmental state as that state “whose political and bureaucratic elite has the genuine
developmental determination and autonomous capacity to define, pursue or implement”
policies that seeks to address the developmental goals, which, among others, include “land
reform, extension of property rights, training, job creation, liberation of the poor –especially
the rural poor from continued domination of traditional landed elites and anti-developmental
oligarch who both oppose empowerment and often stay in way of development and
democracy”. This definition has a policy or ideological bent, and, at the same time, tend to
have institutional focus. It makes reference to policies and structural characteristics of the
state or institutional attributes that needs to exist for a state to achieve its developmental
goals. Although Leftwich makes reference to autonomous capacity of the state, the
embeddedness of such autonomy is not specified. The definition does not fully comply with
the conceptual framework that underscores the imperative of “inclusive embeddedness”- a
state-business-civil society relationship (Edigheji 2006:06).
Chang’s definition of a developmental state shares the same characteristics with that of
Leftwich. This is clear in the definition of a developmental state in terms of the pursuit of
policies that co-ordinate investment plans, national development vision, institutional capacity,
and the ability to resolve conflicts that may arise in the course of development among the
competing interests (Chang 1999:192-1999). Chang defines a developmental state both in
terms of policy goals or ideological disposition and institutional focus or state-structure
orientation. However, the definition does not make reference to the internal organisation
structure of the state’s relations to society. Evan’s concept of embedded autonomy is not
captured in Chang’s definition. In his most recent contribution on the subject Chang
(2010:83) defines a developmental state as the state that “intervenes to promote economic
development by explicitly favouring certain sectors over others”. This definition reverts to
Johnson’s conception of the concept of a developmental state where it is conceived as
interventionist state (see Johnson 17,19).
Krieckhaus (2002:1697) defines a developmental state as the state “with a combination of
high bureaucratic capacity and significant autonomy from society [which] successfully
allocate[s] financial resources to strategic sectors and thereby generate rapid industrial
advance.” In this a specific reference is made to society. This addresses the omission of the
variable of state-business-civil society relations or ‘embedded autonomy’ in Leftwich and
Chang’s definitions. Krieckhaus notion of ‘significant autonomy’ or Evans’ ‘embedded
autonomy’ means that a state “assumes a prominent role catalysing and mobilising resources
towards national development priorities” (Naidoo 2006:481). As one of the pillars that
undergird the conceptual framework as enunciated above, Edigheji (2006:03) contends that
Evans’ notion of embedded autonomy links the concept of a developmental state to that of
democracy.
Some attempts to conceptualise a development state gravitate more towards the concept of
democracy, where it is defined in terms of its ability to craft strategic relationships and
establish networks with the private sector and civil society to advance a developmental state
agenda (Beeson n.d; Evans 1998; Mkandawire 1988; Palidano 2000; Sindzingre 2004).
Maserumule (2010:17) explains that “such relationships and networks are important in
forging a common understanding of the development vision of the state among the democratic
sectors”, which, according to Clift(2003), refers to government, elected and appointed
officials, media, and major on-line portals, political parties, interest groups, civil society, the
private sector, international government organisations, and citizens/voters.
Mhone (2004) defines a developmental state as the state that is proactively pursuing and
defining a developmental vision to be attained in the long-term, in coordinating economic
activities and steering them toward desired outcomes, mobilizing and synergizing class and
social forces in support of the developmental agenda. This definition is comprehensive. It is
expressed in terms of the policy goals of the state and the relationships that the state should
have with the markets and society. The latter is glaringly clear in the reference to ‘class and
social forces’ in the definition. However, the institutional attributes of a developmental state
does not seem to have been given a definitional priority. Mhone’s (2004) definition is much
closer to Naidoo’s (2006) definition, even in words used in its formulation. While Naidoo
(2006:481), in defining a developmental state, talks about “catalysing and mobilising
resources towards national development priorities”, Mhone’s (2004) definition makes
reference to “mobilizing and synergizing class and social forces in support of the
developmental agenda.
Scholars so far cited attempt to define a developmental state beyond policies goals of the
state. However, there is another body of literature that its definition of a developmental state
is still trapped in naivety. Its definition is limited to policy goals or ideological component of
the concept, therefore fail to comply with the conceptual framework for defining a
developmental state as ingrained in the authoritative works of Johnson (1982), Evans (1995)
and Mkandawire (1998). Such definitions are mostly characterised by their preoccupation
with the economic dimension of the concept of a developmental state. Taylor (2002:04)
observes that in many instances the concept of a developmental state is defined in strictly
economic terms. It is defined simply as a state where economic growth is achieved through
industrialisation or the state that pushes for economic transformation and growth through
industrialisation (Kauzya 2008:02; Kriekhaus 2002:1697; Chibber 2002:957).
In similar terms Castells (1992:55) defines a developmental state as that state that “establishes
as its principle of legitimacy it ability to promote sustained development, understanding by
development the steady high rates of economic growth and structural change in the productive
system, both domestically and in its relationship to the international economy. This
perspective propagates that the state is considered as being developmental on the basis of
evidence deductively drawn from the performance of the economy. From this, as Mkandawire
(1998:on-line) explains, a definition that evolves is that of a state that is considered as
developmental “if the economy is developing, and equates economic success to state strength
while measuring the latter by the presumed outcomes of its policies”. Mbabazi and Taylor
(2005) define a developmental state along the same logic of conceptualism as that type of
state that uses its administrative and political resources to maximise economic development.
These definitions presuppose that the end of a developmental state is only economic growth.
This deviates from Johnson’s conception of a developmental state, which is premised on the
economic and social imperatives of development.
To define a developmental state only on the basis of its ability to achieve economic growth
rates and structural changes in the productive system tantamount to conceptual reductionism.
It leads “to myopic concentration of analysis” (Mkandawire 1988:on-line) and completely
disregards the conceptual framework that in defining a developmental state a connection
between the development impact and structural characteristics of the state – their internal
organisation and relations to society – need to be established (Evans 1995). This definitional
approach distorts the very essence of the concept of a developmental state, particularly in
terms of its ‘originative historical context’. Taylor (2002:04) contends that “a major problem
in defining a developmental state simply from its economic performance” is that “not all
countries with good growth rates are developmental states”. A developmental cannot just
simply be defined in economic terms. Johnson defined a developmental state as the planrational state that shapes socio-economic development and intervenes to achieve established
substantive social and economic goals. Economic goals are not the end of a developmental
state. They are, instead, a means to an end. Such end is embedded in the social goals of a
developmental state, which is to enhance the quality of life of the citizens.
Naidoo (2006:481) defines a developmental state as an interventionist state that seeks to
achieve economic growth or capital accumulation and social or welfare upliftment. In this
definition the key aspects underscored as constituting the essence of a developmental state are
“economic growth” and “the well-being” of society (see also Gloppen and Rakner 1993:40).
Naidoo attempts to maintain a balance between the economic and social dimensions of a
developmental state in defining a developmental state. However, his definition is more
focussed on state intervention rather than the capacity of the state. Maserumule (2007:213)
explains that the concept of a developmental state is premised on two dimensions, namely
economic and social dimensions. It is explained that the economic dimension of a
developmental state is concerned with economic transformation whereas social dimension has
to do with the question of enhancing the quality of life of the citizens. In some instances the
social dimension of a developmental state is over-emphasised to the extent that some just
simply define the concept as a service delivery state. It is argued above that this perspective
trivialises the concept of a developmental state. It is reductionist in defining the concept.
Ferguson (1990:15) explains that subsumed in the economic dimension of a developmental
state is the imperative of industrial transformation whereas the social dimension of the
concept incorporates issues that pertain to enhancing the quality of life or improving the
standard of living, reducing poverty and attending to the material wants of the citizens. A
developmental state does not only promote economic growth and enhances productivity, as
Castells (1992) defines it. It is also, more importantly, concerned with promoting or
enhancing the quality of life or standard of living of the citizens (White 1998:20). This
definitional variable is underscored in Pronk (1997:05), where a developmental state is
defined as the state that creates and sustains policy climate for productive investment, exports,
growth and human welfare. In this definition both the economic and social policy goals of a
developmental state are emphasised. However, defining a developmental state only on the
basis of policy goals is, as already argued above, in adequate. This inadequacy has been the
characteristic of the South African literature for some time (see Edigheji 2006:01). However,
the approach in conceptualising a developmental state in South Africa is now beginning
change as the focus is also on the institutional attributes of a developmental state and the
issues of state-business-society relations.
The results of the analysis of different definitions of a developmental state confirm Habib’s
(2009:on-line) observation that, as referred to above, in some literature the attempt to define a
developmental state is “mainly descriptive detailing the particular policies that generated the
positive socio-economic outcomes” whereas other definitions “tend to have a more
institutional focus emphasising the embedded but relatively autonomous character of the
state”. This in spite of the fact that a conceptual framework for defining the concept is set in
the works of particularly Chalmers Johnson, Peter Evans and Thandika Mkandawire. These
intellectual personalities are generally considered authoritative scholars on the concept of a
developmental state. There is another body of literature which attempts to adhere to the
conceptual framework referred to in the foregoing by trying maintain that ‘ideology-structure
nexus’ (Mkandawire 1998) or establish a connection between development impact and
structural characteristics of the state – their internal organisation and relations – in defining a
developmental state (Evans 1995). It synthesises the policy or ideological focus in defining a
developmental with institutional or state-structure focus. This approach is holistic in defining
a developmental state. It is edifying in the attempt to understand the concept of a
developmental state.
But, why does the existing literature define a developmental state differently whereas a
conceptual framework for its common understanding is set in the authoritative body of
literature on the subject? This question is beyond the scope of this paper. It is a subject for
other scholarly endeavours. Of relevant to this paper is whether the different definitions of a
developmental state presuppose a lack of common understanding of the concept. Or perhaps
to put it the other way round, is there a common understanding of a developmental state?
Having critically considered the definitional aspects of a developmental state, it is now
opportune to answer this question.
4.3.
A common understanding of the concept of a developmental state – does it exist?
Concepts shape our thoughts. They are “tools of thinking” (Pauw 1999:11). To improve our
thinking, more understanding of concepts we use is very important (Maserumule 2004:77).
We depend on the definitions to understand concepts. The purpose of a definition is to
“channel thinking in a specific way” (Pauw 1999:20-21). It provides insights into the meaning
of concepts. A definition is a basis towards understanding concepts used to make sense of
social world. In the existing body of literature, the definitions of a development state abound.
However, in spite of its extensive use and prevalence, the attempts to define it does not
always converge sameness. This is so in that defining a concept is an act of circumscribing it
(Pauw 1999:21). It is selective of the things or properties that apply to a concept and such
circumscription is influenced by the idiosyncrasies of the context of its consideration. This
inevitably leads to different definitions of a concept, which may be understood differently.
Sometimes definitions distract the true meaning of the concept they seek to define.
Pauw (1999: 21) explains that “definition is not simple, because of the
defeasibility”. This is even more so when a concept being considered is
normative complexities. Naidoo (2006:479) observes that those who use the
developmental state tend to circumvent its normative complexity” and
phenomenon
fraught with
concept of a
obscures an
understanding of what it means. There is no much of an agreement about the definition of a
developmental state and its attendant features (Stubbs 2009). This is because of, according
Dassah (2011:05), “a lack of an explicit theoretical framework in the literature and failure to
examine the concept from the perspective of new institutional economics”. Stark (2010:193)
writes that there is no commonly agreed conceptual template that provides a clear and feasible
definition of a developmental state. This appears to be the basis of Dassah’s (2011:05) point
that, as referred to above, “an array of definition in the literature suggests developmental state
has no generally accepted definition. Does this necessarily presuppose that a common
understanding of the concept of a developmental state is non-existent?
As contended sub-section 4.1 above, a conceptual framework for defining a developmental
state exists. It is based on the authoritative work of Chalmers Johnson (1982), Pater Evans
(1995) and Thandika Mkandariwe (1998). The question whether such conceptual framework
is commonly agreed is, however, a matter of contestation. A key proposition of the framework
drawn from Johnson’s conceptualisation of a developmental state is that this concept cannot
just only be defined in terms of policy goals that seek to achieve economic growth. The social
dimension of the concept is also considered. Also, more importantly, a balance needs to be
maintained between the policy and institutional focus of the concept. This is what
Mkandawire (1998) calls ideology-structure nexus.
Evans’ (1995) notion of embedded autonomy is underscored as one of the key conceptual
variables for defining a developmental state. Another point of contextual importance for
consideration in determining whether there is a common understanding of a developmental
state is the fact “commonness” does not mean “sameness”. It just simply means sharing more
or less similar properties that apply to a concept. In contextualising the answer to the question
on a common understanding of a developmental state it also needs to be reiterated that this
concept is not prescriptive. It is rather descriptive, hence the attempts to determine its
meaning often assumes the character of extensional definition, which makes it possible to
define the concept in a manner that, without losing the essence of its originative historical
context, befits the contextual peculiarities of different nation-states.
The formulations of the definitions of a developmental state in the existing body of literature
are not the same. They are also not contradictory. All the textbook definitions studied for the
purpose of this paper share more or less similar but not the same characteristics in defining
the concept of a developmental state. Most attempts to define the concept do not lose the
essence of its “originative historical context”. Their points of variations, not contradictions,
are on their selective emphasis of certain definitional properties of the concept to suit the
context of its consideration. For, as pointed out above, defining a concept is an act of
circumscribing it. It is selective of the things or properties that apply to a concept as used in
context. Some definitions of a developmental state focus on the policy goals or ideological
character of the state whereas others are more inclined towards the institutional attributes of
the state or state structure and its linkage to the political and economic elites, and its relations
with society. These are the different aspects or variables of a developmental state which in
defining it, some are emphasised more than others. In this the question is whether an emphasis
of some aspects of the concept without the others necessarily presupposes a lack of common
understanding or it is just a question of contextualising.
In the literature studied it appears that an emphasis of the different aspects of the same
concept over others is largely a question of context rather than substantive differences of
opinions on its conceptual essence. Once more, the point that this paper emphasises is that the
definitions of a developmental state are formulated differently. However, the essence of the
phenomenon that they seek to define is similar. Therefore, against this background, the
question whether there is common understanding of a developmental state is answered in a
positive sense. In spite of their various formulations, as informed by different contexts of their
articulations and their emphasis of different aspects of the concept over others, an array of
definitions of a developmental state in the literature studied does not eschew the essence of its
“originative historical context”. Such a common understanding is consolidated by the
evolving conceptual paradigm from which the definitions of a developmental state that
synchronises the policy goals or ideological character of the state with the institutional
attributes or state-structure, linking them to the notion of inclusive embeddedness [statebusiness-civil society relationship] are formulated.
A coherent body of scholarship that is evolving seems to be succeeding in clarifying the
concept of a developmental state and engendering a common sense of what is it. Scholars of a
developmental state clarified the Anglo-American scholarship that this concept is not the East
Asian model of socialism. Likewise to the socialists the clarification is that a developmental
state is not the East Asian model of capitalism. As Bolesta (2007:105) puts it, a
developmental state is conceptually positioned between a free market capitalist economic
system and centrally planned economic system”. It is a plan-rational state “conjoining private
ownership with state guidance” (Woo-Cuming 1992:02) to achieve economic growth and
sustainable human development. The concept developmental state refers to a seamless
network of political, bureaucratic, moneyed or business and societal influences, leveraged by
a strong capacity, that structure the economy to contribute towards the attainment of a
developmental vision that the state, cognisant of the imperative of embedded autonomy –
crafted for the nation. The paper’s contention that there is a common understanding of a
developmental state is authenticated by a semblance of convergence in the existing body of
literature on what is generally considered as its typical outcomes or outputs.
4.4.
Typical outputs and outcomes of a developmental state
Lee (2010:02-08) writes that Africa’s current development paradox can only be disentangled
by creating developmental states. This assertion is generally relevant to most, if not all, Third
World countries. It is consistent with the contention that there is a common understanding of
what a developmental state is. A call for creation of developmental states in Africa is based on
the successes of the East Asian model of developmentalism, which “flagrantly [flouted] all
received principles of capitalist rationality”(Dore 1986:18) and turned the newly
industrialised countries of East Asia, including China, into the world’s richest big nations
(Johnson 1999:33). This East Asian model, which Chalmers Johnson termed developmental
state, is emulated in most countries grappling with the challenge of development. A
commitment to styling such countries as developmental states is based on what came out of
the East Asian model of development, the remarkable successes achieved in turning around
the economies of Japan, China, South Koreas, Taiwan, Malaysia and Singapore. This appears
to be the premise of Evans’ (2009: 07) proposition that “no developmental state, no
development”.
Chang (2010:35) explains that, apart from the East Asia, the Scandinavian countries, France,
and interestingly enough, the United States, had their own arrangements of developmental
states models at some point in their histories. Is it not therefore, in the context of the
foregoing, misleading to talk about typical outputs and outcomes of a developmental state?
Bolesta (2007:105) explains that it is the research on East Asia which eventually prompted the
theory of developmental state and engendered so much discourse as the alternative to neoliberalism. In fact, Bolesta (2007:108) differs with Chang (2010:35) that, “from the historical
perspective, it was the Asian developmental concept that prevailed whereas the early capitalist
European model was replaced by the social-democratic interventionist capitalist state present
in parts of continental Europe such as Germany, or in Scandinavian countries”. On this basis
Bolesta further argues that it is the East Asian states which are considered to be or have been
developmental states from which generalisations could be made about the typical outputs and
outcomes of a developmental state. This presupposes “the vision of a uniform East Asian
developmental state. Onis (1999:118) contends that this line of reasoning is misleading
because, in spite of substantial similarities among the Koreas, Taiwanese, and Japanese cases,
the presence of important differences should not be underestimated, particularly in trying to
generalise from the East Asian experience”(Onis 1999:118). This is an important factor that
the discussion on the typical outputs and outcomes of a developmental state considers.
In the existing body of literature it is contended that in Africa only Botswana and Mauritius
could be considered as developmental states (Musamba 2010) whereas South Africa is an
intermediate state (Edigheji 2010:25) or “the developmental state in the making” (Gumede
2011:16-19). Africa’s history of underdevelopment is an irony in that some of its visionary
leaders such as Ghana’s Kwame Nkrumah, Tanzania’s Julius Nyerere, Zambia’s Kennet
Kaunda and Congo’s Patrice Lumumba had long pronounced that the post-colonial project is
build developmental states in Africa(Fritz and Menocal 2007:535). With the exception of
Botswana and Mauritius, this vision is yet to be attained. It is generally believed that,
although some hold different views, Africa’s solution to the challenge of underdevelopment
as exacerbated by the exigencies of the 21st century lies in the adoption and adaption of the
East Asian experiences to befit the local conditions. Mbabazi and Taylor (2005:04-08) caution
against the emulation of East Asian developmental templates and argue that Africa should
learn from the best and successful development model – measured on the basis of its outputs
and outcomes. Fritz and Menocal (2007) state that it is easy to identify developmental states
after their developmental outputs and outcomes have been attained. To this the question is
what are the typical developmental outputs and outcomes of a developmental state?
For the purpose of this paper developmental outcomes refer to the essential elements, positive
and negative, intended and unintended, that characterise the consequences of a developmental
state. It is what is gained from particular developmental processes and outputs. The
developmental processes are concerned with how the developmental outputs are brought
about to achieve the developmental outcomes whereas developmental outputs are the things
that the state do to realise the developmental outcomes. The developmental outputs are the
results of the developmental process. They include tangible manifestations of a developmental
state whereas developmental outcomes imply quantification of state performance. The
developmental outcomes are associated with the developmental processes and outputs of a
developmental state. This conceptual reflection is important for systematising the discussion
on the typical outputs and outcomes of a developmental state. This means that in this part of
the paper the focus is on what a typical development state does, how it do what it does and the
objectives that it seeks to achieve by doing what it does.
In the existing body of literature a semblance of convergence exists that a fundamental
objective of a developmental state is to achieve socio-economic development [outcome]. In
more specific terms, this developmental outcome refers to economic growth and social
development. Socio-economic development is about maintaining balance between economic
growth and social development. A developmental state intervenes in the development process
to achieve socio-economic development or what Johnson refers to as “substantive economic
and social goals”. Its outcome is considered attained when the citizens’ standard or quality of
life is enhanced. A developmental outcome is therefore not measured only in terms of
economic growth or gross domestic product (GDP), but also, more importantly, in terms of
the quality of life of the citizens. The state intervention in the development process is
informed by a national developmental vision that the state crafts for the nation. Such vision is
informed by developmental ideology, which should be “anchored in some form of nationalist
project” (Mkandawire 1998:on-line). In Africa, as Ake (1996) observes, “the ideology of
development was exploited as a means of reproducing political hegemony; it got limited
attention and served hardly any purpose as a framework for economic transformation”.
In crafting a national developmental vision, a developmental state does so in a relatively
autonomous way. This means that a developmental state has the “ability to establish the rules
of the game vis-à-vis organised interests within society” (Vickers 2007:35). A national
developmental vision is an overarching framework that directs national developmental efforts
[outputs] towards desired developmental outcomes. With the concept of “embedded
autonomy”, Evans (1995) makes an important contribution on how the process of developing
a national development vision in a developmental state should unfold, which expanded the
20th century concept of interaction limited to the state and industrial elites as key drivers of
the developmental agenda. Evans (2010:49) argues that “in the 21st century, deliberative
development is the foundation of efficient economic strategy as well as effective public
policy”. In this the contention is that a national developmental vision should be a product of
shared coherent goals that evolve from the inclusive process of state-business-civil society
interaction. Evans (2010:49) observes that the 20th century developmental state’s interaction
with the industrial elites resulted in them becoming a more collectively organised coherent
class. The same is necessary “for a much broader section of society” in constructing a 21st
century developmental state (Evans 2010:49). In this the most important outcome of a
developmental state becomes “inclusive embeddeness” [state-business-civil society
relationship] (Edijheji 2006:06), which requires strategic capacity or state ability to engage
the citizens in defining a common national developmental vision and galvanising all of them
to take part in its implementation. It is key for forging a common national developmental
agenda. Evans’ proposition is based on new growth theory, which suggests that the 20th
century developmental state models are no longer appropriate for the developing countries. It
underscores the importance of ideas and human capital as the key imperatives of growth
(Evans 2009:08).
By broadening the scope of interaction beyond state-business developmental elites to include
the civil society provide opportunities for access to ideas and human capital in a broader
scale. Evans (2009:09) avers that “accelerating economic growth requires expanding access
to the existing stock of ideas, increasing effective utilisation of this stock and generating of
new ideas suited to a country’s specific circumstances”. This requires the state to redesign and
redirect budget allocation priorities from the operational expenditure towards investment in
human capital and the socio-economic environment (Du Toit 2008). This is important to
“improve productivity levels, increase the labour absorption capacity of the economy and
raise its growth potential to ensure higher sustainable output growth and shared income
(Evans 2009:08). These aspects underpin the socio-economic outcomes of a developmental
state.
The notion of “inclusive embeddedness” may also make a significant contribution in the
democratisation of the nation-states. In this the contention is that democracy is an outcome of
socio-economic development, not necessarily a condition for it. Empirical evidence from the
Western Europe and especially the Bismarckian Germany, Meiji Japan, Brazil, South Korea,
Taiwan, Thailand, and Indonesia shows that these countries success stories of economic
growth are not the consequences of democracy. They occurred in authoritarian circumstances.
Some developmental successes were achieved in the states in the states were one party system
has been in existence for more than 40 years. Botswana, Malaysia and Singapore could be
cited as examples in this regard. As Leftwich (1993:613) observes, “in all these societies there
are now powerful internal demands for the establishment or extension of democratic practices,
and dominant parties in de facto one-party democracies are under pressure”. This
authenticates the contention that democracy is a consequence or outcome of a developmental
state. In contrast with the 20th century developmental states that weakened the civil society,
the 21st century ones create state-society linkages.
In the article titled Thinking About Developmental States in Africa, Mkandawire underscores
social capital as one of the strategic imperatives of developmental states. This is clear in the
contention that “developmental states are social constructs consciously brought about by
states and societies” (Mkandawire 1998:on-line). A developmental state facilitates
organisation the organisation of civil society (Evans 2010:49), or what is called the third
sector in the partnership for socio-economic development. In exercising its authority
following the results of interaction with the business and civil society partners, the state
remains committed and accountable to the national developmental vision. Its “policies
achieve legitimacy through strong, redistributive economic performance” (Vickers 2007:35).
Johnson (1999:52) explains that in a developmental state “legitimation occurs from state
achievements, not from the way it came to power”.
The distributional patterns of economic growth is oriented in a way that benefit all the
citizens, especially the poor, not “self-maximising or predatory forms of behaviour” (Onis
1991:114) that evolved when the development elite coalitions abdicate the national
developmental agenda and “distorts the distributional effects of economic growth in favour of
the non-poor” (Kondlo 2010:09). Developmental states reorder socio-economic relations to
achieve “growth with equity” (Chang 2006:01). Their focus is not merely on income growth,
but more importantly, “on human development issues such as reducing infant mortality,
increasing life expectancy and widening opportunities for educational achievements”(Dassah
2011:593). In a developmental state “elite coalition adopt national developmental agendas”
(Habid 2009:on-line) and “set of policies motivated by an overall long-term target and not
individualistic micro-goals” (Bolesta 2007:106).
The elite coalition that drives a developmental state agenda, if not properly structured and
appropriately managed, could degenerate a developmental state into a predatory state. For, in
most cases the intersection between politics and business results in corruption. This occurred
in Latin America’s developmental states [Brazil and Mexico], which its main elements are
political capitalism and appointive bureaucracy. Political capitalism refers “to the close ties of
business and the ruling elites, where the state and business seem to be connected in one
structure, where the ruling elite is also a business elite, the position of business in the
economy depends solely on who is in the government” (Bolesta 2007:108). On the other hand
appointive bureaucracy refers to a staffing practice where the new government fill most
positions in the administration with cadres drawn largely from the ruling elite. The
consequence of this is often corruption, which is, however, not a unique phenomenon in the
Latin American model of a developmental state. Corruption also occurred in the East Asian
developmental states, which is a contrast of the Latin American model. It is a typical negative
consequence of a developmental state.
In its pursuit of a national developmental vision, a developmental state is guided by an
industrial policy, which is used to assert its role in the economy by co-ordinating investment
plans. Mahabane (2005:08) states that a “key component of [the] developmental state is
industrial policy. By making reference to Rodrik, a professor of international political
economy at Harvard University, Mahabane explains that the purpose of industrial policy “is
as much about eliciting information from the private sector on significant externalities and
their remedies as it is about implementing appropriate policies”. The industrial policy directs
investment, regulates “its intensity and influences institutions, companies and communities so
that they follow a certain overall development strategy” (Bolesta 2007:106). It underscores
industrialisation as a strategic imperative to achieve economic growth. The focus is on market
value-added goods production and domestic capital accumulation, emphasised “as essential in
enabling stable, long term development”(Bolesta 2007:106). It is selective as it only target or
promote particular sectors, through trade protection, subsidies, regulation, state ownership and
other means, considered strategic for economic growth and transformation of the productive
structure of the economy. It is not only the East Asian developmental states that use selective
industrial policy to achieve economic growth. The Scandinavian countries also did likewise,
albeit their developmental state model is different from the East Asian ones in many respects
(Chang 2009:34-35).
What is considered as strategic productive sector for industrial policy targeting differs from
one context to another. Chang (2009:35) explains that “strategic could be defined in many
ways for productivity growth, technological development, employment, or export earnings”.
The industrial strategy in a developmental state is outward orientated and its economies are
largely export-driven. This is to maximise labour absorption capacity of the economy, thus
address the socio-economic challenge of poverty and unemployment. Export-oriented
economy is, however, vulnerable to the international rules of trade that in most cases are not
fair particularly the developing countries. The outward-orientated industrial strategy in a
typical developmental state is centred on the following aspects, as illustrated in Table 1.
Table 1: The character of industrial policy in a developmental state
Industrial strategy focus
Nature of strategic intervention
Selectivity
This is concerned with picking a few activities or
sectors in the economy considered strategic for
development and investment purpose. The East Asian
developmental states used this industrial policy
approach. Rather than promoting all industrial
activities indiscriminately and in an open-ended way,
only those activities and functions that offered
significant technological benefits and linkages are
targeted.
Productive activity
The private sector is awarded a leading role in
productive activities whereas the public enterprises fill
the gaps and entered risky markets.
Entrepreneurship
The early entry of entrepreneurs into the world market
is forced, using exports to discipline and monitor both
bureaucrat and enterprises
Investment
Redesigning and redirecting budget allocation
priorities from operational expenses towards massive
investment in skill creation and infrastructure
development
Local capabilities
The state selects foreign direct investments to help
build local capabilities or tap into dynamic, high
technology value chains
Centralisation of strategic decision-making
A decision-making function on strategic issues is
centralised in competent authorities that could take an
economy-view and enforce policies
Bureaucracy and governance
Improving the quality of bureaucracy and governance
is a key imperative in building state capacity. This also
involves collecting information and learning lessons
from technological leaders
Policy flexibility and learning
Policy flexibility is important to ensure that mistakes
are corrected en route. The state also involves the
private sector in strategy formulation and
implementation. This is important for learning purpose.
Source : Lall (2004)
To drive a developmental state agenda, institutions that promote growth and development are
created. They are economic bureaucracies placed at the heart of the polity and play a
fundamental role in shaping development policies whereas non-state economic affairs are
effectively managed (Vickers 2007:35). In Japan the Ministry of International Trade and
Industry (MITI) was created to promote economic growth and development. MITI played a
leading role in shaping the Japanese development policies over above the planning agency
that had been created merely as an internal think-tank, organisationally small and does not
have power (Chang 2009:37). In South Korea and France powerful planning agencies
modelled along Japan’s MITI were created to enhance state capacity in driving economic
growth and development. The Economic Planning Board (EPB) was established in Korea.
Under the leadership of a prime minister, the EPB wielded so much power over other
ministries (Cheng, Haggard and Kang 1998: 88-89). It used to by the Korean state to pursue
“some of the most market-defying selective industrial policies” (Chang 2010:83).
In France a Commissariat General du Plan (CGP) was established. It arranged the activities of
other ministries. Dassah (2011:595) explains that in Taiwan, the Commission for Economic
Planning and Development (CEPD) and earlier versions formulated macro-economic
development plans and administered financial aid from the United States of America”. But,
Chang (2009: 37) offers a different explanation that in Taiwan the situation is different as its
CEPD did not have much power as the Japanese’s MITI, Korean’s EPB and French’s CGP.
The CEPD “could not plan things the way the French and Koreans could, but it still provided
a co-ordinating function” (Chang 2009:37). These institutional arrangements were pursued to
enhance or build a strong state capacity, which is one of the key outcomes of a developmental
state. Subsumed in the concept of state capacity for a developmental state are developmentorientated political leadership, autonomous and effective bureaucracy. The commitment of
political leadership to the developmental goals is important in that “the development
orientation of a state is not a permanent condition, but rather a dynamic feature with a limited
time horizon” (Fritz and Menocal 2007:534). In a developmental state, the developmentoriented political leadership provides a national developmental vision, guides economic
development and leads, rather than, follows the market. Such leadership has strategic focus
and capacity to define a national developmental agenda and mobilise all the strategic forces to
take part in its implementation.
The relationship between political and bureaucratic leadership in a developmental state is a
very interesting one in that, as Johnson (1999:53) puts it, “the politicians reign and state
bureaucrats rule”. This is typical of the Japanese state bureaucracy, which its model of a
developmental state resonate wide emulation. In Japan state elite bureaucracy governs. This
contrasts the Latin American model of a developmental state, “where a new government
usually appoints most of the positions within the administration” (Bolesta 2007:108). As
explained above, this staffing practice is called appointive bureaucracy. It is common in
Brazil and Mexico. In South Africa is called cadre deployment. In Japan state bureaucracy is
not affected by the democratic elections and enjoys a high degree of technocratic autonomy.
Dassah(2011:593) explains that “in the East Asian ‘tiger’ economies, autonomy enabled
decision-makers and technocrats to formulate economic policy, form business alliances, direct
state interventions, be independent of and cooperate with private sector interests, construct
markets, promote actors in these markets, set performance criteria and discipline private
sector firms”.
Bolesta (2007:107) observes that “democratically elected politicians in [Japan] seem to have
limited influence on the running of the state whereas its bureaucracy seems to have larger
control over state governing than in other democracies”. This is often where the conundrum of
a developmental state is in terms of building state capacity. Following the Japanese model,
letting bureaucracy to govern is not in synch with the notion of development-oriented political
leadership. It may degenerate a developmental state into a bureaucratic state. In this the
national developmental agenda runs the risk of being trivialised as just a mere technocratic
cliché. However, it is important that bureaucratic autonomy is protected. Such protection is
important to ensure that the political leadership of the state does not micro-manage
bureaucracy. Autonomous and effective bureaucracy is achieved through the creation of an
inexpensive, efficient and effective public service, staffed by the nation’s brightest and best
servants functioning without constraints, and capable of being innovative in addressing the
social and economic needs of the citizens (Beeson, n.d; Evans 1998; Johnson 1982; Palidano
2000). Bureaucratic autonomy is about insulating the public service from the political
vagaries, allowing it to use its institutional, technical and administrative capacity to
effectively implement the policies of a developmental state. Bolesta (2007:109) explains that,
“although the strategy and goals might be drafted by the ruling elite, the implementation is
facilitated by competent bureaucracy, a state administration, which is a structure largely
independent from possible democratic choices of the society”.
From the above exposition it is clear that the typical outputs and outcomes of a developmental
state are many. In winding up the discussion on these aspects, and also as a way surmising,
the following Table 2 is generated to illustrate what that which a developmental state
does[developmental outputs], how it does what it do [developmental process] and the
consequences or impact of what it do[developmental outcomes]
Table 2: Illustration of the typical outputs and outcomes of a developmental state
Developmental Process
Developmental outputs
Development outcomes
How the developmental outputs are
brought about to achieve the
developmental outcomes in a
developmental state
The results of the developmental
process or the things that the
developmental state do to achieve
the developmental outcomes
The impact of the developmental
outputs or that which the
developmental state gains from the
developmental outputs
Embedded autonomy








Industrialisation




Developmental
coalition elites
comprising state,
business and civil
society
Development
ideology
National
developmental vision
Industrial policy
Industrial strategy and
an integrated longterm development
plan
Pro-business policies
Industrial sector
targeting, trade
protection, stateownership, subsidies
and regulations
Industrial
competitiveness,
diversification and
technological
upgrading
Strategic and
sequenced
liberalisation based on
overall development
strategy
Transformation of the
productive structure of
the economy
Domestic capital
accumulation
Value-added good
production










Socio-economic
development:
economic growth +
social equity = longterm sustainable
human development
Inclusive
embeddedness: statebusiness-civil society
relationship or cooperation among the
state, business and
civil society or a
developmental
partnership between
government, business
and civil society
Democratisation of
the development
process
Consolidation of
democracy
Organised civil
society
Strengthened strategic
capacity of the state
Strong, redistributive
economic
performance
Stable and long term
sustainable
development
Maximisation of the
labour absorption
capacity of the
economy
Alleviation of poverty
and creation of
Meritorious recruitment

Efficient bureaucracy
or public service
staffed by the nation’s
brightest, skilled and
appropriately
qualified employees




Centralisation of strategic
decision-making
Intervention

Economic
bureaucracies at
the heart of the
polity
Re-ordering of socioeconomic relations

employment
State capacity:
administrative and
technical capacity
Efficiency and
effectiveness in
managing non-state
economic affairs
Improving the quality
of bureaucracy and
governance
Shape development
policies
 Enhance state capacity
in the pursuit of
economic growth and
development
 Properly co-ordinated
investment plans
 Growth with equity