Distributional coalitions, the state and economic development : a reformulation of Olson's theory
Date
1994
Authors
Tang, Wing Yin
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Abstract
The economic success stories of the four Asian newly industrialized nations (ANICs), viz., Hong Kong, Singapore, South Korea and Taiwan have stirred many controversies as to the causes of their rapid economic growth. Emerging in the mid-1980s, the statist perspective maintained that the state played a crucial role in transforming the economy in developing nations. However, critics argue that the statist perspective is inadequate for explaining the economic experiences of bureaucratic-authoritarian states in Latin America and some other Southeast Asian nations. An alternate explanation, Olson's society-centered theory of distributional coalitions, contends that rapid economic growth is caused by weak distributional coalitions (or special interest groups). In this thesis I combine both perspectives and argue that the destruction of distributional coalitions in the ANICs during WWII facilitated successful state intervention in the local economy in these nations. I support this argument with a cross-national regression analysis involving 20 developing nations, 8 from the Asia-Pacific region and 12 from Latin America. I chose these two regions because they are the most dynamic newly industrialized nations with a commitment to economic development. Moreover, the contemporary theoretical debate about development theory focuses on these regions. By using various indicators of distributional coalitions and state strength, the findings of this study generally support the hypothesis that rapid economic growth is associated with weak distributional coalitions and strong state intervention. However, an interaction model reveals that state intervention is negatively correlated with economic growth in countries where a dense network of distributional coalitions is present. This finding, however, cannot be construed as an uncritical support for a minimalist government because the state plays a crucial role in overcoming structural constraints, and constructing stable institutional and legal frameworks in developing countries. What is important for a sustained economic growth in developing nations is the elimination of special-interest groups in the form of patron-client networks between political and economic elites.