Building Capability By Defying Best Practices: The Case of China
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1 Building Capability By Defying Best Practices: The Case of China World Bank Conference Enhancing the Quality of Service Delivery January 16-17, 2017 Yuen Yuen Ang
2 Connection to Conference Theme CONFERENCE THEME: building state capability to implement solutions to complex problems EXISTING ARGUMENTS: PDIA, pragmatism, incremental problemsolving, trial-and-error
3 My Argument: A Radical Brand of Pragmatism Leverage what appears to be weak institutions or wrong practices to kick-start development in developing countries. For example: corruption, patronage, profit-sharing within public sector, piracy, communist political structures, tribal networks, etc.
4 What s the Logic? We may only spark change in poor societies with what they have not with what we wish they had. Normatively weak/bad institutions can be functionally strong.
5 Sources Book: How China Escaped the Poverty Trap (CUP, 2016) Article: Beyond Weber: Conceptualizing an Alternative Ideal- Type of Bureaucracy in Developing Contexts. (Regulation & Governance)
6 THE CASE OF CHINA
7 Local development paths are distinct yet interconnected.
8 Forest Hill City, Fujian Province
9 Chicken-and-Egg Problem of Development Good governance/ strong institutions Economic Wealth
10 A multi-step, co-evolutionary sequence of development
11 1993: Central government accelerated market liberalization Establish a specialized, professional investment agency OR Adopt en masse, personalized investment promotion
12 Defining Conditions of Early Development GOALS. CONSTRAINTS. RESOURCES.
13 1993: Central government accelerated market liberalization GOAL In the past, our goal was to push for rapid economic growth, so we welcomed any investor. Establish a specialized, professional investment agency OR Adopt en masse, personalized investment promotion
14 1993: Central government accelerated market liberalization CONSTRAINTS Bureaucracy left over from Maoist era. Can t fire anyone. Establish a specialized, professional investment agency OR Adopt en masse, personalized investment promotion
15 1993: Central government accelerated market liberalization RESOURCE Businesses invest here because of personal relationships. Establish a specialized, professional investment agency OR Adopt en masse, personalized investment promotion
16 1993: Central government accelerated market liberalization En masse, personalized investment promotion (bee hive campaign) GOALS. CONSTRAINTS. RESOURCES.
17 Back then, our commercial parks had no plan. A tofu factory sat beside another factory making fiberboards. How was that going to work?
18 CHANGE OF PRORITIES REFLECTED IN ANNUAL GOVERNMENT WORK REPORT Prior to 2003, work reports emphasize speed and expansion. Word quality first appeared in 2003 Quality appeared in first line in 2007
19 CHANGE IN DESIGN OF AGENCY TARGETS OVER TIME Agencies evaluated by amount of investments Then by number of projects that exceeded certain scale Then by number of projects in state-selected sectors Investment targets abolished altogether
20
21 In essence, what s the simple but not simplistic story of development?
22 Step 1: Harness existing weak institutions to Step 2: Emerging markets stimulate strong institutions build markets Step 3: Strong institutions preserve markets
23 Cross-national extension of theory Late medieval Europe: Communal property rights Antebellum United States: Risky taxless financing schemes Contemporary Nigeria: Piracy as distribution channel Unlike China, none are centralized authoritarian regimes, yet markets were built through normatively weak institutions or wrong practices.
24 Conclusions 1. A radical brand of pragmatism, tailored to poor, traditional, weak societies Go beyond saying that we should adapt, experiment, incrementally solve problems. 2. Normatively weak/bad institutions can be functionally strong Think about institutions functionally rather than normatively
25 Thank You
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