Statist theory

1. 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

2. 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

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

4. 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

5. 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)

6. 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

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

8. 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

9. 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.

10. 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.

11. 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.