This video describes two categories of states that have emerged in developing countries – developmental and predatory states – in terms of the economic relations they promote.

Developmental states

The gap between rich and poor countries may have widened in recent decades, and developing countries have tried a variety of ways to bridge that gap.  In the mid-20^th century, countries generally tried two paths: Import-substitution industrialization – a strategy involving protecting domestic industries from international competition – and export led-growth – a strategy to promote domestic firms by helping them export to the global market.  Export-led growth was adopted by countries like Japan and South Korea that successfully bridged the gap to become among the richest in the world, and economists have used this evidence to argue that strategies that promote trade rather than protectionism are better on their economic merits.  Without getting into that debate, what we are going to talk about today is the underlying conditions that allowed Japan and South Korea to successfully promote a variety of industries in international markets.

Peter Evans in States and Industrial Transformation describes the type of state institutions that promoted economic development in South Korea in particular.  Noting that most definitions of the state focus on its coercive power, he argues that modern states are more defined by their economic role.  All modern states are involved in their economies, he says, the question is not how much but what kind.  States that succeed at promoting economic growth are called “developmental states” and feature embeddedness and autonomy.  Embeddedness means they have strong connections between state and society – allowing bureaucrats to know best which industries might have a competitive advantage and to negotiate successfully among economic actors.  Autonomy means that the state is able to take a step back and think about its citizens’ long-term interests and goals rather than simply represent the interests of different groups.  Developmental states have Weberian bureaucracies full of highly skilled professional organized into hierarchies, but still interact with societal actors (NGOs, companies, labor) at all levels of bureaucracy.

Predatory states

Developmental states are contrasted with predatory states, which allow leaders and their allies to use the state to advance their personal interests.  Predatory states are defined by patron-client relationships – individuals with access to power (such as members of a presidential clique) build networks of supporters by offering perks like jobs or exclusive contracts to those who are loyal to them.  This environment fosters corruption rather than growth, since aid goes to the companies with closest ties to the leadership rather than those best able to compete in international or domestic markets.  Predatory states often enforce their rule through repression and are characterized by rent-seeking.

Rent-seeking is an economic term that refers to the practice of seeking profit by manipulating public policy or economic conditions instead of open competition. Examples include companies or individuals lobbying for special tax rates or lighter regulations, using bribes to obtain government contracts, or using violence to force competitors out of a market, creating a monopoly.

In sum, in predatory states, a small group of elites “capture” the state and use the bureaucracy to advance their interests.

While predatory states are dictatorships and developmental states are often associated with “inclusive institutions,” not all developmental states are democracies.  South Korea did not hold free and fair elections until 1987, but pursued successful economic strategies before then.  In addition, while South Korea is a model developmental state that pursued export-led growth, the two terms are not equivalent.  Brazil was the model for import substitution industrialization and, as Evans notes, also featured characteristics of a developmental state (it was an intermediate case).