International Development Studies, Institute of Society and Globalisation Laurids S. Lauridsen Paper to be presented at the EADI/DSA Conference on Rethinking Development in an Age of Scarcity and Uncertainty, September 2011, University of York, UK Developmental governance is different from good governance – what economic transformations in Taiwan tell us about developmental governance

International Development Studies, Institute of Society and Globalisation What was the role of state – policy, institutions and politics - in the dynamics of economic transformation in Taiwan, and how can that inform a developmental governance approach to economic development? The core question

International Development Studies, Institute of Society and Globalisation Orthodox perspective Getting policies right – good policies Getting institutions right – good governance Getting politics right – good politics Heterodox perspective Developmental policies matter Developmental institutions matter Developmental politics matter THE POLITICAL ECONOMY OF DEVELOPMENTAL GOVERNANCE

International Development Studies, Institute of Society and Globalisation Policies Industrial diversification Industrial deepening Industrial upgrading Institutions a highly motivated, competent and coherent bureaucracy protected and supported by the political leadership a relational institutional arrangement for sustained strategic cooperation and coordination between public and private sectors (SBRs) a well-organised private sector either in form of business associations with a high representation, effective interest intermediation, high capacity for in- house information provision an institutional infrastructure with mechanisms of transparency and accountability Policies, Institutions and Politics

International Development Studies, Institute of Society and Globalisation Politics How do developmentally oriented states come into being and how are they consolidated? Where does the development orientation of the political leaders come from? How does the political organisation of the state impact upon policy decision-making and policy implementation? What motivates private business to enter into a developmental coalition with state elites, and under what conditions should we expect collaborative rather than collusive relations between state and business? Politics leadership state elite challenges legitimacy political conflicts political exchange relations political circumstances Policies, Institutions and Politics

International Development Studies, Institute of Society and Globalisation A set of favourable initial conditions –domestically and internationally Policies: Strategic industrial policy – diversification, deepening and upgrading + conservative macroeconomic policy Institutions: relative cohesive party-state + distant and low- trust SBRs + business associations + micro-institutional foundation (SMEs) + exclusive and extroverted policy networks Politics: Narrow coalition, social control and demobilisation + tacit social support + indirect rule through local factions Developmental governance and industrial change under authoritarian rule

International Development Studies, Institute of Society and Globalisation A period of economic liberalisation and political democratisation. Accelerated pressure on elites to upgrade – urgency Polices: Strategic industrial policy – technological upgrading: support programmes for ten strategic industries, sixty-six key components, eight key technologies (ICT) Institutions: refurbished steering capacity, technological pilot agency, stronger and more balanced bureaucracy-private enterprise links, transnational technical community (Northern TW and Silicon Valley) Politics: Electoral politics, networking from above and below, POEs as a policy tool, a KMT-big business alliance, side payments to local factions Developmental governance, political opening and industrial upgrading

International Development Studies, Institute of Society and Globalisation The dot.com crisis and fear of hollowing out Policies: Strategic industrial policy (biotechnology) Politico-institutional set-up: DPP, divided government, KMT economic bureaucracy, upgrading and electoral calculations, difficulties with cross-border governance (identity politics), loss of state-autonomy Developmental governance under stress

International Development Studies, Institute of Society and Globalisation Not a mixture of good policies, good institutions and good politics Strategic industrial policies – consistently important Some similarity with the institutional design principles but also differences Politics: not just economic rationality and technocratic foresight : policy choices, institutional set-up Policies, institutions and politics all matter and must be studied in an integrated way Development governance has a strong relational element, so the analysis must encompass the changing nature of state-business relations, while taking the institutional/ organisational nature of the business-side as well as broader micro-institutional arrangements into account Developmental governance is dynamic entity Concluding remarks on developmental governance in Taiwan

International Development Studies, Institute of Society and Globalisation Judge a man by his questions rather than his answers. - Voltaire