Statist theory Historical background Challenge to dependency theory

Statist theory • Historical background – Challenge to dependency theory, which could not explain the rise of the East Asian NICs (newly industrialized countries) – Also note role of state in Peter Evan’s Dependent Development

Premises of Statist Theory • States have the potential to promote development within their own borders – (not simply “externally conditioned”) • States have autonomous interests (from society) in promoting development because they are responsible for national security; they must compete militarily and economically in the international state system • Ability of states to promote development depends on the nature of state institutions

Key elements of Statist Theory • Institutional level of analysis • Focus on nature of state institutions – Developmental vs. predatory

Statist theory • Characteristics of developmental state bureaucracy – Merit/skill-based recruitment – Performance-based rewards – Belief in bureaucratic mission – Insulated from societal pressures – Empowered to formulate and implement policy

Statist Theory • Developmental state bureaucracy can alter market behavior through the exercise of industrial policy • Tools of industrial policy include – Trade controls (e. g. tariff barriers, esp’ly pre-WTO) – Tax incentives (what Johnson calls “targeted tax breaks”) – Selective credit allocation – Public enterprise (what Johnson calls “government corporations)

Statist Theory • Charateristics of predatory state bureaucracy – Recruitment based on patron-client ties – Policy based on personal benefit not mission – Not insulated from societal pressures – Lacking in ability to formulate good policy – Lacking in authority/power to implement policy

Statist Theory: Predicted Outcomes Economic: Developmental state institutions wealth Predatory state institutions poverty

Statist Theory: Predicted Outcomes Political: Developmental state institutions stability capacity democracy can create preconditions for democracy enlightened state elites can create top-down openings for democracy Predatory state institutions instability incapacity authoritarianism

Example from Iraq: Baker-Hamilton Report (Iraq Study Group) • Governance – “The Iraqi government is not effectively providing its people with basic services: electricity, drinking water, sewage, health care, and education. In many sectors, production is below or hovers around prewar levels. In Baghdad and other unstable areas, the situation is much worse. – “There are five major reasons for this problem.

Baker-Hamilton • “First, the government sometimes provides services on a sectarian basis… • “Second, security is lacking… • “Third, corruption is rampant… – Iraq has a functioning audit board and inspectors general in the ministries, and senior leaders have identified routing out corruption as a national priority. But too many political leaders still pursue their personal, sectarian, or party interests. There are still no examples of senior officials who have been brought before a court of law and convicted on corruption charges.

Baker-Hamilton • “Fourth, capacity is inadequate. – Most of Iraq’s technocratic class was pushed out of the government as part of de-Baathification. – Other skilled Iraqis have fled the country as violence has risen. – Too often, Iraq’s elected representatives treat the ministries as political spoils. – Many ministries can do little more than pay salaries, spending as little as 10 -15 percent of their capital budget. They lack technical expertise and suffer from corruption. – Inefficiency, a banking system that does not permit the transfer of moneys, extensive red tape put in place in part to deter corruption, and a Ministry of Finance reluctant to disburse funds. • “Fifth, the judiciary is weak.