The concept of Developmental State revisited

O conceito do Estado Desenvolvimentista revisitado

ABSTRACT

The article lists as a hypothesis that the concept of Developmental State has recently undergone variations and needs to be revisited and updated, but not discarded; on the contrary, it remains extremely important nowadays. In order to test its hypothesis, the article adopted as a technical-methodological procedure a systematic approach of bibliographic sources, intending to conduct a State-of-the-Art Study about the Theory and the concept of the Developmental State. The results obtained were that the concept of Developmental State remains elementary, but it has become more complex, intricate, aggregated and dynamic. The article dares, therefore, to present a new concept of Developmental State.

KEYWORDS:
Developmental state; development regime theory; new developmentalism; new developmental state

RESUMO

O artigo elenca como hipótese que o conceito de Estado Desenvolvimentista sofreu variações recentemente e precisa ser revisitado e atualizado, mas não descartado; pelo contrário, permanece extremamente importante nos dias de hoje. Para testar sua hipótese, o artigo adotou como procedimento técnico-metodológico uma abordagem sistemática de fontes bibliográficas, pretendendo realizar um Estudo do Estado da Arte sobre a Teoria e o conceito de Estado Desenvolvimentista. Os resultados obtidos foram que o conceito de Estado Desenvolvimentista continua elementar, mas tornou-se mais complexo, intrincado, agregado e dinâmico. O artigo ousa, portanto, apresentar um novo conceito de Estado Desenvolvimentista.

PALAVRAS-CHAVE:
Estado desenvolvimentista; teoria do regime de desenvolvimento; novo desenvolvimentismo; novo estado desenvolvimentista

INTRODUCTION

The general purpose of this article is simple, however elementary and original. It is to demonstrate that the concept of Developmental State needs to be revisited. The premise from which research departs is that, recently, there have been new theoretical and practical contributions on the role of the State for the economic development of a society. This makes the concept of Developmental State, normally based on Johnson’s studies (1982, 1999), become more complex, original and representative.

The article tries to answer the following question: What is, currently, understood by the concept of Developmental State in relation to its use as a theoretical-analytical tool for academic research and public policies? The research lists as a premise that the concept of Developmental State has recently undergone variations and needs to be revisited and updated, but not discarded; on the contrary, it remains extremely important nowadays.

To reach its objective and examine its premise, the article adopted as technical and methodological procedure a systematic approach to bibliographical sources, conducting a State-of-the-Art Study on the concept of the Developmental State. It is important to emphasize that the research essentially focused on post-1982 studies and writings, the year in which Chalmers Johnson formulated and operationalized the concept of the Developmental State for the first time when he analyzed Japan’s economic development process.

Understanding this methodological approach is fundamental for the sense of research, since the article is not concerned with rescuing the theoretical, historical and social procedurality of the formation of the sovereign state, nation-state and economic development since its structuring within the Capitalist Revolution¹. The paper does not aim to build a concrete model of Developmental State that could be applied or emulated without limitations by any country. As we know, a construction of Developmental State is specific to the social, economic, and political local structure, in addition to the historical-social density of the moment. Consequently, practical experiences will not be analyzed; this paper observes only the conceptual formulation and operationalization of the Developmental State.

The focus of this paper is theoretical and conceptual, primarily. Then, we carried out a syntopical reading of the specialized literature with the explicit aim to uncovering some differences and similarities of the old and new approaches to elaborate a new concept of Developmental State. This program allows mapping pioneering and contemporary authors, concepts, guidelines, strategies and precepts present in the analyzed material, propagating them and building new reflections and contemplations.

The article consists of two sections, in addition to this introduction and the final remarks. In the first section, we highlight the early studies on the concept of Developmental State. In the second section, the paper dedicated to exposing the recent studies on the concept of the Developmental State with its variations and innovations. In the final remarks, the article presents the results obtained with the research and dares to formulate and operationalize a current concept for the Developmental State.

DEVELOPMENTAL STATES: THE BIRTH OF THE CONCEPT AND THE CONSOLIDATION OF THEORY

After the end of the World War II, the Economy was solidified as an Applied Social Science, and consequently occurred the advance of economic studies about how the process of growth and economic development unfolds. At that time, numerous authors dedicated to characterizing and operationalizing the concept of Economic Development and, later, of a Developmental State. Thus, for a starting point and a better understanding of the logical-conceptual argument presented in this paper, it is essential to differentiate, succinctly, the concepts of economic growth and economic development.

According to Moraes (2023), economic growth is a sine qua non condition for a nation to achieve economic development, but it is not sufficient. Economic growth is more linked to increases in a country’s product, that is, to the continuous growth of per capita income over time. Economic development, in turn, represents an improvement in the population’s quality of life through productive structural change (expansion, integration, and sophistication of the productive structure), including positive alterations not only in the composition of the product but, also, in the allocation of resources by the different sectors of the economy to improve welfare indicators. In Furtado’s words:

[...] economic growth, as we know it, has been based on the preservation of the privileges of the elites who satisfy their eagerness for modernization; development is characterized by its underlying social project. [...] Having resources to invest is far from being a sufficient condition to prepare a better future for the masses of the population. But when the social project prioritizes the effective improvement of the living conditions of this population, growth is metamorphosing in development (Furtado, 2004, p. 484).

The State, thus, that seeks strategies of economic growth, not in an irrational and merely exponential manner, but aiming to develop to withdraw from the periphery of the world economic system is a State with developmental intentions. To this end, the State needs to have the purpose of changing its productive structure to have greater economic and social development. The State, hence, needs to structure and execute a developmental project.

Since the end of World War II, there have been important essays and academic research analyzing these issues. However, the operationalization of the conceptual of the Developmental State, with its political, economic and social aspects, began only in the 1980s. Previously, what existed were studies about the role of the State in economic growth and development, but not the formulation of the concept of Developmental State. Despite the construction and operationalization of the conceptual of the Developmental State having, Johnson’s studies (1982, 1999) as a landmark, the studies consulted by the research, usually go back to the 1960s. The research opted to follow this tradition since it helps in the understanding of the evolution of the analyzed concept.

In the 1960s, Alexander Gerschenkron published a study that focused on the political importance of the economic development process. In the book, Economic Backwardness in Historical Perspective. A Book of Essays (1962), the author combines history, political theory, and methodology to analyze the centrality of State intervention as a fundamental cause for “backward country’s industrialization”.

For Gerschenkron (1962), even though there was no “recipe” for economic development, it was possible to find regularities and specify generalizations in the process. When analyzing the history of the industrial policy in backward country’s industrialization, that have made their productive structural change in a second moment, such as the USA, Germany, Japan and the Nordic countries, Gerschenkron (1962, p. 354) states: “The more backward a country’s economy, the greater was the part played by special institutional factor designed to increase supply of capital to the nascent industries […]”.

The central argument of Gerschenkron (1962) is that economies with economic backwardness - a concept formulated and operationalized by the author - are not able to repeat the same path as economies with pioneer industrialization. In the backward country’s industrialization, the role of the State had its relevance expanded in the economic development process after the Industrial Revolution. This occurs because the production processes, nowadays, used more capital-intensive technology, so making the possibility of emulation and catching-up of the backward economies more complex, uncertain and costly. The gap between center and periphery, between industrialized and non-industrialized nations has become much larger.

Albert O. Hirschman - one of the forerunners of Classical Development Theory - in his seminal work The Strategy of Economic Development (1958), already highlighted the importance given to the State and the political dynamics of development in Gerschenkron (1962). In this study, Hirschman argues that economic development is not only subject to finding the optimal combination of resources and factors but “[...] in a situation of underdevelopment a far stronger agent is required than deficit spending or similar Keynesian remedies for unemployment” (Hirschman, 1958, p. 06). The author uses the term “binding agent” of the responsible State “[...] to organize and achieve cooperation among the many factors resources and abilities needed for successful development [...]” (Hirschman, 1958, p. 10).

Although the instigating works of Gerschenkron (1962) and Hirschman (1958), lead, in part, to a categorization and systematization of the concept of Developmental State, and although the first developmental experiments were carried out by European mercantilist States, which is still the beginning of the Developmental State model - as stated by Hidalgo-Capitán (1998) and Bresser-Pereira (2016, 2017a, 2017b) - the elaboration and application of the concept of the Developmental State only appeared in the 1980s. It has a quite a precise point in time when the political scientist Chalmers Johnson analyzed Japan’s economic development process. This is unanimity in the specialized literature, see, for example: Fine and Pollen (2018); Haggard (2018); Ricz (2020); Routley (2012) and Wylde (2012).

Johnson (1982, 1999) used the term Developmental State in a pioneering mea­ns to define the State whose primary essence is the commitment to overcome underdevelopment and the aspiration for economic development. According to Johnson (1982, p. 18-20), the State can intervene in the economy by obeying three standards: i) Regulatory State with its market-rational; ii) Socialist-Leninist State and its command economy; and iii) Developmental State and its plan rational model.

According to Johnson (1982), the Developmental State rejects the economic liberalism (laissez-faire) and the plan ideological of the Socialist-Leninist State ­with its command economy. For the author, economic planning in the Developmental State is a basic and substantial characteristic, however, it obeys logic and a rational objective: State interventionism for economic development.

For the author, it is necessary an interaction between State and market for society to overcome underdevelopment. Johnson (1982) yet argues that the Developmental State cannot be purely an organizer of the market in a solely Keynesian model, because it is incapable of removing the economy from underdevelopment. The Developmental State is concerned with the effectiveness of productive capacities while the regulatory State seeks only greater efficiency of the economy. The regulatory State does not plan, execute, or control industrial policy, for example. In the Developmental State industrial policy for the sophistication, expansion, and integration of the productive structure, in turn, is a priority. In the author’s words

The developmental, or plan-rational, state, […] has as its dominant feature precisely the setting of such substantive social and economic goals. In the plan-rational state, the government will get greatest precedence to industrial policy, that is, to a concern with the structure of domestic industry and with promoting the structure that enhances the nation’s international competitiveness. […] On the other hand, the market-rational state usually will not even have an industrial policy (or, at any rate, will not recognize it as such) (Johnson, 1982, p. 19).

According to Johnson (1982, 1999), the Developmental State is marked by the following aspects: i) substantive intervention in the economy and not only regulatory; ii) central role in a small but highly qualified public bureaucracy, delegating a merely auxiliary role to the legislative and judicial branches; iii) control of foreign financial accounts; iv) the use of a rationalized industrial policy that protects the national industry from final goods, which separates foreign technology and facilitates the import of machinery; v) supervising of competition in strategic sectors for structural change; vi) creation of public financial institutions; vii) provisional but intense use of credit and fiscal incentives; viii) adoption of a consolidated budget for public investments; ix) investment in science and technology; x) rejection of detailed laws, allowing the creative disappointment of entrepreneurs and a certain discretion in the public bureaucracy.

For Johnson (1999), the Developmental State must adopt a quasi-revolutionary stance. In the author’s words:

The successful capitalist developmental states have been quasi-revolutionary regimes, in which whatever legitimacy their rulers possessed did not come from external sanctification or some formal rules whereby they gained office but from the overarching social projects their societies endorsed and they carried out. […] What distinguishes these revolutionaries from those in the Leninist states is the insight that the market is a better mechanism for achieving their objectives than central planning. The market includes people who want to work for a common goal; central planning excludes them (Johnson, 1999, p. 52-53).

Another important economist of the Classical Developmental Theory to dedicate to the theme was Robert Wade. What determines the Developmental State, according to Wade (1990), is its focus on the State as a central economic mechanism. The State guarantees a high share of investments in productive capacity in the national territory, orienting it to economic sectors with the capacity to sustain higher wages in the future. The result of this intense cycle of investment is a rapid increase in the demand for labor and, consequently, an addition to the worker’s income, generating an improvement in consumption. After the productive structural change of the economy, the Developmental State can expose its companies to international competition directly or indirectly.

To Wade (2018), the Developmental State has to use its apparatus to: i) expand production in sectors and products with increasing returns and external economies; ii) keep a large measure of the productive sector in national hands; iii) look all the time for opportunities to replace sophisticated imports with domestic production (in priority sectors). To achieve these objectives, the Developmental State needs:

It deploys a wide range of instruments, including directed credit, fiscal investment incentives (such as tax rebates on production of products currently on the country’s technology frontier), trade protection (combined with a tariff-rebate system so that producers can get tariff-free import of inputs which go into their exports while they pay the tariffs on what they sell on the domestic market), and hard bargaining with multinationals intending to make foreign direct investments within the national territory (such as local content requirements on a proposed ethylene plant or chip plant) (Wade, 2018, p. 527).

In 1995, Peter Evans’ writings deepened and revived the debate about the Developmental State by employing precepts of sociological and political economy. For Evans (1995), the Developmental State arose by national arrangements or by external factors (international threat). When it emerges by national will, the Developmental State is too close to a Weberian bureaucracy. The Developmental State, in this way, is meritocratic with highly selective and beneficial recruitment for efficiency, with commitment and encouraging corporate coherence. The agents and acts that construct the Developmental State are not isolated from society as suggested by the precepts of the Weberian bureaucracy, however. Contrarily, the Developmental State has to structure institutional mechanisms capable of maintaining State bureaucracy in constant contact with groups, movements, and social classes.

For Evans (1995), for economic development, contact with strategic sectors is essential to create dense connection networks capable of solving problems and conflicts of interest, with legitimacy and active participation by social sectors, and particularly by entrepreneurs. Evans (1995) rescues the concept of embeddedness - originally formulated and operated by Karl Polanyi in The Great Transformation: the origins of our time (1944) - to describe the incorporation of society into the State, through institutionalized channels for the continuous negotiation and renegotiation of objectives, acts and political actions.

According to Polanyi (2001), the economy is not autonomous, but it is a system of social relations between individual actors and collectivities. This means that economic institutions are embedded in various non-economic institutions and their participation is fundamental to the functioning of the economy. Economics, thus, is a science that faces a severe ideological dispute since it deals with the distribution of wealth and income among social sectors.

In order not to be contaminated by ideological dispute and to maintain the scientific character of Economics, Evans (1995) defends that the Developmental State needs the embeddedness of the multiple social actors with their various desires. For the author, the Developmental State, however, cannot be captured and neither instrumentalized by a determined fraction or block of power interested in immediate, personal, party, and class gains. The Developmental State must also achieve administrative and enforceable autonomy, however without being authoritarian and/or discretionary.

In consequence of all explain, Evans (1995) states that the internal organization of Developmental State must have embeddedness of social sectors and autonomy at the same time, which led the author to formulate and operationalize the concept of “embedded autonomy”. In Evans’ words:

This apparently contradictory combination of corporate coherence and connectedness, which I call “embedded autonomy,” provides the underlying structural basis for successful state involvement in industrial transformation. Unfortunately, few states can boast structures that approximate the ideal type (Evans, 1995, p. 12).

The Developmental State, for Evans (2003, p. 28), moreover, does not need to obey an institutional standard imposed by the central economies. This institutional imposition leads to an “institutional monocropping” charged with depreciating and distorting the history, culture, and conjuncture of other countries. Economic underdevelopment and the imposition of an “institutional monocropping” present in the international economic system, restrict the incentives and increments for States and citizens of dependent and underdeveloped economies to reach their full capabilities and potential.²

Institutional monocropping is based both on the general premise that institutional efficiency does not depend on adaptation to the local socio-cultural environment and on the more specific premise that idealized versions of Anglo-American institutions are ideal development instruments, regardless of the level of development or position in the global economy (Evans, 2003, p. 28-29).

Woo-Cumings (1999) presents another fundamental aspect of the Developmental State to have embedded autonomy. According to the author, to acquire the quality of embedded autonomy, the Developmental State must have a pilot agency capable of being what Hirschman (1958) called the binding agent. The pilot agency of the Developmental State needs to possess and build embedded autonomy agreed upon by dense networks and corporatist arrangements representing the interests of classes, collectives, and social movements. The pilot agency, also, needs to be able to carry out a plan-rational, as Johnson (1982) defended, being responsible for executing an economic development plan and monitoring its progress.

The South Korean Ha-Joon Chang popularized, at the end of the last century, the concept of Developmental State beyond the economy. According to Chang (1999), the Developmental State oversees four functions: i) coordination of financing and investments for structural changes; ii) formulating a future vision of the economy; iii) construction and reform of institutions and organizational vehicles; iv) conflict mediation. The Developmental State, for Chang (1999, 2004), has to focus on expanding the most sophisticated productive capacities of society through the creation and improvement of new technologies and organizations.

In 2005, Chang, in a chapter published together with Peter Evans, highlighted the value of institutions in the Developmental State. According to the authors: “The developmental state provides a classic example of how institutions make a difference in economic change, as it is among institutions that have most dramatically reshaped the relative national trajectories of economic growth in the late twentieth century” (CHANG EVANS, 2005, p. 101).

For Chang and Evans (2000) and Chang (2004), good institutions and organizational vehicles are not the basic causes of development or underdevelopment - as Institutional Economics believes - but it is undeniable that they are conditions for the proper functioning of markets and for the formulation, execution and evaluation of State intervention policies aimed at economic development. Institutions and their organization may vary from State to State; there is not a single recipe, however.

According to Amsden (2001), “the rest” - as the author calls the backward industrializing economies of Asia and Latin America - prioritized the construction of a Developmental State during a vast period of the 20th century. The Developmental State of “the rest”, in Amsden’s view (2001), has four attributes: i) development banking; ii) local-content management; iii) ‘‘selective seclusion” (opening some markets to foreign transactions and keeping others closed); iv) national firm leaders and v) principle of reciprocity. This last item, widely applied in East Asian countries and fearfully disdained in Latin America, concerns control mechanisms defined by the Developmental State for national companies that receive subsidies, licenses and State investments to achieve a certain performance standard. To Amsden:

The control mechanism of ‘‘the rest’’ revolved around the principle of reciprocity. Subsidies (‘‘intermediate assets’’) were allocated to make manufacturing profitable - to facilitate the flow of resources from primary product assets to knowledge-based assets - but did not become giveaways. Recipients of subsidies were subjected to monitorable performance standards that were redistributive in nature and results-oriented. The reciprocal control mechanism of ‘‘the rest’’ thus transformed the inefficiency and venality associated with government intervention into collective good […]. (Amsden, 2001, p. 8, emphasis in original).

For Amsden (2001), the Developmental State was the way that “the rest” found to gradually replace in their societies the rhetoric and policy of the invisible hand of the market and the Theory of Comparative Advantages imposed by the pioneer countries of industrialization. Economic interventionism, through the Developmental State, was the real responsible for the “[...] Golden Age of industrial expansion” (Amsden, 2001, p. 125).

RECENT STUDIES ON THE DEVELOPMENTAL STATE: COMPLEXITY AND VARIATIONS

In the last decades, the theoretical literature dedicated to researching the general and specific aspects of the State and its relationship with the national and international market for the economic development of a society has expanded and deepened significantly. The recent democratization of scientific research in some peripheral countries has allowed authors from the Global South to contribute and propagate more actively with the debate on the Developmental State. In addition, with the economic crisis of 2007, the year in which the Subprime Mortgage crisis in the USA was triggered and with the deepening of the European Sovereign Debt Crisis in 2008, several European and American authors returned to the studies of the Developmental State.

For Hayashi (2010), this means that neoliberal globalization has not buried the concept and potential of the Developmental State. In fact, far from being outdated, it is necessary to integrate into the world economy, rather than to be protected from it. According to the author:

[…] the developmental state is a model of state-led industrialization for developing countries, where the market mechanism is underdeveloped or the market itself does not exist. The underdevelopment (or nonexistence) of the market means that the market does not signal which industries should grow or disappear. Under the circumstances, the government should be more proactive than just leaving any economic activity to the market: the government should identify which industries should be targeted and actually promote such industries. However, the means to promote particular industries do not have to equate to trade protectionism (Hayashi, 2010, p. 62).

For Schneider (2015), what differentiates the Developmental State from other States is not only the effort to accumulate economic capital. All States want the economy to grow; however, the Developmental State craves a planned and projected economic growth with the ambition to change the country’s economic position in the international economic system. The Developmental State, therefore, has no desire to remain merely as a Welfare State but aspires to withdraw the nation from the periphery of the world economy by overcoming its condition as an underdeveloped society.

Doner and Schneider (2000) and Schneider (2015) also emphasize the need for the Developmental State to have embedded autonomy in order to pursue its catching up. Furthermore, the authors indicate two appropriate institutional arrangements to assist in the construction of embedded autonomy. They are: i) deliberation councils composed of representatives of the government, business associations, and specialists; ii) development associations in charge of collecting information, allocating public investments, and monitoring the use of funds, demanding reciprocity.

For Fine and Pollen (2018), there is a Developmental State Paradigm in Economic Science and Political Science that can be classified as middle-range theory.

This offers an integration of the theoretical and the empirical, lying somewhere between grand theory and case studies, and is marked by its feasibility in explaining social outcomes by reference to underlying causal factors, without being overly deterministic or insensitive to diversity and specificity (Fine; Pollen, 2018, p. 212).

According to Fine and Pollen (2018, p. 214), the Developmental State Paradigm has three basic characteristics. Specifically, i) it is structured taking as fundamental the State-Market dichotomy, but complementation with civil society is essential; ii) the State is designed in terms of ministries, institutions, networks, and personnel to make policy, at the expense of broader considerations of politics of class conflicts (inter-and intra-) and the sources and exercise of power and associated hierarchies. Although class interests are not absent from the Developmental State Paradigm, they tend to be confined to the consideration only of the capitalists, the others have greater or lesser openness through embedded autonomy; iii) the Developmental State Paradigm follows the logic of nationalism and, in particularly, in the idea that each Nation-State can develop, subject to the adoption of appropriate policies.

According to Riain (2004), nowadays, Developmental States achieve their objectives by molding the productive capabilities of society and of the market as a whole and no longer by taking the lead in the economic development project. A Developmental State is one that “[…] pokes and prods domestic firms to compete in the global economy and to constantly upgrade their organizational and technical capabilities to that end” (Riain, 2004, p. 23). For the author, Developmental State is still the best mechanism to propel an economy beyond the limited dynamics of private investment. It is the best means to improve a country’s position in the international division of labor. However, the Developmental State cannot achieve these ends in isolation; it increasingly depends on a harmonious relationship with society for its success.

To Ricz (2020), the new Developmental States must prioritize not only the sophistication, expansion and integration of the productive structure. It is also necessary to seek social, sustainable, equitable and inclusive development. This involves establishing contact with different social and economic interest groups, aiming at social support and mobilization. The Developmental State, nowadays, therefore, needs to establish sectoral approaches, something defended by Mazzucato (2015) as well.

One of the main specificities of developmental states is thus, that by building up balanced socio-economic alliances, these can lessen the role and share of discretionally distributed rents for buying the support, loyalty of certain elite or interest groups and at the same time make it possible for governments to apply a long-term development-oriented approach and implement their long-term developmental vision (Ricz, 2020, p. 662).

This greater approximation of the Developmental State with the environmental and social agendas does not diminish its power. For Rapley (2008) and Wylde (2012) the Developmental State must still be strong and often adopt unpopular and traumatic policies. Force must arise less from crude power and more through an alliance between a technocratic State and a well-organized productive class. The strength of the Developmental State would be much more linked to the penetration of the Developmental State apparatuses in society. For Wylde (2012, p. 66), the strength of the Developmental State derives from three factors: i) high levels of administrative capacity (institutional analysis); ii) the presence of a domestic capitalist class and its relationship with the State (company-State relations); and iii) a strong executive (authoritarianism).

To effectively guide economic development a state must enjoy the power to direct society and lead it through traumatic changes. Bureaucrats must be able to draft policies that promote national development, not the advancement of private lobbyists. Government may have to enact unpopular or even harsh policies in the name of development. […] What determines strength is less the degree but the character of penetration; therefore, a strong society is a prerequisite of a strong state, because the state needs to have an equally organised, predictable set of social actors with which to relate. The conclusion from this is that states need not be authoritarian or remote from society in order to enact or institute development (Wylde, 2012, p. 66).

Scientific production on the theme of the Developmental State has recently been concerned with analyzing the model of the Developmental State not only in underdeveloped countries (the rest), but also in central economies. The developed nations resort to the precepts of the Developmental State with the intention of maintaining their position of advantage over others. The main authors who evaluated the Developmental State in central economies were Fred Block (2008) and Mariana Mazzucato (2015).

Block (2008), when analyzing the economies of the USA and the European Union (EU), concludes that both have resorted to developmental policies to reinforce the dynamism of productivity capitalists through industrial policy, ensuring the competitiveness of their companies on the technological frontier. In the author’s view, the EU adopts a Developmental State more explicitly while in the USA the economic interventionism is veiled and covered up by liberal rhetoric.

According to Block (2008), the Developmental State in the USA and the EU is structured in a network model and not based on the Weberian bureaucracy. The so-called Developmental Network State (DNS) accommodates and organizes itself in a highly decentralized manner, relying on an extremely technical team that composes the cadres of relevant government agencies. All technicians and agencies that structure the DNS must present embedded autonomy.

A DNS is not housed in a single place; rather its activities might be carried out in literally hundreds of different offices located in different governmental agencies or facilities. It also does not have a unified budget; spending is disbursed across a wide range of different agencies. Even its impact tends to be decentralized as hundreds or thousands of distinct groups of technologists are supported in their work across a wide range of different economic sectors (Block, 2008, p. 174).

For Riain (2004, p. 30), the DNS is built around a “loosely coupled” organizational model. This, however, does not prevent it from having embedded autonomy. This is guaranteed by the State’s mobility and flexibility, bringing the public sphere closer to the various social strata at local, regional, and national levels.

The decentralization of state agencies enables them to become deeply embedded in their clients and constituencies, despite the fact that they are often dealing with a wide range of individuals and organizations across widely dispersed networks. However, the agencies also retain a certain autonomy because they are held accountable by the setting of performance requirements, constant informal monitoring by their social constituencies, and formal evaluations (typically carried out by external consultants, often published, with relatively easy availability). The internal accountability of Weberian bureaucracy is supplemented by the external accountability of particular units to performance criteria (Riain, 2004, p. 30).

The DNS aims to support companies to develop product and process innovations that do not yet exist. To this end, it uses four action mechanisms: i) targeted resourcing; ii) opening windows; iii) brokering; iv) facilitation. Let’s analyze each one.

The targeted resourcing is the action of government agents to carry out the function of prospecting ideas from creative groups in universities, research centers, and the productive social layer in order to boost them, generating economic opportunities and technological innovations. After prospecting and identifying these individuals and groups, State officials provide funding and equipment for the development of projects and ideas. “Targeted resourcing is intended to focus the energies of scientists and engineers on a particular set of tasks and create synergies by getting groups of highly skilled people working together” (Block, 2008, p.4).

The opening windows consist of the premise that many ideas, individuals, and creative groups did not fit the profile of priorities listed by the DNS at that time. This, however, does not mean that the ideas and projects developed by these individuals and groups are bad; suddenly there are excellent innovations and sophistication in frontier of knowledge that government agents are unable to capture. In view of this, the DNS needs to institute constantly opening channels (open windows) for scientists, engineers, and entrepreneurs can present their ideas and projects, receiving funding and other types of support. “This is the “let a thousand flowers bloom” dimension of technology policy where government agencies provide fertilizer to help new ideas grow” (Block, 2008, p. 5).

The brokering is presented in two subtypes, i) technological brokering and ii) business brokering. Both are the organization of facilitation and the concrete execution resulting from previous actions. The technological brokering connects the different groups of researchers, scientists, creative and the productive social layer, encouraging their organization and exchange of experiences. It is the State creating physical spaces or State agents acting as a link between individuals and groups with similar or complementary projects. The business brokering is the direct assistance of the State through funding and technical support so that these individuals and groups can commercialize their products and services developed. The State assists the groups in the management organization and commercial connections, as a supply chain and potential customers for their products and services (BLOCK, 2008).

Closing the mechanisms of action of the DNS is the facilitation. It is State assistance to remove governmental and physical obstacles for groups and researchers to develop and commercialize new technologies, modes of production and organization. An innovation in the industry, for example, may come up against outdated rules and regulations that make its research and trade unfeasible. The DNS works to facilitate and overcome these barriers, if the innovation brings sophistication productive, and competitive leadership (Block, 2008).

This brief catalog helps to understand why the DNS is necessarily a highly decentralized structure. Most of these activities require a very high level of specific expertise within the relevant government agencies. To be effective, these officials require “embedded autonomy”; they have to be deeply rooted in the particular technological community that they are funding (Block, 2008, p. 5).

According to Block and Keller (2011), the DNS with its agencies, programs and mechanisms are the real responsible for the innovations that occurred in several sectors of the EU and the USA. The authors demonstrate that between 1971 and 2006 in the USA, for example, of the 88 innovations that were rewarded as important advances for society by R&D Magazine³, 77 of them depended entirely on federal research support not only in their initial stages, but throughout the process until commercialization. In other words, of every 100 innovative products and services developed in the USA, in this period, 88 had State participation.

For Mazzucato (2015), most of the radical, revolutionary innovations that impacted society and the capitalist system would not have happened had it not been for the State to coordinate, invest and execute projects with intensive capital. According to the author, “[…] the active visible hand of the State […]” is responsible for major innovations such as railroads, nanotechnology, the internet, touch screens and modern pharmaceuticals. Productive sophistication in various manufacturing and service sectors would not have happened via the “market” at the initiative of the entrepreneurs (Mazzucato, 2015, p. 154).

In view of this, Mazzucato (2015) affirms that the State is not merely a market regulator (public choice), corrector of market failures or facilitator of economic growth. The State is entrepreneurial and is willing to take risks that companies are not. The Entrepreneurial State, for the author, does not eliminate the risks but assumes the risks. It is the Entrepreneurial State that guides and chooses strategic sectors, technological trajectories, investments in research, development, and innovation policy (RD&I) to propel knowledge, innovation, expansion, integration, and productive sophistication, resulting in development economic.

What we have instead is a case for a targeted, proactive, entrepreneurial State, one able to take risks and create a highly networked system of actors that harness the best of the private sector for the national good over a medium- to long-term time horizon. It is the State acting as lead investor and catalyst which sparks the network to act and spread knowledge. The State can and does act as creator, not just facilitator, of the knowledge economy (Mazzucato, 2015, p. 27, emphasis in original).

The productive forces of the market, according to the author, only assume the creation and production in a second phase with fewer risks and with the knowledge already consolidated. And freeing the State to allocate resources, technical staff and undertake new projects on the technological and knowledge frontier. This movement, the entrepreneurship of the State, is constant and standard throughout history, being present in the Industrial Revolution, in the structuring of Silicon Valley and can play its role in the future with the green revolution. “Arguing for an entrepreneurial State is not ‘new’ industrial policy because it is in fact what has happened” (Mazzucato, 2015, p. 27).

This entrepreneurial aspect of the State, for Mazzucato (2015), is only highlighted by the mainstream media when the development project led by the State fails. When trying to realize a complex project, often denied by companies due to the high risk implied, the State can fail; and this is soon highlighted by free-market advocates. However, in cases of successful State entrepreneurship - such as the internet, the modern pharmaceutical industry, the aerospace industry, information technology, etc. - the State does not receive merits or praises, even though it is the main investor. The glory and prestige of the conquest are left exclusively to the market. In the words of the author:

The emphasis on the State as an entrepreneurial agent is not of course meant to deny the existence of private sector entrepreneurial activity […]. The key problem is that this is usually the only story that is told. Silicon Valley and the emergence of the biotech industry are attributed to the geniuses behind the small high-tech firms […] (Mazzucato, 2015, p. 26).

Mazzucato later (2015) continues:

Examples from these high-tech sectors in the US are often used to argue why we need less State and more market: tipping the balance in favour of the market would allow Europe to produce its own ‘Googles’. But how many people know that the algorithm that led to Google’s success was funded by a public sector National Science Foundation grant (Battelle, 2005)? Or that molecular antibodies, which provided the foundation for biotechnology before venture capital moved into the sector, were discovered in public Medical Research Council (MRC) labs in the UK? How many people realize that many of the most innovative young companies in the US were funded not by private venture capital but by public venture capital, such as that provided by the Small Business Innovation Research (SBIR) programme? (Mazzucato, 2015, p. 27, emphasis in original).

Bresser-Pereira (2016) does not overemphasize the entrepreneurial character of the Developmental State, as Mazzucato (2015) does. He, however, recognizes that the State must act in an articulated and proactive manner with the productive forces of the market to obtain the maximum economic performance in the medium and long term. For Bresser-Pereira (2016), the Developmental State has the assumption that the market is the best method for society to organize economic activities. Nevertheless, the market is unable to regulate non-competitive activities and to coordinate macroeconomic prices (profit rate, interest rate, exchange rate, wage rate and inflation rate). Due to the market’s impotence in organizing and coordinating macroeconomic prices, it was necessary to create an intervening State concerned with the economic development of society.

The Developmental State, according to Bresser-Pereira (2016), must be composed of a coalition of developmental classes, aiming to stimulate the productive capitalists and support the workers. For example, in the countries that led the Nation-State consolidation process, the Capitalist Revolution and the Industrial Revolution - Great Britain, France and Belgium - the Developmental State was the fruit of political coalitions - monarchy and emerging bourgeoisie - and built on National Developmental. Thus, the Developmental State, for the author, opposes the liberal-conservative class coalition, composed of archaic and rustic social layers of the economy - for example, latifundium elites, rentier⁴ and financier capitalists.

In the words of Bresser-Pereira:

The Developmental State, is the State of a “mixed economy”; it is the State in which a developmental class coalition, formed by entrepreneurs, workers, public bureaucracy and sectors of the former dominant class, holds political power and adopts a national development strategy, thus opposing a conservative and liberal coalition formed by the sectors of the old ruling class, by rentier capitalists and financiers who manage the resources of the former (BRESSER-PEREIRA, 2016, p.07).

For Bresser-Pereira (2017b), it is possible to categorize governments according to their degree of State intervention. In one spectrum would be Liberal capitalism and in another the Statism represented by the fully planned economy - which Johnson (1982) called the Socialist-Leninist State and its command economy. To Bresser-Pereira (2017b), the Developmental State is halfway between the two extremes.

Despite this categorization, Bresser-Pereira (2017b) emphasizes that the State cannot be defined as a developmental only by the combination of market and State coordination; there are other characteristics. Bresser-Pereira (2017b) lists five aspects of Developmental State, they are: i) to elect productive sophistication as a goal to achieve economic development; ii) the State must establish strategic development policies and industrial policies; iii) the State has to coordinate the non-competitive sector of the economy (infrastructure, basic industries and large financial institutions); iv) the State has to be concerned about fiscal and exchange rate responsibility, without incurring chronic budget and current account deficits; v) the State has to be responsible for managing the five macroeconomic prices (profit rate, interest rate, wage rate, inflation rate and exchange rate).

For Fonseca (2015, 2016) the types of economic interventionism are different, so they differ in theory and in practice. According to Fonseca (2015, 2016), Developmentalism is one of several types of interventionism that the State can carry out in the economy, there are other types such as: Socialism, Fascism, Keynesianism, etc. Economic interventionism is a reality in almost all political ideologies and economic theories, since to a greater or lesser extent they delegate a certain role to the State in the conduct of economic policy.

The interventionism of Developmentism “[...] does not aim to reinforce market mechanisms but to provide changes towards a route considered desirable by its formulators and executors” (FONSECA, 2015, p.45). The tools of interventionism in Developmentalism may vary from government to government, from developmental strands to strands, above all in the matter of social justice and national sovereignty, however all currents seek the expansion, the integration and the sophistication of the productive structure for overcoming the condition of underdevelopment through a Developmental State.

Fonseca (2015) enumerated the aspects that most Latin American governments had when they elected economic development through the Developmental State as their primary objective in the middle of the 20th century. Fonseca also verified what the main thinkers on economic development listed as an expression of the Developmental State. The result of this dense research is synthesized in seven points as the main aspects that predominate in the Developmental State: i) the State must have a national project; ii) conscious and determined intervention by the State; iii) the State has industrialization as its scope; iv) the State has a bureaucracy or technical group capable of formulating and/or executing the national project; v) the State aims at income redistribution; vi) the State is concerned with agrarian reform; vii) there is the presence of development banks or State development institutions.

Mkandawire (2001) argues that Developmental State is one that has the capacity to pursue any national project, assuming functions beyond its capacity, character or policy. While, for Musamba (2010), the Developmental State has as a striking characteristic a political leadership oriented towards development. Musamba (2010) also states that bureaucratic autonomy, a key element for the Developmental State, will be efficient, as it allows bureaucrats to manage the economy, through the careful selection of the main industrial sectors.

Fritz and Menocal (2007), also, raised the need for political leadership to lead the construction of the Developmental State. The authors, moreover, point out that the developmental nature of the State is not, a static status, and some States may be developmental for a limited period or transitory period. However, leadership and political goodwill alone do not guarantee the construction and execution of the Developmental State. According to Vu (2007), the Developmental State needs to have developmental structures (state capacity) and uses these to perform developmental roles. Vu (2007) points out that a country pursuing developmental roles without having developmental structures would be a Developmental State - but a failing one.

For Doner, Ritchie and Slater (2005, p. 328), what defines a Developmental State is its constant concern to remain in the frontier areas of knowledge, always generating an ability to “[…] upgrade from lower value to higher value economic activities”. This causes Developmental States to seek to occupy the highest niches in the international division of labor. Following this logic, countries that seek only economic growth would not have a Developmental State, since the focus is not only to diversify the economy but also on “upgrading”, that is, the expansion, integration, and sophistication of the productive structure. For the authors, the success of this “upgrade” is a determining factor for the Developmental State to maintain a coalition of classes around its economic development project.

Law (2009) highlights the role of education in the Developmental State. For him, the Developmental State needs to be the principal shaper of education, aiming not only best qualification of workers and entrepreneurs, but also for nation building. “To be more specific, education in developmental states, as in other societies, addresses two major themes related to state formation: economic and sociopolitical” (Law, 2009, p. 260).

For Law (2009), the Developmental State, by adopting commercial policies and industries, seeking economic development, will know the employers’ demands for skills at specific times of the developmental project. Then, to ensure an adequate match between the demand for and supply of skills, the State can use existing and future human resource requirements to guide its education and training systems. To carry out this task, the Developmental State must maintain strong control over education and training institutions so that it can respond quickly to the demands of the developmental project, the formation of the nation and the constant change of the labor market. In short, the capacity of the Developmental State redefining its labor needs and retraining its citizens is one of the main keys to the success of the development project.

It is important to mention that, in Brazil, there is, also, the construction of the concept of the Logistic State, which originated from the concept of Developmental State. The main name in the elaboration of the concept of Logistic State is Amado Cervo, who structured several interpretations about the use of foreign policy as economic development instrument.

The Logistic State proposes to revisit the realistic and practical view of Independence Thought of International Relations of Brazil developed by Afonso Arinos de Melo Franco, San Tiago Dantas and João Augusto de Araújo Castro in the 1960s. Known as Independentists, these authors understood that only industrialization would not remove peripheral countries from underdevelopment, it was also necessary to restructure the international system that is solidified in a manner that hinders or even impedes economic development (Cervo, 2008; Cervo; Bueno, 2002).

According to Cervo (2008), the international economic system is dualistic, that is, there is a center and a periphery. The foreign policy of the peripheral countries has the role of being a tool to overcome the structural dependencies - financial, business, and technological - imposed by the central economies and which not permit the economic development of the peripheral economies. The rationality of the international economy, the transnationalization of foreign capital and the insertion of peripheral countries into world-economy and in the process of globalization in a passive manner are factors that destabilize the Developmental State at the domestic level.

For Cervo (2008), it is necessary to restructure the international economic and political system, adopting a real and not merely discursive interstate economic interdependence. For this, the peripheral economies must prioritize the model of the Developmental State internally and, in the international dimension, the State needs to have a Logistic role. Moraes (2019), based on these studies, then, affirms that due to the very limitations of performance outside of its sovereignty, the Developmental State transmutes to a Logistic State when acting in the international sphere.

The Logistic State has two dimensions, according to Cervo (2008), a political and an economic one. In its political action, the Logistic State delineates three clear lines of action: i) abandoning the illusion of a multilateral and harmonious world advocated by the neoliberal paradigm; ii) rescue of the realistic and practical vision of the Independentists; iii) the search for structuring a reciprocity multilateralism between central and peripheral countries. On the economic issue, the Logistic State operates in two approaches: i) by aggregating national enterprises to international production chains; ii) by direct investments abroad, initially in neighboring countries.

[...] the focus of the (logistic) paradigm consists, precisely to provide logistic support to enterprises, public and the private, preferably private, in order to strengthen it in international comparative terms. Thus, the governments of the central countries - the United States, Europe and Japan, for example - proceed by protecting companies, technologies and capital of national origin, stimulating their internal strengthening and their global expansion, ensuring employment and the good wage of workers, increasing the well-being of the consumer (Cervo, 2008, p. 87).

With a certain influence of the Constructivism Theory of International Relations, of the World-System Economy, of the Latin American Historical-Structuralism and the Realism Theory of International Relations; the formulation and operationalization of the concept of Logistic State in Moraes (2019) perceives international society as heteronomous, and not as anarchic. Presumably, it is suggested that the interstate relationship process is continuous and historical; the identities, the accumulation of capital and the productive structure are not static, there are possibilities of being modified, therefore.

Globalization for the Logistic State must be viewed critically and realistically. Peripheral economies have to insert themselves proudly and actively into the world economy. It is necessary to encourage the internationalization of the productive social classes and large national companies so that they acquire property advantages, allowing the emulation of products, the catching-up of the peripheral economy, which would benefit from the increasing returns of scale offered by industrial activities. The performance of the Logistic State in international relations, to Cervo (2008) and Moraes (2019), helps peripheral economies to gradually overcome underdevelopment and economic dependence, producing intensive goods and services with greater productive sophistication and absorbing qualified labor and technology, consequently, developing.

According to Moraes (2019), the Logistic State does not seek economic development for the establishment of a new imperialism, reproducing the dualist international division of labor. The Logistic State adopts a real economic interdependence and not an illusion and discursive such as that propagated by radical liberalism. The Logistical State disagrees with the view that economic interdependence already exists and that the world is already multilateral and harmonious. Real economic interdependence and real harmonious multilateralism in international relations still have to be built and their construction necessarily passes through the economic development of the peripheral economies.

FINAL REMARKS

This paper aimed to revisit the concept of the Developmental State since its emergence in specific theoretical-analytical literature. The methodology used was the bibliographic review to obtain a State-of-the-Art Study. After the selection, evaluation, analysis and systematized filing of the researched sources, the research believes that it was able to satisfactorily answer the question of this article and test its premise. The use of the concept of the Developmental State in academic research and public policies remains a basic theoretical-analytical tool in the early 21st century. However, the concept of the Developmental State - as formulated by academics in the 1980s and 1990s - is outdated as a theoretical-analytical research tool. With the expansion and intensification of the Technological-Scientific-Informational Revolution, consequently, of Globalization, the concept of Developmental State remains elementary, but it has become more complex, intricate, aggregated and dynamic.

After the presentation of the authors who are the precursors of formulation and conceptualization of the Developmental State in the first session of the paper; and after the presentation of recent studies on the Developmental State - with its complexity and variations - including important contributions from the Global South in the second section; it became evident that the formulation and conceptualization of the Developmental State from the 1980s to nowadays has become comprehensive with multiple consensus but some disagreements.

From the existing literature, several common principles can be extrapolated - common principles that can be used as a model for formulation and operationalization a new conceptual of Developmental State. This s the objective of the paper. Thus, in the next lines follow our concept.

We truly believe that Developmental State has two dimensions: i) economic and ii) political-social. At the economic level, the Developmental State executes substantive and conscious intervention in economy in a quasi-revolutionary manner, yearning for economic development in a sustainable, inclusive and creative manner. Economic interventionism, to the Developmental State, has an outlined project - particularly in industrial policy and productive sophistication. It adopts plan rational of the economy - requiring development banks, State development institutions and a pilot agency. It coordinates the non-competitive sector of the economy, constructs a selective opening of the market, establishes stimuli and is concerned with the five macroeconomic prices (profit rate, interest rate, wage rate, inflation rate, and exchange rate).

At the socio-political level, the Developmental State emerges from the political leadership that aims to lead, to project the structuring, and to reform of institutions to generate agents of connections and organizational vehicles at national and international levels to promote changes toward economic development without radical conflicts. The Developmental State must maintain strong control over education and training institutions. It must democratize access to economic capital, cultural capital, and social capital. Domestic action is more interventionist-vanguardist while international action is logistics-reformist. These actions have the scope of establishing development councils and associations - with dense connection networks - in charge of exhorting the coalition of developmental social layers, monitoring the mechanisms of reciprocity, likewise allowing the participation of several social sectors in formulation, distribution, and appreciation of policies and public investments, guaranteeing social and political support at national and international levels. The Developmental State has to rely on a bureaucracy or specialized technical group with meritocratic content centralized or structured in a network - embedded in the social layers but with autonomy (embedded autonomy) - that adopts a consolidated budget of competent investments to expand the potentialities and capacities of the productive social layers, responsible for sustaining higher incomes in the future.

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• 1
  The Capitalist Revolution was the long period that allowed the change from the feudal system to capitalism. It initiated in northern Italy from the 14th century and was completed in Britain with the formation of the Nation-State and the Industrial Revolution in the late 18th century (Bresser-Pereira, 2017a).
• 2
  The imposition of an institutional monocropping can be considered a structural violence legitimized by the culture of the central countries to the peripheral ones. To understand more about the debate on violence and its three forms in society see the various works by Johan Galtung. An introduction to his vast work can be read in Amaral (2015).
• 3
  The R&D Magazine award is a reference on the subject of innovation in the USA and excludes innovations in Information and Communication Technologies (ICTs).
• 4
  The concept of rentier capitalist, although it has never been employed by Karl Marx has its origin in him. Marx (2004) juxtaposes the terms “rentier” from “capitalists” to demonstrate that a rentier tends towards the exhaustion of his benefits, while a capitalist return most of his profit to survive competition. Currently, the concept of rentier capitalist is used to describe the belief in economic practices capable of monopolizing access to any kind of property (physical, financial, intellectual, etc.), and thus obtaining significant amounts of profits without contributing to society. According to Bresser-Pereira: rentier capitalist is “[...] a capitalist economic agent that has some parallels with the aristocracies of the Ancien Régime: its disconnection from the productive system and, therefore, its essentially superfluous character, which must have been the reason why Keynes called for the ‘euthanasia of rentiers’ in the final chapter of his General Theory” (Bresser-Pereira, 2018, p. 21).

• 5
  JEL Classification: B2; O10; P48.

Publication Dates

• Publication in this collection
  13 Nov 2023
• Date of issue
  Oct-Dec 2023

History

• Received
  19 Dec 2022
• Accepted
  19 Jan 2023