Resurgent Asia by Deepak Nayyar

Author:Deepak Nayyar
Language: eng
Format: epub, pdf
ISBN: 9780192589316
Publisher: OUP Oxford
Published: 2019-09-27T16:00:00+00:00

2. States and markets in Asia

The role of the state in the economic transformation in Asia—ranging from leader to catalyst or supporter—was proactive, often crucial, in the process of development,9 although its degree or nature differed between countries and changed over time within countries. To begin with, there were strong similarities across countries, as states almost everywhere sought to create initial conditions and establish enabling institutions. Later, there were significant differences between countries in the role of states, which was shaped not only by outcomes but also by politics.

Even if initial conditions were bequeathed by history, intervention could and did improve upon that reality without enormous time lags. There were two aspects to this effort. For one, governments invested in developing a physical infrastructure for energy, transport, and communication. For another, governments sought to spread education in society, where primary education provided the base and higher education provided the edge. In both, a critical minimum was necessary to kick-start the process of development. Some countries did better than others in building infrastructure. Most countries concentrated on primary and secondary school education to follow up on higher education somewhat later, which was the correct approach, while a few such as India concentrated on higher education while neglecting school education, which yielded some benefits but was not appropriate as it also imposed costs.10 The effectiveness and quality of such interventions shaped outcomes.

At the outset, governments also sought to facilitate institutional change that would be conducive to development. Institutional change in the rural sector, characterized by significant difference between Asian countries, was critical in this sphere. In much of Asia, landed elites had both voice and influence in post-colonial governments, which enabled them to resist agrarian reforms. Consequently, legislation on redistributive land reforms was diluted or circumvented almost everywhere.11 This was so in India, Indonesia, Malaysia, Pakistan, Philippines, Sri Lanka, Thailand, and Turkey. In fact, meaningful redistributive land reforms were carried out in only four economies: South Korea, Taiwan, China, and Vietnam. There were land reforms in South Korea during 1945–1950 under the supervision of the United States occupation forces, when land owned by the erstwhile Japanese colonial government and Japanese companies or individuals was confiscated, while Koreans with large landholdings were divested of their lands, all of which was redistributed to families who were owner-cultivators. Similarly, soon after 1950, there were land reforms in Taiwan, once again under the supervision of the United States, carried out by the Nationalist Kuomintang government that had moved to Taiwan after fleeing from China. Following the revolution, in 1950, the Chinese Communist Party led by Mao Zedong carried out land reforms in China, which were redistributive to start with but then moved to collective farms. This was followed by a second round of agrarian reforms in 1978 initiated by Deng Xiaoping with the introduction of the production responsibility system with incentives for farmers. Similarly, the Communist Party in Vietnam led by Ho Chi Minh started land reforms in 1945, which were completed after the French were

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