the long journey of latecomers

8/10/2019 The Long Journey of Latecomers

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COURSE ID : 2101

COURSE NAME : Development Studies, Histories, nd!r"es

#EC$URER : Andre% &is'(er

$I$#E O& !A!ER:$(e #on) *ourne+ o t(e #te'omers: Inte)rtion o

Developin) Countr+ to -lo.l Industrili/tionS+stem

S$UDEN$ ID NO$ EMAI# ADDRESS:S3 2415


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$(e #on) *ourne+ o t(e #te'omers: Inte)rtion oDevelopin) Countr+ into -lo.l Industrili/tion

S+stem

I6 Introdu'tionThe beginning of industrialization era in Europe was characterized

with Industrial Revolution in 16th Century in England. Ever since theIndustrial Revolution, any other countries were racing to reach highereconoic developent through assive industrialization as it isconsidered as the ne!t phase of developent and "ourney toodernization era. #onetheless, not every country had e!perienced theidentical phase of industrialization, because they were in di$erent stage ofdevelopent at that tie. The integration of the latecoers to the globalindustrialization syste was coplicated tas%s due to the high degree ofdependency to their centre and the increasing level of industrialization

ine&uality throughout the world.This paper would argue that the late industrialization country need ane!tra e$ort by the governent to narrow the industrialization lagged. Toe!plain this arguent, it would start by identifying the concept of lateindustrialization and its practice in developing country. The followingsection would describe further about contrasting point of view onindustrial policy, constructed by the battle between #eo'(iberals and)tructuralists. The ne!t part contains the di$erences between these twoapproaches in regard to the treatent for winners and losers in lateindustrialized country. *fter that, there would be a practical e!aple andcoparison of the ipleentation of industrial policy in )outh +orea and*frica. inally, I would give a conclusion to su up the arguentation.

II6 #te Industrili/tion in Developin) Countr+The developing countries, particularly in East *sia and )ub')aharan

*frica, have declared their independences fro 1-/s to 1-6/s. 0y thatperiod, there have been a"or industrial countries such as England,erany, and #etherlands. These latecoers have one thing in coon2they shared siilar historical bac%ground and risen fro post'colonialisera. Thus, they began the developent as independent state and startedto forulate the appropriate developent policy, as well as industrialpolicy. The latecoers were trying to enter upon the globalindustrialization syste although their internal condition was not always in

favour for international industrial recognition. 3ue to the rapid progress ofindustrialization in developed countries, therefore it ta%es speci4cstrategies to foster industrialization process in latecoer5s country.

Even though the iperialis was over, the latecoers were stillunder control of developed country. 3ependency have ade thepolarization on global industrialization, where the #orth is the centre, andeventually ipacted the inability of the developing country to understatethe industrialization gap *rrighi et al 7//82-9. In addition, the lateindustrialized country has been in:uenced by its centres to designindustrial policy as their wish. *ccording to Chang 7//721/9, thedeveloped countries has suggested the developing countries not tointervene the industrial sector with several protection, such as infant

industry protection, iport substitution, e!port oriented policy, and so on,


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whereas the developed countries have ta%en the siilar ways in order todevelop their industrial sector, or so called ;+ic%ing *way the (adder5.

III6 Industril !oli'+ Appro'(es: Neo#i.erls 7S Stru'turlistsThe ne!t &uestion is what %ind of industrial policies which are

necessary< To begin with, (all 7//219 has described two di$erent pointsof view regarding the industrial policy2 #eo'(iberals and )tructuralist. Theneo'liberals approach deand for free ar%et and inial governentintervention. The neo'liberals, as stated in The =ashington Consensus in1->-, aied to integrate global industry and trade by prooting ;goodpolicies5 for industrialization and developent. The ;good policies5 by The=ashington Consensus consisted of ten policy recoendation, wherethree ain policies are trade liberalization, privatization of stateenterprises, and deregulation =illiason 7//821?69. These policyrecoendations seeed to enforce the latecoers to leave theindustrialization in a free ar%et syste and less interruption by the state.0y assuing the ar%et to wor% in perfect copetition, the econoic and

industrial process will wor% e$ective and [email protected] rise of oderate neo'liberals, which is basically The Aost'

=ashington Consensus, has given a new diension of neo'liberalsapproach in industrial policy. The oderate neo'liberals have 4nallyac%nowledged the role of the state in order to iprove industrial policy(all 7//21/9. Bowever, they stressed that the role of the state need tobe in line to support the ar%et e@ciency and to rescue the ipact ofar%et failure. Therefore, the ain function of the state is to providee&uivalent distribution of inforation to solve ar%et failure due toasyetric inforation and to create institutions to underpin the freear%et and trade syste.

The concepts carried by the structuralist ephasize the structuralchange in industrialization conte!t by the role of the governent (all7//279. Bence, the industrial policy for structuralists is well %nown asstate'led industrial policy. The need to forulate ade&uate and speci4cindustrial policy has increased since the failures of ar%et befall within thelatecoers. )trucuturalists governent also have to ta%e part in creatingcertain set of institutions to guarantee the ipleentation of the industrialpolicy. The institutions have to coe up with new rule of the gae whichbecoes the guideline for every sta%eholder. These rules are urgentlyneeded to assist corporation with various levels of circustances. (all7//2 7'89

=hat is iportant for structuralists is that the industrial policies,

intervention for factor ar%et in particular, have to be selective as well asfunctional (all 7//2189. overnent cannot universalize industrial policywithout having siilar level of industry within the country. oreover, thereare certain types of industrial policy that can be ta%e into account and beadapted to developing countries such as *sden 7//>2 1/'1/?921. Iport )ubstitution Industrialization7. E!port Driented Aolicy8. Infant Industry Arotection. Tari$ and )ubsidy. overnent Arocureent

These types of policy recoendation have ore structuralists approachrather than neo'liberals, because they were highlighting the need of

governent intervention in industrialization process.


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I76 Di8erent $retment or 9inners nd #osers in #teIndustrili/tion Countriesovernent interventions in industrial policy need to engage the

selection target group. 3i$erent industrial policy re&uire di$erent andspeci4c target group that need to be addressed. The otives and ideology

behind certain industrial policy deterined the recipients of the policy. Theain distinction of governent intervention, according to #eo'(iberalsand )tructuralists governent, is that the forer underlines theiportance of earning e!tra surplus by governent interventions whilethe latter view that the governent interventions are needed in order tosupport doestic copanies.

The #eo'(iberals and )tructuralists approaches to industrial policyhave also di$ered in ters of handling winners and losers, especially indeveloping countries. The neo'liberals governent pointed out theiportance of gaining ore pro4t in the free ar%et syste. The #eo'liberals governent is pic%ing winners and losers based on theassessent of 4r5s perforance and evaluation. Thus, the intervention

will be ost li%ely given to Trans #ational Copany T#C9 or other largescale copany which have been recognized as the ost valuable 4rsand doinated in the global ar%et. The other sall and ediu 4rswould not be the 4rst priority of the neo'liberals governent as they arenot bene4cially calculated.

The botto line for the structuralists governent intervention inrelation to industrial policies is to brace the doestic 4rs by eans ofinstitutional support. The structuralists governent also loo% forward tothe developent of )all and ediu Enterprises )Es9 which havebeen foresighted to have a proising return in the future. The ris%s oninvesting on such enterprises, for instance 4nancial loss and less potentialar%et, have to be ta%en toward %eeping the industrial policy on theproper path. To ensure and aintain the continuous process ofindustrialization, the structuralists governent create 4nancial institutionto a%e industrial'friendly'policy for doestic copany so that they canintensify the production process and eet the e!port deand *sden7//>21/>9.

76 #essons #erned rom Sout( ore nd Su.S(rn Ari')outh +orea has been one of the largest industrialized country and

becae %ey actor in world of industrialization. Rising fro devastatingcircustances, su$ered fro Fapanese colonialis and +orean =ar, it isthe ilitary forces who 4nally too% over and designed econoic

developent plan, including industrial policies. Investing into educationsyste was the 4rst policy for iproving +orean children to becoe high's%illed labour and &ualify for the industrial labour deand *sden1--72-9. =ith the cobination of high supply of doestic s%illed labourand the governent intervention, )outh +orea had started the industrialdevelopent on the right trac%. +orean had e!perienced state'ledindustrial policy, such as giving subsidy to the 4rs and setting lower andlong ter interest rate to boost the production output *sden 1--72 ?and *sden 7//>21/-9. In e!change for these incentives, the businesssectors need to ful4l the doestic and foreign deand. 0y 7/1/, the shareof anufacturing sector to +orean 3A was 18.?/G, increased by orethan 1/G since 7///. The siilar trend also shows in the value ofanufacture e!port, which has increased fro 8/.7G in 7/// to >8.Gin early 7/1/ Econoics )tatistic )yste the 0an% of +orea 7/1/9.


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*nother interesting e!perience of latecoer industrialized countrycoe fro *frica. They began to develop the country by transforing theeconoic activity through industrialization. Hnli%e +orea who startedinvesting in state'owned 4rs, the *frican was in highly dependent to theiport goods. Countries fro )ub')aharan *frica created the state'led

policy, such as iport substitution, but it reained unsuccessful and evenresulted the withdrawal of industry fro *frica Aage 7/11219. Thegovernent relied heavily on the iport goods and services, includingindustrial goods and capital, to provide a"ority of doestic needs frothe developed country. The structure of *frican Econoies, as reported byDEC3 7/1/, n.d.2 79, shows that within the period of 7//'7//-, therewas a declining trend on the anufacturing shares to 3A in )ub')aharan*frica, fro 18.1G to 17.-G respectively. Coprising fro H) / billionof iports and H) 8? billion DEC3, n.d.2 79 of e!ports, these trade4gures also indicate the subordination of )ub')aharan *frica to the rest ofthe world.

7I6 Con'lusionThe developent of industrialization process in late'developing

country has been through in a various circustances. orulatingindustrial policy re&uire speci4c approach, depending on the variation ofcountry5s condition. )everal successful industrial policies perfored bylate'industrialization country have ac%nowledged the role of governentto intervene in doestic and international industry a$airs. In the conte!tof pursuing the sae industrial level with the developed country, thear%et'led policy would not be su@cient for latecoers to integrate in theworld of industrialization. This could happen since there was a ar%etfailure because of the barriers and obstacles for the latecoer to enterar%et copetition. =hat can be learned fro )outh +orea and *frica isthat it ta%es structural and coprehensive transforation onindustrialization to prioritize national interests rather than becoing highlydependent to another advance country.

7II6 Reeren'es*sden, *lice B. 7//>9, ;The =ild Dnes2 Industrial Aolicies in the3eveloping =orld.5 InThe Washington Consensus Reconsidered: Towards aNew Global Governance, edited by #arcJs )erra, Foseph E. )tiglitz. D!ford2D!ford Hniversity Aress, pp.-'11>

*sden *lice 1->-9,;*sia5s #e!t iant2 )outh +orea and (ate

Industrialization5,

D!ford2 D!ford Hniversity Aress.

*rrighi, iovanni, 0everly F. )ilver and 0en"ain 3. 0rewer 7//89,;Industrial Convergence, lobalization, and the Aersistence of the #orth')outh 3ivide,5Studies in Comparative International Development8>192 8'81

Chang, Ba'Foon 7//79, ;Bow the Rich Countries Really becae Rich5,chapter 7 in +ic%ing *way the (adder2 3evelopent )trategy in BistoricalAerspective. (ondon2 *nthe Aress

Econoics )tatistic )yste the 0an% of +orea 7/1/9*ccessed 11 #oveber 7/1http2KKecos.bo%.or.%rK:e!KEasy)earchLe."sp
http://search.proquest.com/docview/220639183/FFBC2FC30DD346A2PQ/1?accountid=13598http://search.proquest.com/docview/220639183/FFBC2FC30DD346A2PQ/1?accountid=13598http://moodle.iss.nl/file.php/458/Chang(2002)How%20did%20the%20Rich%20Countries%20Really%20become%20Rich%20pp1-12%20ca5148.pdfhttp://ecos.bok.or.kr/flex/EasySearch_e.jsphttp://moodle.iss.nl/file.php/458/Chang(2002)How%20did%20the%20Rich%20Countries%20Really%20become%20Rich%20pp1-12%20ca5148.pdfhttp://ecos.bok.or.kr/flex/EasySearch_e.jsphttp://search.proquest.com/docview/220639183/FFBC2FC30DD346A2PQ/1?accountid=13598http://search.proquest.com/docview/220639183/FFBC2FC30DD346A2PQ/1?accountid=13598


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(all, )an"aya 7//9, ;Reinventing industrial strategy2 The role ofgovernent policy in building industrial copetitiveness5,G-! Discussion"aper Seriesno.7>, Hnited #ations Conference on Trade and 3evelopent,#ew Mor%

Aage, Fohn 7/119, ;)hould *frica Industrialize, 7//89, pp.1?'1>1

Drganisation for Econoic Co'operation and 3evelopent n.d.9, ;*fricanact )heet ain Econoic Indicators5*ccessed 11 #oveber 7/1http2KKwww.oecd.orgKinvestentKinvestentfordevelopentK?7>8.pdf
http://www.oecd.org/investment/investmentfordevelopment/47452483.pdfhttp://www.oecd.org/investment/investmentfordevelopment/47452483.pdf

the long journey of latecomers

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