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At a conference at USC, Harvard historian Carter Eckert informed me that Alice Amsden had died earlier this year; we had missed it and suspect others might have as well. For those who study Korea--and the political economy of East Asia more generally--her contrarian voice will be missed.
Alice was an outsized personality: combative, impatient even irascible. Although sympathetic to her larger project, she would burrow into differences. I came out on the losing end of more than one argument with her. Her impatience was well-founded. She was inductive in the best sense, and had little time for theory that was not rooted in empirical engagement. And I do not mean running regressions. She logged lots of hours talking to officials and managers and touring the shop floors of Korean and Taiwanese firms.
For Koreanists, she will be remembered for Asia's Next Giant: South Korea and Late Industrialization. But it is her most important book, and the one that motivated her more general statement in The Rise of the Rest: Challenges to the West from Late Industrialization. Economists like to sneer at her claim that Korea succeeded by “getting prices wrong.” But three-word quotes hardly do justice to the richness of her argument about Korean growth. The core argument of Asia’ Next Giant did not have to do the real effective exchange rate or even industrial policy, but with learning: how latecomers absorbed technologies, including product, process and managerial technologies.
The state was an important part of the story, but not simply because it intervened to “get prices wrong.” One of her most astute observations had to do with business-government relations. Decades before Rajan and Zingales wrote their important Saving Capitalism from the Capitalists, Amsden pointed out that high-growth trajectories were more likely when the state could “discipline” the private sector by controlling rent-seeking. Does that point need serious defense?
But firms were important, too. She showed how the emphasis on process engineering in the Korean chaebol and movement of engineers within the groups facilitated learning. Process engineers were Amsden’s heroes, major drivers of the industrialization process.
Amsden’s work generated such heat because it entered stage left just as a neoclassical consensus on East Asian growth appeared triumphant. Led by heavyweights like Bela Balassa—my colleague Marc Noland’s mentor--Anne Krueger and Jagdish Bhagwati, that consensus focused on the reforms that shifted countries from import-substitution to export-led growth. This consensus had two weaknesses, the first being political. If such reforms were so obviously welfare-improving, why didn’t more countries adopt them? Chalmers Johnson was the first to raise this issue in his magisterial MITI and the Japanese Miracle. Others followed, myself included.
However the big prize was the fight among the economists, since they exercised much more power over policy. The debate crystalized around the role of industrial policy, but it was always very much more than that. The critics—Amsden, Robert Wade, Ha-joon Chang, Dani Rodrik—showed that the East Asian cases were distinctive models of capitalist development that bore little resemblance to the advanced industrial states. Success came not from adopting a policy template such as that handed down by the Washington Consensus, but from a more complex process of social learning.
Whatever we think of the particular elements of Alice Amsden’s work, she stood as a reminder of one important lesson in the sociology of knowledge: if there is a powerful consensus, upheld by a professional establishment, watch your wallet. Groupthink can easily trump a careful look at the facts on the ground. Knowledge evolves through point and counterpoint. Alice Amsden’s career was devoted to being a sharp antithesis.
Further reading.
Marcus Noland and Howard Pack, Industrial Policy in an Era of Globalization. My colleague and I disagree on these issues, but his book with Howard Pack is testament to the fact that these debates have been long-lived.
Stephan Haggard, Pathways from the Periphery: the Politics of Growth in the Newly Industrializing Countries. I show that the transition to export-led growth in the East Asian newly industrializing countries rested on strong states.
Stephan Haggard, “On Governing the Market,” (.pdf here). The main competitor to Amsden’s book on Korea was Robert Wade’s study of Taiwan, Governing the Market. In the attached 2004 review for Issues and Studies, I survey the debate on the developmental state. Amsden also wrote on Taiwan; Beyond Late Development: Taiwan's Upgrading Policies with Wan-wen Chu remains one of my favorite books on the political economy of the country.
