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Heterodox Approaches To A Post-Pandemic World: What Would Alice Say?

“Learning to develop requires a shift from purely deductive theories to relying on inductive live experiences in real time. If emerging economies are to continue to surge, if less developed countries are to step up their output, they need a mutinous mind, a soul of sedition, and a revolution in reasoning about economic development”.

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Professor Alice Amsden was the Barton L. Weller Professor of political economy at the Massachusetts Institute of Technology (MIT) and was one of the leading heterodox economists. She was famous for her work on industrial development in developing countries.  Her early research focused on the late industrializing economies of East Asia; she would later apply her theory of development to other regions. She challenged orthodox economic and normative policy making, particularly the Washington Consensus; a neo-liberal and one size fits all approach to policymaking agreed upon between the International Monetary Fund (IMF), World Bank, and U.S. Department of the Treasury. Professor Amsden posited that the more freedom the developing countries had to set their own policies the faster they grew. In an interview, she explained why she was drawn to East Asia “I am usually driven by injustice and hypocrisy, rather than by a two-sector model, although that is always in the background”.  

In her book on Taiwan, Beyond Late Development: Taiwan's Upgrading Policies, co-authored with Wan-Wen Chu they showed how latecomers catch up in high-tech industries and modern services, the critical factors, government policies, and large-scale firms, which drive skills, speed, and scale. In a separate earlier study on Taiwan, on the manufacturing of machine tools, she showed how through local entrepreneurship, small firms devoid of any government support, used reverse engineering and tapped into an existing reservoir of existing skilled labor to make it to the top of the industry globally.  She would say “This was one of the few industries I ever studied where government support was not required. I always use it as a benchmark. It got its capital from slogging away and selling its inner-city factories when real estate prices soared”.  

In her path-breaking book ‘Asia’s next Giant, South Korea and late Industrialization’ she documented how nationally owned firms learned their production engineering and project execution skills and found that it was skills rather than an innovation that was a factor in their success in world markets. She highlighted how the government offered subsidies to firms, however, imposed strict performance standards and focused on export processing to absorb labor. The government focus on jobs and employment and more importantly learning; Korea’s entire industrialization was based on learning, “the concerns about jobs and employment paid off for the Korean people in so many ways. Professional managers first gained experience in labor-intensive plants, and as employment grew, the government did not have to apologize for investing in capital-intensive industries, where the acquisition of technological capabilities really surged, also heavy investment in jobs and education were critical for democratization”.  

In her seminal book The Rise of “The Rest”: Challenges to the West from Late-Industrializing Economies she documented how after a century of struggle, a dozen non‐Western countries with pre‐Second World War manufacturing experience succeeded in entering the orbit of modern industry. For the first time, countries without the competitive asset of proprietary, pioneering technology became economic powers, how industrialization among these prime latecomers succeeded, why it followed a novel path, and what some countries did to advance farther than others. She was an early predictor of China’s success. In her final book ‘The Role of Elite’s in Economic Development’ she co-authored with Alisa Di Caprio and James Robinson, they would interrogate the role of the elite who were the beneficiaries of state subsidies in economic development, and played an outsized role in a country’s trajectory of growth.  

In an interview given in 2008 to Rolph van der Hoeven, she would lament “Even today no one talks about gross unemployment. That’s too hot. Better stay out of the labor market. It’s all about poverty alleviation now. No one cares about jobs. They care more about cultural liberty, for example, because social theory is in fashion”. In response to a shift within developing countries to equitable and social development as promoted by the Millennium Development Goals (MDGs) she responded that “curing poverty by creating employment took time but trying to raise living standards by encouraging social reform would take an eternity”.  

For all inquiries related to the series please email the executive editor Neeta Misra who is based in Washington DC at neeta@businessworld.in 

 


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