I Analysing Capitalisms as Institutional Systems: Our Approach
Analysing the Capitalisms of Developing Countries: What's the Point?
The Rise of New Capitalisms
The world economy is currently undergoing a major revolution: non- OECD countries’ contribution to world GDP has started to overtake that of mature industrialized countries for the first time since the late eighteenth century, when China and India were dominating world manufacturing (OECD 2010). Despite the recent slowing down of this trend, the upheaval marks a turning point for a group of fast-growing developing economies, with countries like China, India or Brazil, and smaller ones like Vietnam or Botswana, being brought to the fore by the second historical wave of globalization that was to accelerate in the 1990s. Such countries are now well on the way to accounting for an ever-increasing share of world income. Besides the well-known causes of their rapid growth, such as high rates of capital accumulation and low production costs, the
E. Rougier (*)
GREThA, CNRS Research Unit, PESSAC CEDEX, France © The Author(s) 2017
E. Rougier, F. Combarnous (eds.), The Diversity of Emerging Capitalisms in Developing Countries, DOI 10.1007/978-3-319-49947-5_1
original forms of socio-economic organization currently being developed in these emerging countries probably also explain their economic success. Surprisingly, however, these recent Asian, African and Latin American economic miracles have been bolstered by institutional configurations far removed from those prescribed by the extended Washington Consensus model (Rodrik 2008a). An apt illustration of this point is provided by China’s original articulation of market-friendly incentives and decentralized statist capitalism, which simultaneously allows for high-level technological skills, low labour costs and high-performance exporting firms (Bardhan 2010; Qian 2003).
All developing economies may not be considered as fully fledged industrial or tertiary capitalisms, though. While most lower-income countries are still predominantly informal and agricultural economies, many middle-income countries are poorly diversified rentier economies exhibiting only few attributes of genuine capitalism. Still, as they all articulate such similar socio-economic sectors as agricultural and goods markets, labour and finance markets, social protection and education, these various types of socio-economic systems can be compared, whatever the levels of sophistication and formalization they have reached. Lastly, since they export commodities or manufacturing goods, host capital flows or send migrants, nearly all developing countries are integrated, albeit to varying degrees, to global capitalism. They consequently can all be analysed as emerging capitalist systems.
Although they have become ubiquitous on commodity and goods markets, in global governance arenas, as well as in business magazine columns, what we will call in this book ‘emerging capitalisms’ have, somewhat curiously, seldom been considered in their own right. Admittedly, experts might well have expected these capitalisms to converge towards those of the OECD mature countries since they had, after all, undergone years of standardized liberalization reforms and globalization-led inflows of Western technological and institutional influence. The assumption of a “race to the bottom” driven by the generalized trend of social protection spending retrenchment imposed by an environment of globalized competition was also put forward in the early nineties (Ohmae 1995). Yet, national systems of rules, regulations, and policies have remained significantly differentiated across industrialized and non-industrialized economies. Consequently, both the hypotheses of a “race to the bottom” and of a convergence of national institutional systems under the harmonizing forces of globalization and technological change have been challenged by the systematic divergence thesis underlying the comparative political economy approach.
Although a comprehensive comparative analysis of economic systems, including both industrialized and emerging countries, would seem useful for understanding current globalization trends, such analysis has generally been restricted to mature developed economies. The convergence thesis has been essentially challenged by a resurgence of comparative analyses of OECD countries’ capitalist systems with respect to such dimensions as social protection (Esping-Andersen 1990), and market coordination (Hall and Soskice 2001), as well as education and finance (Amable 2003). There have been far fewer typological or analytical propositions concerning developing countries, which are undoubtedly, at least for the middle income ones, involved in capitalist modes of production and distribution. Two significant exceptions to this general neglect are China and, to a lesser extent, India. Whereas China’s apparently open-ended rise has engendered an ever-increasing number of analyses by both scholars and experts involved in development and globalization issues, this has not been the case for other developing countries. Although some emerging national capitalisms in Africa or Asia, like Botswana or Vietnam, are increasingly being signalled as models by international financial institutions or private advisors, the majority of the developing economies have never, or seldom, been studied as sui generis capitalist systems. It is, therefore, somewhat puzzling to realize how much emerging capitalisms’ originality and heterogeneity went unnoticed for so long before the present book. Very little academic research has been explicitly geared towards identifying emerging models of capitalism and then comparing them to the mature ones.
Analysing developing countries’ capitalisms as internally consistent systems of rules governing markets and sectors is, nevertheless, as legitimate as it is in the case of developed economies. An approach of capitalisms based on the observation and comparison of the systems of institutions and regulations underlying the working of markets and organizations in each national economy, whatever its level of economic development, would leave the institutional convergence issue undetermined a priori. Systems of institutions govern markets and economic sectors through the incentives and constraints they impose to economic agents, with these institutions being the joint product of historical initial conditions and critical junctures, cultural preferences and values and sociopolitical conflict (North 1990). Consequently, we can anticipate that different historical and political trajectories will reflect in clearly differentiated ways of organizing markets, state and businesses across countries that need to be identified and compared. This is exactly what we aim to do in the present book.
The comparative approach of institutional systems we have chosen to adopt in this book precisely investigates the diversity of emerging forms of capitalism by looking at the systems of sectoral modes of regulations to be observed across a broad range of developing countries. Our analysis finally ushers in a wide range of questions. How can we first assess institutional systems empirically, and then compare them? Is there an institutional pattern common to all emerging and developing countries? If not, do individual institutional configurations cluster into a limited number of models? What are the main long-term determinants of these models, and what specific patterns of socio-economic outcome are associated with them? What paths of institutional formalization are open to countries trying to escape the poverty trap? All these questions are of deep interest for all of us who try to anticipate what the world economy will look like within the next two decades. Addressing them is also crucial for the social scientists (economists, political scientists, sociologists) investigating how economies, polities and societies interplay and self-organize in a globalized world. This book is our contribution towards this goal.
-  The most quoted reference to the institutional convergence hypothesis is certainly Fukuyama(1992). As for economists, Benabou (2006) has provided a formal demonstration of this convergence mechanism. Acemoglu et al. (2012) have, however, recently shown that the persistence ofdifferent systems of capitalism is explained by the complementarities in terms of specialization anddemand.
-  For a simple request using China and Capitalism as keywords, a well-known online book resellergave no fewer than 1243 references classified under the heading “Politics and Social Sciences”, and593 under the “Economics” heading. A similar request gave 204 references for India under theheading “Economics”, 88 for Brazil, and only two for one of the most widely acknowledged Africanmodels of emerging capitalism, Botswana. It should be noted that whereas Japan, the oldest Asian“former” emerging capitalism, has 811 references, Korea has only 135.
-  Similarly, the question has only received scant attention from Development Studies, with thepolitical economies of emerging and developing countries simply being treated as either more orless identical, or else being considered as too diverse and sui generis to be subsumed into models.Those rare attempts are surveyed in Chap. 2.