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A review by nielsism
Kicking Awaythe Ladder by Ha-Joon Chang
3.0
Notwithstanding its release in 2002, I believe the main message of this book to be as relevant today as it was 16 years ago. Basically, Chang argues that the "now developed countries" (or: NDCs) are prescribing developmental strategies and rules for developing countries based on 'good policies' (such as a liberal trade schemes) and 'good institutions' (democracy, a good working bureaucracy, independent central banks etc.). But both these sets of 'good' stem from the idea that we - the NDCs - have used these to grow and develop. That they are therefore essential to any growth strategy.
Incorrect, Chang argues. By tracing the development path of the US, the UK, Germany, France, Sweden, the Netherlands and Belgium, Switzerland and Japan, he lays bare two fundamental and insightful things. Firstly, that all these countries have used 'bad policies' to successfully grow themselves: tariffs, import quotas, export subsidies, direct government subsidies, etc. In other words: protecting your infant industries from outside (and often at that point: better and fiercer) competition, can be healthy, and can be logical.
Secondly, the institutions which we now suggest to be taken over in a limited amount of time (think: imposing democracy as quickly as possible) is also not in line with the NDC experience, since it has often taken decades, if not centuries, for the NDCs to have some working 'good governance' institutions in this sense.
In sum, Chang argues that the NDCs are denying developing countries the same policies and institutional development strategy that they themselves used. They are therefore 'kicking away the ladder' of development that they themselves have climbed. He therefore suggests restoring the intellectual debate, by showing that we too used these policies to grow, and should therefore at least allow them the freedom (or policy space) to use these as well - if not actively promote it.
Chang's analysis is a provoking one when it comes to showcasing the developmental path of NDCs. The main take-away should be that there is no one-size-fits-all approach to development strategy, and that both different types of government intervention can play a role in development strategies.
Two elements are missing though. Firstly, there is no analysis of how the international economic governance institutions (such as the IMF, World Bank or the WTO) are actually limiting the policy options of developing countries. I agree they do, to an extent (especially the shift from the GATT to the WTO). And I agree with the main message. But there is a larger (academic) debate raging until this day, revolving around the question to what extent the 'policy space' of developing countries is being curtailed by these institutions. Chang starts from the point that this is heavily constrained, and that this is detrimental. There is certainly a case to be made here, but a thorough analysis of the limiting options would have made this an even better, and more convincing, read.
Secondly, Douglas Irwin raises the important point that correlation is no causation - and that Chang may have been misguided. From his historical analysis, he draws the conclusion that NDCs are now rich because of protectionist policies, but this is not necessarily so. Irwin argues that Chang fails to take into account very context-specific variables that could have accounted for the growth, despite the protectionist flavors. Hence, drawing the conclusion that protectionist policies are more favorable, may be a stretch. Chang should have (in Irwin's opinion) made a stronger case of how much protectionism actually played a role in the development of Western countries.
Incorrect, Chang argues. By tracing the development path of the US, the UK, Germany, France, Sweden, the Netherlands and Belgium, Switzerland and Japan, he lays bare two fundamental and insightful things. Firstly, that all these countries have used 'bad policies' to successfully grow themselves: tariffs, import quotas, export subsidies, direct government subsidies, etc. In other words: protecting your infant industries from outside (and often at that point: better and fiercer) competition, can be healthy, and can be logical.
Secondly, the institutions which we now suggest to be taken over in a limited amount of time (think: imposing democracy as quickly as possible) is also not in line with the NDC experience, since it has often taken decades, if not centuries, for the NDCs to have some working 'good governance' institutions in this sense.
In sum, Chang argues that the NDCs are denying developing countries the same policies and institutional development strategy that they themselves used. They are therefore 'kicking away the ladder' of development that they themselves have climbed. He therefore suggests restoring the intellectual debate, by showing that we too used these policies to grow, and should therefore at least allow them the freedom (or policy space) to use these as well - if not actively promote it.
Chang's analysis is a provoking one when it comes to showcasing the developmental path of NDCs. The main take-away should be that there is no one-size-fits-all approach to development strategy, and that both different types of government intervention can play a role in development strategies.
Two elements are missing though. Firstly, there is no analysis of how the international economic governance institutions (such as the IMF, World Bank or the WTO) are actually limiting the policy options of developing countries. I agree they do, to an extent (especially the shift from the GATT to the WTO). And I agree with the main message. But there is a larger (academic) debate raging until this day, revolving around the question to what extent the 'policy space' of developing countries is being curtailed by these institutions. Chang starts from the point that this is heavily constrained, and that this is detrimental. There is certainly a case to be made here, but a thorough analysis of the limiting options would have made this an even better, and more convincing, read.
Secondly, Douglas Irwin raises the important point that correlation is no causation - and that Chang may have been misguided. From his historical analysis, he draws the conclusion that NDCs are now rich because of protectionist policies, but this is not necessarily so. Irwin argues that Chang fails to take into account very context-specific variables that could have accounted for the growth, despite the protectionist flavors. Hence, drawing the conclusion that protectionist policies are more favorable, may be a stretch. Chang should have (in Irwin's opinion) made a stronger case of how much protectionism actually played a role in the development of Western countries.