S

Rethinking Development Theory:

Insights from East Asia and Latin

America

Gary Gereffi

Presented by Group 5

The Emerging Global

Manufacturing System: Toward a

Theoretical Synthesis

S (1) the declining significance of industrialization

S (2) the position of core and peripheral capital in

commodity chains and export/marketing networks

S (3) a new framework for differentiating the roles of the

newly industrializing countries in the world economy.

Research Objectives

S Japan, and its regional neighbors South Korea, Taiwan,

Hong Kong, and Singapore, have made the most

impressive economic strides of any nations in the world in

the postwar era.

S Mexico, Brazil, and Argentina being the Latin American

analogues of East Asia's "Four Tigers"

Theoretical perspectives: perceptions

and misconception

S the new international division of labor

S the globalization of production

S newly industrializing countries

S development strategies: outward/inward-oriented

S Semiperipheral countries

S dependent development

S developmental state

S cultural factors (Confucianism/Ibero-Catholic)

The NICs in Historical and World-Systems

Contexts

Table I. The East Asian and Latin American NICs: Basic Indicatorsa

Country

Populatio

n

(millions,

mid-

1986)

Area

(thousand

s of

square

kilometers

)

GDP

(US$ millions)

GNP

Per capital

Distribution of gross domestic product (percent)

Agriculture Industry Manufacturingb

Services, etc

1965 1986 1981 1986 1965 1986 1965 1986 1965 1986 1965 1986

Taiwan 19.5 36 2800 76,210 2560 4040 27 6 29 47 20 39 44 47

Hong

Kongc

5.4 1 2150 32,250 5100 6910 2 0 40 29 24 21 58 71

South

Korea41.5 98 3000 98,150 1700 2370 38 12 25 42 18 30 37 45

Singapore 2.6 1 970 17,350 5240 7410 3 1 24 38 15 27 73 62

Brazilc 138.4 8,512 19,450 206,75

0

2220 1810 19 11 33 39 26 28 48 50

Mexico 80.2 1,973 20,160 127,14

0

2250 1860 14 9 31 39 21 26 54 52

Argentina 31.0 2,767 16,500 69,820 2560 2350 17 13 42 44 33 31 42 44

a Sources: World Bank (1988:223, 227; 1983: 149) for 1981 GDP per capita; and CEPD (1988:3-4, 23, 29, 41, and 199) for the data on Taiwan.

b Because manufacturing is generally the most dynamic part of the industrial sector, its share of GDP is shown separately.

c The most recent data for GDP and the percentage distribution of GDP are for 1985. East Asian & Latin American NICs ----similar levels of industrial development;

Upper-middle-income countries;

GNP/capital ---- Higher in EA nations (1986);

The cornerstone of development for the Latin American & EA NICs ----

Manufacturing;

The service sector ---- largest share of the economy.

Table II. Export by the East Asian and Latin American NICs, 1965 and 1986a

Country

Exports

(US$ billions)Exports/GDP

(Percentage)

Percentage share of exports(b)

Primary

commodities

Textiles

and clothing

Machinery

and transport

equipment

Other

manufactures

1965 1986 1965 1986 1965 1986 1965 1986 1965 1986 1965 1986

Taiwan 0.5 39.8 18 52 59 9 5 18 4 29 32 44

Hong Kong 1.1 35.4 51 94c 13 8 43 35 6 21 38 36

South Korea 0.2 34.7 7 35 40 9 27 25 3 33 29 33

Singapore 1.0 22.5 103 130 65 33 6 5 11 38 18 25

Brazil 1.6 22.4 8 12c 92 60 1 3 2 15 6 23

Mexico 1.1 16.2 5 13 84 70 3 2 1 18 12 10

Argentina 1.5 6.9 9 10 94 77 0 2 1 6 5 14

a World Bank (1988:242-245). The 1965 export figures for all countries except Taiwan are from the IMF (1986: 114-117).

Taiwan’s export total for 1965 is given in CEPD (1988:208). The 1985 export data for Hong Kong ($30.2 billion) and Brazil

($25.6 billion) are from the World Bank (1987:221).

b Percentages may not add up to 100% due to rounding error.

c 1985.

The NICs in Historical and World-Systems

Contexts (Cont.)

EA & Latin American NICs launched major export (1965);

EA NICs --- 3rd World’s premier exporters (1986);

The NICs --- priority given to external trade (EA NICs);

The NICs in Historical and World-Systems

Contexts (Cont.)

Latin America

NICs

The world slump of 1929-33--- cutting purchasing power by 60% Most

countries --- to suspend the convertibility of their currencies, etc (Latin

America);

Latin America NICs --- open door to new wave of DFI: The US, West Europe,

and Japan (mid-1950s);

o DFI in traditional --- export-oriented projects: mining, oil, and agriculture;

o DFI in the postwar --- import-substituting investments: automobiles,

chemicals, machinery, and pharmaceuticals.

East Asia

NICs

Rapid economic growth in the EA NICs (1960s) --- after the colonization by

Japan (1945);

HK, Singapore, S. Korea & Taiwan --- Outward-oriented industrialization

(1960s): textiles, garments, and electronic equipments.

Heavier industries: steel, petrochemicals, shipbuilding, vehicle

manufacture, and computers.

Phases of Industrial

Development

Outward-looking industrialization Inward-looking industrialization

Commodity export phase

(unrefined or semi processed raw

materials: agricultural goods, minerals,

oil, etc.)

Primary ISI

(shift from imports to the local

manufacture of basic consumer goods:

textiles, clothing, footwear, and food

processing)

Primary EOI

(export of labor-intensive

manufactured products)

Secondary ISI

(a variety of capital- and technology-

intensive manufactures)

Secondary EOI

(export of higher value-added items

that are skill intensive and require a

more fully developed local industrial

base)

EOI – Export Oriented Industrialization

ISI - Import Substituting Industrialization

The dynamic interplay of inward- and

outward-oriented industrialization

Dependent development in Latin America and East Asia

Declining Significance of Industrialization

S 1950-1980 – gap between developed and developing

countries narrowed in terms of industrialization.

S Decline of industry & manufacturing share of GDP –

balanced by increase of service sector and high-value segments of

manufacturing

S Conclusions:

1) “Industrialization” and “development” are not synonymous

East Asia performed better than Latin America in terms of indicators

2) Industrialization does not guarantee proximity to core status in the

world system

Core status is defined by economic activities toward

technology- and skill-intensive products and techniques

with higher levels of local value added

Declining Significance of Industrialization

S 1950-1980 – gap between developed and developing

countries narrowed in terms of industrialization.

S Decline of industry & manufacturing share of GDP –

balanced by increase of service sector and high-value segments of

manufacturing

S Conclusions:

1) “Industrialization” and “development” are not synonymous

East Asia performed better than Latin America in terms of indicators

2) Industrialization does not guarantee proximity to core status in the

world system

Core status is defined by economic activities toward

technology- and skill-intensive products and techniques

with higher levels of local value added

Commodity Chains and

Export/Marketing Networks

S Commodity chain – network of labor and production

processes whose results is a finished commodity

Which part is more profitable?

Raw material supply

Production Exporting Marketing/retail

To move to most profitable end of commodity chain, shift

from manufacturing to marketing is required – will require

new patterns of investment in research and development,

advertising, retail distribution etc.

Differentiating the Roles of the NICs in

the World Economy

Based on export production, 4 roles:

a. Commodity-export role – export of natural

resources, re-exports (Latin America, Singapore)

b. Export-platform role – foreign-owned, labor-

intensive assembly of manufactured goods in export-

processing zones. Moved from Korea and Taiwan to China, SEA (labor cost)

Upswing in Latin America (labor cost, proximity to markets)

Differentiating the Roles of the NICs in

the World Economy

c. International-subcontracting role – production of finished

consumer goods by local firms, output is distributed and

marketed by core or peripheral capital. Major niche filled by East Asian NICs since 1980s

d. Component-supplier role – production of component parts

in capital- and technology intensive industries in the periphery,

for export or assembly in core country Latin America – production owned by core capital, sometimes

with partner

East Asia – foreign subsidiaries manufacture parts or

production by local firms

Thank you for your

attention!

Brought to you by Group 5