Climbing out the Ditch

1. Climbing out the Ditch Managing the Politics of Change: Leadership and the Role of Institutions in East Asia ‘s Rapid Growth

2. low per capita GDP high unemployment crushing poverty Underdeveloped Country wide rural-urban disparities high illiteracy weak capacity high mortality rates inept government political instability poor governance

3. High per capita GDP Intermittent bouts with unemployment low poverty Developed Country manageable regional disparities high literacy well endowed capacity low mortality rates well functioning government long term political stability good governance

4. The Real Challenge of Development Desired State Managing the Politics of Change (Developed) status quo (underdeveloped)

5. East Asia’s High Performers Taking the bull by the horns . . . . . . managing the politics of change

6. Requisites of Change Management embedding change in the culture establishing a sense of urgency consolidating gains & producing more change CHANGE creating a guiding coalition generating short term wins developing a vision and strategy empowering broad based action communicating the change vision John Kotter, 1996

7. Requisites of Change Management embedding change in the culture establishing a sense of urgency consolidating gains & producing more change creating a guiding coalition generating short term wins Threat of communist takeover developing a vision and strategy empowering broad based action communicating the change vision John Kotter, 1996

8. Requisites of Change Management embedding change in the culture establishing a sense of urgency consolidating gains & producing more change creating a guiding coalition generating short term wins Shared growth developing a vision and strategy empowering broad based action communicating the change vision John Kotter, 1996

9. The Principle ofShared Growth The Wealth Pie

10. The Principle ofShared Growth All share in increments to the pie

11. The Shared Growth Phenomenon

12. The Shared Growth Phenomenon Ratio(unweighted average) of Top to Bottom Quintile and per Capita Growth Rate, Selected Years: 1976-1988

13. The Shared Growth Phenomenon Integrated Poverty Index, 1988

14. Requisites of Change Management embedding change in the culture establishing a sense of urgency consolidating gains & producing more change • Vision 2020 • Annual awards for • export performance creating a guiding coalition generating short term wins developing a vision and strategy empowering broad based action communicating the change vision John Kotter, 1996

15. But Why Shared Growth? History and path dependence Thrust of Leadership

16. Desired State Managing the Politics of Change (Developed) status quo (underdeveloped) The Role of Institutions The Western World democratic institutions ? ? ? East Asia post WWII

17. The Predicament of Leadership Paradox of autocracy Time inconsistency of economic policies

18. The Paradox of Autocracy Property rights ???

19. Time Inconsistency Costs Benefits “today” “tomorrow”

20. The Predicament of Leadership Paradox of autocracy Time inconsistency of economic policies credible commitment

21. Institutional Foundations of Shared Growth Deliberation councils Wealth sharing mechanisms Competent/functional bureaucracy

22. Requisites of Change Management embedding change in the culture establishing a sense of urgency consolidating gains & producing more change government - business deliberation councils creating a guiding coalition generating short term wins developing a vision and strategy empowering broad based action communicating the change vision John Kotter, 1996

23. Institutionalizing Consultative Processes: the Deliberation Council Coordination and information “leveling” Rent allocation Credible commitment

24. Wealth Sharing Mechanisms • land reform • developing rural infrastructure • investing in basic education • promoting SMEs/labor intensive manufacturing • allocating corporate equity • worker cooperatives • public housing programs

25. Land reform Distribution of Land and Owner-Cultivated Households in Taiwan, by size of Holding, 1039 vs. 1960

26. Land reform/rural infrastructure Overall Effectiveness of Simulated Experimental Programs in South Korea, 1978 Rural Income of Bottom decile Rural Households in Poverty (percent) 28.7 30.4 77.6 63.5

27. Basic education Primary and Secondary Enrollment Rates in the High-Performing East Asian Economies (insert table 3-1 in Campos, p.32)

28. Labor intensive SMEs Exports of Small and Medium Enterprises in Taiwan (Hundreds of millions of U.S. Dollars)

29. Malaysia NEP Malaysian Ownership of Share Capital of Limited Companies (at par value 1969-1990)

30. Requisites of Change Management embedding change in the culture establishing a sense of urgency consolidating gains & producing more change well functioning bureaucracy creating a guiding coalition generating short term wins developing a vision and strategy empowering broad based action communicating the change vision John Kotter, 1996

31. Implementation Capacity: the Bureaucracy Merit based recruitment and career advancement Adequate compensation

32. Implementation Capacity: the Bureaucracy Estimates of per Capita GDP and Ratio of Public to Private Sector Salaries, Developing Countries

33. Depth of political appointments Philippines Korea Minister Secretary Index of bureaucratic capability Under secretary Level 2 Assistant secretary Level 3 1.0 Bureau Director Level 4 0.6 Regional Director Service Director 0.5 Division chief Division chief 0.2 Political appointees Ratio of public to private wages Percent 0.0 100 Philippines Korea 66 80 60 26 40 20 0 Philippines Korea Source: WDR 1997

34. Implementation Capacity: the Bureaucracy Merit based recruitment and career advancement Adequate compensation Accountability

35. Economic growth and bureaucratic performance