Proposal preview

Development Under Dictatorship?  – Revisiting economic development under authoritarian regimes in the periphery

The role of the state in economic development is contested. New research on the developmental state in Asia and the effects of state-led industrialization in Latin America poses still unanswered questions. The rapid economic transformation of some countries under authoritarian regimes complicates our understanding of the relation between economic development and political regime. In order to address the factors for inclusive transformation under authoritarian regimes, comparative work might be most fruitful. Did some dictatorships pave the way for inclusive development, while others had pervasive negative impacts? What answers are hinted to by looking at multiple dimensions of development?

Call for Papers for the panel (PDF).

Organizer(s)

  • Montserrat Lopez Jerez Lund University montserrat.lopez_jerez@ekh.lu.se Spain
  • Sara Torregrosa Hetland Lund University sara.torregrosa_hetland@ekh.lu.se Spain
  • Cristian Arturo Ducoing Ruiz Lund University cristian.ducoing@ekh.lu.se Chile

Session members

  • Sara Torregrosa Hetland, Lund University
  • Montserrat Lopez Jerez, Lund University
  • Cristian Arturo Ducoing Ruiz, Lund University
  • Martin Andersson, Lund University
  • Isabelle Tsakok, Colombia University
  • Tobias Axelsson, Lund University
  • Piotr Korys, University of Warsaw
  • Maciej Tyminski, University of Warsaw
  • Greta Seibel, London School of Economics
  • Prince Young Aboagye, Lund University
  • Ellen Hillbom, Lund University
  • Giacomo Gabbuti, University of Oxford
  • Nuno Palma, University of Manchester
  • Jaime Reis, University of Lisbon
  • Antonio Linares, University of Extremadura
  • Francisco Parejo, University of Extremadura

Discussant(s)

  • Gareth Austin The Graduate Institute Geneva gareth.austin@graduateinstitute.ch
  • Ewout Frankema Wageningen University ewout.frankema@wur.nl

Papers

Panel abstract

The role of the state in economic development is contested. New research on the developmental state in Asia and the effects of state-led industrialization in Latin America poses still unanswered questions. The rapid economic transformation of some countries under authoritarian regimes complicates our understanding of the relation between economic development and political regime. In order to address the factors for inclusive transformation under authoritarian regimes, comparative work might be most fruitful. Did some dictatorships pave the way for inclusive development, while others had pervasive negative impacts? What answers are hinted to by looking at multiple dimensions of development?

1st half

A New Order of the Indonesian Business Landscape? The Role of Government Policy in Indonesian SME Development, 1966-1998

Greta Seibel

Indonesia featured as one of the high-growth Tiger Economies in the World Bank’s (1993) East Asian Miracle report, yet its economic history, and similarities and distinguishing characteristics, remain understudied. One of the features of the EA model is the ‘principle of shared growth’, which included various reforms, including SME-targeted support policies. This paper explores the question of the missing middle in the Indonesian manufacturing sector despite the New Order government’s objective to strengthen small enterprises and analyses the main barriers to growth using data on number of manufacturing firms, workers, value added and main issues faced by firm-size category and province from the decadal Economic Censuses (1986-2006). The regional approach enables a detailed study of the variation in SME development and inclusiveness of the economic development process. During this period we would expect to see a shift in firm-size distribution and mechanisation from traditional cottage industries towards modern manufacturing SMEs.

Indonesia featured as one of the high-growth Tiger Economies in the World Bank’s (1993) East Asian Miracle report, yet its economic history, and similarities and distinguishing characteristics, remain understudied. One of the features of the EA model is the ‘principle of shared growth’, which included various reforms, including SME-targeted support policies. This paper explores the question of the missing middle in the Indonesian manufacturing sector despite the New Order government’s objective to strengthen small enterprises and analyses the main barriers to growth using data on number of manufacturing firms, workers, value added and main issues faced by firm-size category and province from the decadal Economic Censuses (1986-2006). The regional approach enables a detailed study of the variation in SME development and inclusiveness of the economic development process. During this period we would expect to see a shift in firm-size distribution and mechanisation from traditional cottage industries towards modern manufacturing SMEs.

The role of economic development for political legitimacy

Tobias Axelsson, Mason Hoadley & Axel Fredholm

There is a large literature discussing the relationship between economic development and democratisation. In this paper, focus lies instead on the role an authoritarian regime may play in creating economic growth and development. When Suharto came to power in 1966 the Indonesian economy was in disarray. The country was predominantly agricultural and GDP/capita levels were among the lowest in the world (Booth 2016). At the time of the financial crisis, which eventually led to Suharto’s ousting from power, some 32 years later, Indonesia was well on its way to become a newly industrial country and a one of the largest economies in the world with rapidly falling poverty levels. In the paper it is explored how and why the Indonesian regime promoted a more equitable growth model.

There is a large literature discussing the relationship between economic development and democratisation. In this paper, focus lies instead on the role an authoritarian regime may play in creating economic growth and development. When Suharto came to power in 1966 the Indonesian economy was in disarray. The country was predominantly agricultural and GDP/capita levels were among the lowest in the world (Booth 2016). At the time of the financial crisis, which eventually led to Suharto’s ousting from power, some 32 years later, Indonesia was well on its way to become a newly industrial country and a one of the largest economies in the world with rapidly falling poverty levels. In the paper it is explored how and why the Indonesian regime promoted a more equitable growth model.

The industrialization under dictatorship. The case of Poland in the 1930s and 1970s

Piotr Koryś & Maciej Tymiński

The development economics often have referred to the state as an important factor for effective industrialization as a modernization strategy in the peripheral countries (what is clearly visible in publications of Rodenstein-Rodan, Gerschenkron and many others, and nowadays expressed in concepts of eg. Acemoglu and Robinson, Rodrik, Lin, Chang). But in the twentieth century the industrialization projects were carried out by many peripheral authoritarian states, and one can raise the question of whether limiting democracy is a barrier to development or, on the contrary, a pro-development factor. Examining Soviet case Robert Allen (2009) demonstrated the potential of non-market authoritarian systems to mobilize resources for effectively catching up through industrialization. However, the barriers to growth within such a model was also quite accurately diagnosed by Brus and Łaski(1991), and the problem is debated until today (eg. Vonyo&Klein 2016).In case of market authoritarian regimes the empirical evidence is mixed.

The development economics often have referred to the state as an important factor for effective industrialization as a modernization strategy in the peripheral countries (what is clearly visible in publications of Rodenstein-Rodan, Gerschenkron and many others, and nowadays expressed in concepts of eg. Acemoglu and Robinson, Rodrik, Lin, Chang). But in the twentieth century the industrialization projects were carried out by many peripheral authoritarian states, and one can raise the question of whether limiting democracy is a barrier to development or, on the contrary, a pro-development factor. Examining Soviet case Robert Allen (2009) demonstrated the potential of non-market authoritarian systems to mobilize resources for effectively catching up through industrialization. However, the barriers to growth within such a model was also quite accurately diagnosed by Brus and Łaski(1991), and the problem is debated until today (eg. Vonyo&Klein 2016).In case of market authoritarian regimes the empirical evidence is mixed.

Andersson and Tsakok_Does good leadership matter for achieving successful agricultural transformation

Martin Andersson & Isabelle Tsakok

The objective of the project is to characterize good leadership at national level and identify a pattern of key decisions/actions of such leadership, the governing philosophies that inspired such decisions/actions; and the institutional contexts they operated in and which contributed to their transformational power, pivotal in achieving successful agricultural transformation. Through the use of case studies we will test our hypothesis that good leadership matters for successful agricultural transformation. In this pilot paper, we ask what Taiwan’s successful agricultural and economy-wide transformation teach us about national leadership.

The objective of the project is to characterize good leadership at national level and identify a pattern of key decisions/actions of such leadership, the governing philosophies that inspired such decisions/actions; and the institutional contexts they operated in and which contributed to their transformational power, pivotal in achieving successful agricultural transformation. Through the use of case studies we will test our hypothesis that good leadership matters for successful agricultural transformation. In this pilot paper, we ask what Taiwan’s successful agricultural and economy-wide transformation teach us about national leadership.

A Noi! Top Income Shares, Economic Inequality, and the Political Economy of Italian Fascism (1914-1943)

Giacomo Gabbuti

From the 1920s, most ‘explanations’ of the origins of Italian fascism credited a role to distributional changes. According to the traditional ‘anti-fascist’ paradigm, Fascism had to be considered a ‘reaction’ to the working class’ achievements in the red two years 1919-1920; an impoverished middle class provided the crucial mass support, needed to overcome the resistance of socialists and labour movements. On the contrary, ‘revisionist’ authors, such as De Felice (1976), considered fascism a genuinely revolutionary movement, representing emerging middle class, previously frustrated in its political expectations. In a period in which the link between inequality and democracy has attracted increasing attention, these opposite approaches resemble modern views on the perils of ‘populism’ or ‘plutocracy’ (Milanovic 2016).

From the 1920s, most ‘explanations’ of the origins of Italian fascism credited a role to distributional changes. According to the traditional ‘anti-fascist’ paradigm, Fascism had to be considered a ‘reaction’ to the working class’ achievements in the red two years 1919-1920; an impoverished middle class provided the crucial mass support, needed to overcome the resistance of socialists and labour movements. On the contrary, ‘revisionist’ authors, such as De Felice (1976), considered fascism a genuinely revolutionary movement, representing emerging middle class, previously frustrated in its political expectations. In a period in which the link between inequality and democracy has attracted increasing attention, these opposite approaches resemble modern views on the perils of ‘populism’ or ‘plutocracy’ (Milanovic 2016).

2nd half

Can autocracy promote literacy? evidence from a cultural alignment success story

Nuno Palma & Jaume Reis

Do countries with less democratic forms of government necessarily have lower literacy rates as a consequence? Using a random sample of 4,600+ individuals from military archives in Portugal, we show that 20-year old males were twice as likely to end up literate under an authoritarian regime than under a democratic one. Our results are robust to controlling for a host of factors including economic growth, the disease environment, and regional xed-e ects. We argue for a political economy and cultural explanation for the success of the authoritarian regime in promoting basic education.

Do countries with less democratic forms of government necessarily have lower literacy rates as a consequence? Using a random sample of 4,600+ individuals from military archives in Portugal, we show that 20-year old males were twice as likely to end up literate under an authoritarian regime than under a democratic one. Our results are robust to controlling for a host of factors including economic growth, the disease environment, and regional xed-e ects. We argue for a political economy and cultural explanation for the success of the authoritarian regime in promoting basic education.

Growth, convergence and inequality during the Franco dictatorship: the case of the most backward Spain

Antonio M. Linares-Luján & Francisco M. Parejo-Moruno

Both the few macroeconomic figures available at the regional level and the series of stature drawn up for some Spanish regions reveal that during the Franco dictatorship (1939-1975) the average standard of living not only grew as never before in the whole of the country but that growth was accompanied by an accelerated process of convergence that significantly reduced the differences between the richest and the poorest areas of Spain. These two facts, however, were also followed by a parallel process of deepening internal inequality within the most backward regions of the country. Our paper proposal aims to study the characteristics and causes of this triple process of growth, convergence and inequality, by studying the case of Extremadura, the most backward region of Spain. The objective of this proposal is twofold. On the one hand, it tries to discern, using anthropometric data extracted from military documentation, whether the growth and...

Both the few macroeconomic figures available at the regional level and the series of stature drawn up for some Spanish regions reveal that during the Franco dictatorship (1939-1975) the average standard of living not only grew as never before in the whole of the country but that growth was accompanied by an accelerated process of convergence that significantly reduced the differences between the richest and the poorest areas of Spain. These two facts, however, were also followed by a parallel process of deepening internal inequality within the most backward regions of the country. Our paper proposal aims to study the characteristics and causes of this triple process of growth, convergence and inequality, by studying the case of Extremadura, the most backward region of Spain. The objective of this proposal is twofold. On the one hand, it tries to discern, using anthropometric data extracted from military documentation, whether the growth and convergence in the region in terms of living standards during the Franco dictatorship are due to the economic policies applied by the own authoritarian regime. On the other hand, our proposal tries to know to what extent the differences in height between the male population born in this Spanish region according to the place of residence (urban or rural), the educational level (literate or not) or kind of job (manual or not manual) obey the extractive institutions developed by the Franco regime.

Growth, inequality and extraction in Ibero-American democratizations

Cristián Ducoing & Sara Torregrosa

Will democracy improve the distribution of economic welfare? Do dictatorships leave long-run legacies behind? In this paper we explore four Ibero-American countries with some common historical traits, but also different contexts: Spain, Portugal, Brazil, and Chile. The two Iberian nations suffered long periods of autocratic regime in the 20th Century, while our south American cases had relatively later and shorter dictatorships. We assess the extent to which democratization brought about improvements in societal welfare, combining indicators of inequality and economic performance. We propose the applicability of the concept of Inequality Extraction Ratio, initially suggested for ancient societies but adapted by Milanovic (2013b) to the analysis of contemporary economies. Our hypothesis is that democratizations, while probably not able to achieve reductions in inequality, could have promoted decreases in relative extraction.

Will democracy improve the distribution of economic welfare? Do dictatorships leave long-run legacies behind? In this paper we explore four Ibero-American countries with some common historical traits, but also different contexts: Spain, Portugal, Brazil, and Chile. The two Iberian nations suffered long periods of autocratic regime in the 20th Century, while our south American cases had relatively later and shorter dictatorships. We assess the extent to which democratization brought about improvements in societal welfare, combining indicators of inequality and economic performance. We propose the applicability of the concept of Inequality Extraction Ratio, initially suggested for ancient societies but adapted by Milanovic (2013b) to the analysis of contemporary economies. Our hypothesis is that democratizations, while probably not able to achieve reductions in inequality, could have promoted decreases in relative extraction.

The Political Economy of Income Distribution in Ghana, 1900-2015

Prince Young Aboagye (Lund University) & Ellen Hillbom (Lund University)

This paper examines the relationship between state structures, economic development strategies and income distribution in Ghana between 1900 and 2015. Empirical work on the determinants of income distribution trends has largely focused on the relationship between economic growth and inequality with the famous Kuznets hypothesis being a point of departure. Kuznets (1955) argued that income distribution trends was contingent on the dynamics of a dual sector economy, with labour moving from an equally distributed, low income agricultural sector to a less equally distributed, high income industrial sector. This worsens overall income distribution initially until more workers move to the industrial sector, thereby leading to falling inequality. Indeed, these changes can be understood to be in response to prices and markets where the search for increasing efficiency and consequent technological change leads to the development of increasing labour productivity and incomes.

This paper examines the relationship between state structures, economic development strategies and income distribution in Ghana between 1900 and 2015. Empirical work on the determinants of income distribution trends has largely focused on the relationship between economic growth and inequality with the famous Kuznets hypothesis being a point of departure. Kuznets (1955) argued that income distribution trends was contingent on the dynamics of a dual sector economy, with labour moving from an equally distributed, low income agricultural sector to a less equally distributed, high income industrial sector. This worsens overall income distribution initially until more workers move to the industrial sector, thereby leading to falling inequality. Indeed, these changes can be understood to be in response to prices and markets where the search for increasing efficiency and consequent technological change leads to the development of increasing labour productivity and incomes.