Abstract
The two authors (François Combarnous and Eric Rougier) compare the historical trajectories of three regional pairs of developing countries (Ghana–Côte d’Ivoire, Mexico–Brazil, and Malaysia–Indonesia) and describe what drove countries with fairly similar initial conditions to adopt contrasted institutional systems. The chapter shows that, in the aftermath of political (decolonization) or economic shocks (external or domestic financial crises), different domestic conditions (in terms of dominant coalitions or of the degree of democracy), together with different economic and political relationships with the former colonial power and transnational corporations, gave rise to diverging institutional trajectories. Whereas certain countries could progressively assemble polymorphic and functional systems of sectoral institutions, others failed to do so since they could only combine types of institutional governance that would appear, ex post, to be non-complementary and, therefore, dysfunctional.
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Notes
- 1.
These pairs were selected on the basis of their initial geographical, economic and socio-political similarities, although, of course, other possible pairs could have been chosen and discussed. We had, nonetheless, due to obvious space limitations, to limit ourselves to a unique pair of countries for each continent. Our pairing is close to that proposed by Lall and Myint (1996) in their comparative analysis of developing countries’ political economies.
- 2.
Because the inclusion of labour unions and peasant organizations within ruling coalitions provided political support for this critical realignment, Haggard and Kaufman (2008) have, for example, described how the establishment of social protection schemes durably modified the entire institutional hierarchy of many Latin American and Asian countries.
- 3.
The early Chinese economic reforms perfectly illustrate this two-way influence. Those reforms introduced dramatic changes in the distribution of economic resources, supported by administrative decentralization and increased de facto local political power, with the economic success of the reforms providing, in turn, strong support for the new local rules of the game (Bardhan 2010).
- 4.
The northern regions of both countries were predominantly Muslim: these regions were more sparsely populated and economically disadvantaged than the predominantly Christian southern regions.
- 5.
The country faced minor coup-related conflicts in 1966, 1981 and 1983, but the north-south divide never led to high levels of violence. Despite extremely close victory margins, the 2008 and 2012 presidential elections were determined as corruption-free by international groups, and no violence was experienced.
- 6.
The GNI per capita in purchasing power parity, which was almost three times higher in Cote d’Ivoire than in Ghana in the early 1980s, has never stopped deteriorating and is now similar in both countries.
- 7.
While average annual GDP growth rates in Cote d’Ivoire amounted to 0.7% (1980s), 2.4% (1990s) and 1.1% (2000s), they were significantly higher in Ghana (2.3%, 4.3%, and 5.8%) and in the whole Sub-Saharan region (1.5%, 2.1% and 5.2%). In 2011, Ghana was one of the fastest growing economies in the world, with an annual GDP growth rate of 15%, while Cote d’Ivoire experienced one of the worst performances in the world, with an annual GDP growth rate of—4.7%.
- 8.
During the 1960s and 1970s, Ivoirian growth (8.9% and 5.5%) significantly outweighed that of Ghana (3.0% and 0.5%) and was one of the highest in Africa (authors’ computations, World Bank data).
- 9.
There was a life expectancy of 64.6 years versus 56 for Cote d’Ivoire, and a mean of 7 years of schooling and 11.4 expected years of schooling, compared to 4.2 and 6.5 for Cote d’Ivoire. The poverty headcount ratio, taken as the number of poor people, has steadily declined in Ghana since 1980, whereas it increased continuously in Cote d’Ivoire during the same period.
- 10.
However, authors such as McCauley (2013) consider that “indirect rule in Ghana came only after a generation of direct rule that had already undermined local traditional elites”, making both countries more similar than different, even in this respect.
- 11.
A typical example of this effort to strengthen national unity was the “Avoidance of Discrimination Act” (1957), which banned political parties structured along ethnic, religious or regional lines.
- 12.
Berr et al. (2009) have constructed an index that measures and combines the degree to which each policy aspect has been implemented, the Washington Consensus Index. This index shows that, in both the 1980s and the 1990s, Cote d’Ivoire engaged itself more rapidly and deeply in reforms than most sub-Saharan countries, whereas Ghana’s commitment to reforms remained extremely weak during the 1980s, and well below the average of other sub-Saharan economies during the 1990s.
- 13.
- 14.
The macroeconomic data used in this paragraph is taken from CIA factbooks.
- 15.
Although the volume of foreign reserves increased for the two countries during the last decade, in 2012, Brazil showed a level ($373.1 billion) more than twice that of Mexico ($167.1 billion). Equally, Brazil’s stock of FDI is double that of Mexico.
- 16.
- 17.
During that period, the developmental and nationalistic objectives were also motivated by the need to solidify the political support of heterogeneous coalitions of urban workers and the rural oligarchy (Haggard and Kaufman 2008). Although unions and labour organizations were mobilized politically, with ambitious labour codes being promulgated, both to gain the political support of workers and to insulate them from the emerging communist influence, no significant progress in terms of social regulation was made during the period. It proved almost impossible to contain growing contestation of both educational access inequality and the absence of land reforms, and the leftist orientation of Goulart’s populist government was reversed in 1964.
- 18.
Although, in the early 1980s, after the enactment of a constitutional amendment requiring 15% of Federal transfers to be spent on primary education by the states, priority was given to universities, with the consequence that illiteracy rates have long remained at far higher levels in Brazil than elsewhere in Latin America, including Mexico (Haggard and Kaufman 2008).
- 19.
Today, after a decade of accelerated growth driven by the commodity price boom, unemployment rates have finally converged, to approximately 5.0%, in the two countries.
- 20.
In 2012, the Gini coefficient was still higher for Brazil (0.52) than for Mexico (0.48).
- 21.
1990 International Geary-Khamis dollars data collected from the New Maddison Project database, Bolt and van Zanden (2013).
- 22.
The available data show that the literacy rate, life expectancy and infant mortality in Malaysia were respectively about 53%, 59 years and 67 per thousand in 1960 compared to 40%, 45 years and 149 per thousand in Indonesia.
- 23.
It should be noted, however, that the broad economic policy frameworks of Indonesia, Malaysia and the rest of Southeast Asia followed rather similar trajectories during the second half of the twentieth century, unlike those of other developing economies. See Minns (2001).
- 24.
Very few countries in the world experienced a higher average GDP growth than Malaysia and Indonesia during this period.
- 25.
Structurally, the difference is also manifest, since more than 53% of the labour force participate in services in Malaysia and 36% in the industry, whereas 39% of Indonesian workers still participate in agriculture and only 22% in industry.
- 26.
For example, the government pursued sound but unpopular macroeconomic policies, and proceeded to a sizable devaluation during the downswings of the early 1980s.
- 27.
The two countries’ scores for the ‘Ease of doing business’ and ‘Corruption perceptions’ indexes are symptomatic of this institutional gap. In 2013, the ‘Ease of doing business’ index ranked Malaysia 8th in the world, whereas Indonesia was ranked 116th. As for the ‘Corruption perceptions’ index, Malaysia was ranked 53rd versus 114th for Indonesia.
- 28.
During 1998, GDP contracted by nearly 8.0% in Malaysia and more than 13.0% in Indonesia.
- 29.
As pointed out by Pepinsky (2009), “for ten months, the regime’s adjustment policies shifted wildly: tight monetary policy followed by loose monetary policy, promises of fiscal and trade reform made and then broken, subsidies protected and then cut, bailouts offered and then denounced”.
- 30.
At the same time, Prime Minister Mahatir, backed by security forces, preserved the burgeoning Malaysian democracy by crushing the country’s first truly pan-ethnic democracy movement.
- 31.
The guardian state is opposed to the predatory state in the Lal and Myint (1996) typology of political economies in developing countries, since the former’s agenda can be supposed to serve the collective interests whereas, in the latter, the elites are only marginally concerned by the welfare of the country’s citizens, except if it increases predators’ gains (Krueger 1993, 62). When the state is factional, it serves the interests of a faction, unlike the autonomous state, whose action is not influenced by the vested interests of the factions (Lal and Myint 1996).
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Combarnous, F., Rougier, E. (2017). Institutional Trajectories: Three Comparative Case Studies. In: Rougier, E., Combarnous, F. (eds) The Diversity of Emerging Capitalisms in Developing Countries. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-49947-5_13
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