Introduction
The possible emergence of a developmental state in Ethiopia has renewed the debate among African activists, scholars and policymakers over how to explain the remarkable success of the ‘East Asian model’. Rapid industrialisation in South Korea, Taiwan and China supposedly invalidates dependency theory, yet Samir Amin’s framework of dependency and delinking can better explain the success of these countries than can competing theories of the developmental state, since it highlights the role of international and domestic political alliances.1 Delinking means submitting international trade and financial relations to domestic social and economic priorities. The goal of delinking can be to build a socialist society or development within a capitalist framework – to ‘catch up’ with rich countries.
The dependency paradigm emerges as a criticism of modernisation theory, which posits that the steady expansion of global capitalism eventually leads all nations to converge to the same income levels. Dependency theory is a wide tent that encompasses various schools of thought developed from the 1950s to the 1970s by groups of scholars and activists across the world – although mainly associated with Latin America – united by the assertion of a qualitative division between central and peripheral economies (Palma 1978; Kay 2010). Central economies have diversified productive structures with many sectors at the technology frontier. Their development is ‘auto-centric’, based largely on domestic producers and consumers. In contrast, peripheral economies are ‘extroverted’, their growth reliant on foreign technology, finance and markets (Amin 2014, 20–28). Since workers are not free to move across national borders as easily as goods and capital, there is no worldwide convergence of income and productivity levels.2 Dependency theorists therefore focus on the drivers of international divergence – on why so few ‘developing’ nations have become ‘developed’ ones.
Indeed, dependency theorists have been criticised for being excessively pessimistic about the prospects for economic development in the periphery, yet delinking provides a theory and a programme for how to achieve auto-centric development. Whether the goal is capitalist development or socialism, delinking is necessary to change a peripheral country’s current pattern of international specialisation and to allow for industrialisation. It requires reaching a high degree of self-sufficiency in food production, finance and technological capacity, and in access to raw materials.
Delinking in a capitalist context parallels much of the analysis and many of the prescriptions offered by the developmental state or industrial policy literature but differs on three key aspects ignored or downplayed by scholars in that tradition (Amsden 1989; Johnson 1995; Woo-Cumings 1999; Chang 2008a). The delinking framework emphasises, first, imperialist hostility to national bourgeois projects; second, the instability of developmentalist coalitions; and, third, the development of domestic technological capacity.
South Korea and Taiwan3 are the only nation-states that have gone from poor to ‘developed’ since World War II; therefore, the challenge to all theories of economic development is to explain why they have succeeded where all other low- and middle-income countries have failed. Accordingly, South Korea has garnered an extraordinary amount of scholarly attention (Amsden 1989; Chibber 1999; Kohli 2004; Chang 2008a; Fischer 2018). Korea and Taiwan became centres with US and Japanese approval and support, while China is a world power increasingly capable of challenging US hegemony. Regardless of high growth rates in several countries, the rest of Asia – except Vietnam – remains strictly peripheral. The ongoing booms in these countries continue to be dependent on foreign consumers, investors and patents. Instead of contradicting dependency and delinking, recent East Asian history demonstrates how it is a supple and fertile theoretical tradition.
This essay first clarifies Amin’s concepts of dependence and delinking and addresses some common criticisms and misconceptions of dependency theory. The second section describes how China, Korea and Taiwan are exemplary cases of delinking and demonstrates how geopolitics were crucial factors for their success. The third section concludes with a discussion of possible implications of this analysis for delinking in Ethiopia and Rwanda.
Dependency and delinking; comprador and national bourgeoisies
Amin defines dependency as a situation of ‘extroverted’ economic development, where the pattern of growth and investment in the peripheries depends on conditions in the centres. Delinking is the active management of foreign trade and finance to change international specialisation, instead of passively accepting the current international division of labour (Amin 1994, 167). The goal of delinking can be to ‘catch up’ to central economies within global capitalism, or to build a socialist society. ‘Comprador bourgeoisies’ perpetuate dependency in the periphery by becoming junior partners to imperialist capital, while national bourgeoisies aim for auto-centric capitalist development through delinking (Amin 1990, 141). Clarifying what dependency and delinking mean also requires dispelling widespread myths about what dependency theory claims: first, that capitalist development in the periphery is simply impossible; second, that the periphery is homogeneous; third, that internal factors are irrelevant; and, fourth, that autarky is the only solution.
Defining dependency and delinking
Amin asserts that the peripheral elites that embrace globalisation – minimal government regulation of the movement of goods and capital across borders – will never achieve sustainable economic development. Instead, these capitalist classes become mere ‘compradors’, or intermediaries, for imperialist capital (Amin 1990, 16). They help to organise the extraction of natural resources and exploitation of local labour on behalf of foreign capitalists but are never in control of the domestic accumulation process and therefore cannot develop technological and financial autonomy.
Peripheral economies must adjust to the changing requirements for accumulation in the centres. They may be called on to provide imperialist capital with an outlet for direct or portfolio investment or with cheap agricultural products, minerals or labour, in various combinations at different times. They are inevitably dependent on imports because they do not have significant capital goods industries. In addition, many cannot produce necessary quantities of essential intermediate goods or of basics like food, fuel and medicine. They must import these and pay for them with ‘hard’ currency, making them dependent on consumers and investors from central countries in order to obtain US dollars, euros and yen. Frequent balance-of-payments crises are not resolved through smooth exchange rate movements restoring international competitiveness but through brutal reductions in national income that restrain imports. Their monetary policies must react to those of the centres, leaving them vulnerable to global financial cycles (Rey 2015). Governments in the periphery have less ability to implement countercyclical fiscal and monetary policies (Frankel, Vegh, and Vuletin 2013; Fischer 2015). The poorest countries cannot borrow in private international capital markets and have small or non-existent markets for public debt in local currencies. Even governments and firms in ‘emerging markets’ like Argentina and Brazil, with large local currency markets, still frequently borrow in US dollars, creating a harder fiscal constraint than in central countries – since governments that borrow in their own currencies can always avoid technical default. An independent monetary policy is possible only with a managed capital account (Rey 2015).
The choice for governments in the periphery is, therefore, either to adapt their economies unilaterally to the needs of capitalists at the centre or to selectively engage global markets for goods and capital in order to prioritise domestic concerns. In short, the question is ‘Delinking or adjustment?’ (Amin 1990, 19).
Delinking is essential for all ‘sovereign projects’ in the periphery, whether on a capitalist or socialist path. To delink, the local state and bourgeoisie must control: first, the reproduction of the labour force, which means agricultural development capable of providing for food self-sufficiency, and then the production of wage goods to keep pace with rising incomes; second, the ‘centralisation of the surplus’, which requires capital controls and domestic ownership of the financial system, so the state can direct investment; third, the domestic market, reserved mostly for domestic production – without major tariffs or restrictions – which implies being competitive in world markets for a significant range of products; fourth, access to natural resources; and fifth, productive technologies, either developed locally or adapted from abroad without indefinite need for foreign equipment and skilled workers. ‘The state and bourgeoisie that control these five elements of social reproduction – and only such – deserve to be described as a national bourgeoisie and state’ (Amin 1990, 11).
Delinking in practice shares much in common with the developmental state. Supporting infant industries and boosting labour productivity requires deviating from global relative prices by disconnecting from global markets for certain goods and capital via carefully targeted tariffs, import licences, export subsidies and capital controls. The industrial policies of Korea and Taiwan aimed, as Amsden famously quips, to ‘get the prices wrong’ (1989, 141).
Delinking differs from the developmental state literature in three key aspects. First, the delinking approach highlights how difficult it is to sustain or expand a ‘developmentalist’ or ‘national bourgeois’ coalition along social democratic lines between domestic capitalists, workers and peasants. ‘The thesis of the center/periphery antagonism argues precisely that the subordinate positions occupied by the peripheries in the world system’ lead peripheral bourgeoisies to ‘encounter greater difficulties when they try to enlarge their internal class alliances’ (Amin 1990, 13). Second, delinking emphasises geopolitics, especially military and diplomatic relations between peripheral governments and imperial powers. Amin consistently derides the naiveté of those scholars who understate imperialist aggression:
The systematic hostility of the West demonstrates the stupidity of the economistic analysis according to which it is always possible to exploit selectively and intelligently the opportunities provided by the market to strengthen the degree of one’s autonomy within the world capitalist system. (1990, 33)
Developmental states face a constant danger of ‘recompradorisation’, where the domestic capitalist class abandons the national bourgeois project and choses to renew stronger ties to foreign capital instead, especially after major balance-of-payments crises. Nearly all post-colonial governments in Africa and Asia were committed to state-led industrialisation, which often resulted in growing foreign debt. Industrialisation in the periphery puts pressure on the external balance, as the growing need for imports of capital and intermediate goods requires export earnings to expand at a consistently high level. Borrowing heavily from Western governments and banks, as global commodity prices rose in the early 1970s, left African governments and their ambitious developmental plans vulnerable to pressure by these lenders when prices fell, precipitating the sovereign debt crises of the 1980s.
As Amin explains, ‘These crises of the model of the expansion of capitalism are precisely the points at which the cherished plan for a bourgeois national development goes wrong and gives way to a recompradorisation of the local bourgeoisie’ (1990, 110). Domestic capitalist classes are tempted to maximise their short-term returns by investing abroad or partnering with imperialist capital instead of continuing to subject themselves to the leadership and discipline of the developmental state. They then agree to accept the ‘law of globalized value’: economic criteria based on relative prices and productivity levels in the centre, static comparative advantage (typically in agriculture, mining or low-end manufacturing), structural heterogeneity and glaring social inequality (Amin 1990, 63). Indeed, the neoliberal reforms pushed by Western lenders after the sovereign debt crises of the 1980s ended the post-independence national bourgeois projects across Africa and reinforced a growth model based on primary exports.
In contrast, the developmental state literature, lacking a theory of why most peripheral countries fail to develop, is too sanguine about the prospects for capitalist development in the periphery. Ha-Joon Chang, one of the leading advocates of industrial policy, for example, ‘at times appears to suggest that every country can simply follow the path of the East Asian “miracle” countries if given the policy space to do so’ (Kvangraven 2021, 87).
Socialist delinking aims not only to alter a country’s insertion in the global economy, but also to eliminate exploitative class relationships and democratise society (Amin 1990, 133). It is the
pursuit of a system of rational criteria for economic options founded on a law of value on a national basis with popular relevance, independent of such criteria of economic rationality as flow from the dominance of the capitalist law of the value operating on a world scale. (1990, 62)
Delinking is also relative; complete delinking is simply impossible. Amin asserts that even ‘70 percent delinking’ would be impressive. For example, he estimates that the trajectories of two key emerging economies, Brazil and India, ‘are driven by twenty percent sovereign project, and eighty percent globalization’ (Amin 2017, 16). South Africa, on the other hand, he claims, lacks any sovereign project at all. Despite his praise for Chinese economic performance, Amin thinks that ‘China’s development is determined fifty percent by its sovereign project and fifty percent by globalization’ (Ibid.).
Delinking is less difficult for countries with larger domestic markets and significant military power. Size is a ‘a significantly favourable factor’, (Amin 1990, 60) boosting development in Mexico, Argentina and Brazil, for example, during the state-led industrialisation era in Latin America from the 1930s to the 1970s (Bértola and Ocampo 2012). It is not determinant, but China simply ‘has a margin of manoeuvre that Senegal does not have’, Amin notes; ‘The context is thus important’ (2017, 17). It is notable that Ethiopia has the second largest population in Africa, which makes delinking there relatively easier than for smaller countries.
Amin therefore provides us with a richer understanding of the political economy of peripheral states than does the developmental state (or industrial policy) literature. He posits a dialectic of class and nation that generates vacillations between national bourgeois (or developmental) and comprador (or liberal) regimes. The transition from one to the other is usually punctuated by major balance-of-payments and fiscal crises. The shape of each crisis is determined by the response of workers, peasants and capitalists around the world to the previous one.
Myths of dependency and delinking
Amin is partly to blame for perpetuating the myth that dependency theorists think capitalist development is simply impossible in the periphery. He argues that until an ‘imperialist cut-off point’ at the end of the nineteenth century, it was possible for national bourgeoisies to form through integration in world market, ‘but today this integration “compradorises” these bourgeoisies and aborts the – repeated – attempts at national construction’ (1990, 156). His critics have seized on these sweeping statements to portray his argument as unconditionally denying all possibility of capitalist development in the periphery and offer East Asia’s success as proof that dependency theorists like Amin are wrong. Dependency theory waned in influence in the 1980s as the industrialisation of the Asian Tigers seemed to undermine such fatalism (Fischer 2015, 709; Kufakurinani et al. 2017, ix).
This pessimism, however, contradicts Amin’s own openness of thought and reflects the gloominess in peripheral countries outside East Asia at the time. The rise of neoliberal ideas and policies worldwide in the 1980s, the decline of social democracy in Europe, the collapse of the USSR and its satellites, and the rollback of Bandung-era populist governments in the periphery, leading to the ‘Lost Decades’ of development in Latin America and Africa, left many progressive activists and scholars dispirited. Yet Amin repeatedly denounces economic determinism, insisting that history is open-ended and driven by class struggles at local and global levels (2009, 90–92). By the mid 1990s, for example, he argues there was a ‘Second Reawakening of Peoples’, as rebellions against the neoliberal international political and economic order gained intensity, especially with the ‘pink tide’ governments in Latin America.
Its critics also misinterpret dependency theory as the claim that any trade with central economies hampers development in the periphery. If participation in foreign trade and finance is the cause of poverty, then the absence of foreign trade and investment – autarky – should lead to development. Taiwan in the 1970s therefore ‘presents dependency theory with a paradox. It is both more integrated in world capitalism than other poor market economies and more developed’ (Amsden 1979, 372). Even the world-systems theorist Giovanni Arrighi – one of Amin’s co-authors – claims that South Korea and Taiwan could not ‘be said to have moved up in the global hierarchy of wealth through a weakening rather than a strengthening of their links, political and economic, with core countries in general and the hegemonic core country (the United States) in particular’ (2002, 76).
Yet delinking, as Amin repeatedly states, ‘is in no way synonymous with autarky’ (1990, 62). Delinking is not about severing all international economic ties; it means subordinating them to domestic development.
Another common criticism of dependency theory is that it simply cannot explain the heterogeneity of the periphery. In the 1970s, the world income distribution did roughly divide into First, Second (communist bloc) and Third Worlds, with Third World countries generally having lower per capita incomes than Second World countries, and most Second World countries, in turn, having lower per capita income than First World countries (Milanovic 2011). Classifying countries as central and peripheral was therefore rather easy. Many analysts, however, consider contemporary Asia simply too heterogeneous for any kind of economic typology. Indeed,
Asia is composed of first world countries like Japan, South Korea, Taiwan, and Singapore; two still very poor giants that defy easy classification (India and China); and a lot of extremely poor countries, some of which are trying to replicate the successes of Japan and South Korea (Thailand, Indonesia), and others that seem to belong, by their income and economic lethargy, to the fourth world (Burma, Cambodia, Laos). (Ibid., 214)
In fact, Amin contends that the periphery is inherently more heterogeneous than the centre (1990, 2). He argues that competition among central economies does lead to the convergence of income and productivity levels among them, anticipating the notion of ‘convergence clubs’. While the centre is homogeneous, the periphery is naturally more heterogeneous because it is defined negatively, as simply not central.4 Peripheral regions experience long, unsynchronised cycles of economic growth and stagnation; therefore, at any given moment, some peripheral countries seem destined to join the exclusive club of central economies while many others appear trapped in poverty. Economic growth remains, however, largely derivative of demand in the centre, with the needs for capital accumulation in the centre at any given period favouring some regions/countries over others. ‘Capitalism in its polarizing worldwide expansion’, Amin clarifies,
has always led to the exclusion and destruction of peripheral regions that had lost the role they played, sometimes outstandingly, at an earlier stage. What has become of the Caribbean and Brazilian Northeast, the setting for the ‘economic miracle’ of the mercantilist era? (1990, xi)
The most pervasive myth of dependency theory is that it blames global markets and imperialist nations exclusively for poverty in the periphery, ignoring domestic factors completely. Amsden, for example, concludes her study of the developmental state in Taiwan by arguing that
the roots of underdevelopment may be seen to lie not so much in surplus extraction through unequal exchange and the repatriation of profits, but rather in local class relationships. These relationships will ultimately decide how the pressures unleashed by imperialism impress themselves. (1979, 372)
Ironically, Amin criticises the world-systems theorists Immanuel Wallerstein and Arrighi for having a
tendency to explain national processes as exclusively, or almost exclusively, shaped by global tendencies. Therefore, they attribute the failure of national attempts to move out of the system to the operation of the global system itself. Thereby the global system becomes responsible for the failure of the Soviet attempt, the failure of the Maoist attempt, and the failure of all the national popular regimes in Africa and Asia that came out of the Bandung era. (Amin 2017, 13)
Explaining East Asia’s successes and failures
Amin argues that Southeast Asia remains peripheral despite impressive growth in countries like Malaysia, Thailand and Indonesia. Crucially, governments and firms there have not built the capacity for domestic technological innovation or adaptation. Amsden’s case studies of Korean and Taiwanese economic development, instead of refuting the need for delinking, describe well what it entails.5 Korea and Taiwan are paragons of capitalist delinking; they are, according to Amin, the ‘last example[s] of bourgeois national construction in our time’ (1990, 36). China began an attempt at socialist delinking in 1949, and Amin analyses the emergence there of a complex battle between statist, capitalist and socialist forces.
Southeast Asia, still peripheral
Amin criticises the World Bank for conflating the economic development of South Korea with that of Southeast Asia. He reproaches the World Bank for having a worldview that is ‘flat and without subtlety’, where economic development is assessed by a single criterion: GDP per capita. Moreover,
Korea, Thailand, and Malaysia, are all presented as ‘success stories’ (miracles) attributed, without any distinctions, to the virtues of the ‘market’. No effort is made to understand how the market in question is regulated by state policies that are different from one country to another, and one time period to another. (Amin 2019, 254)
The World Bank has identified three ‘waves of growth miracles’ since the post-World War II ‘Japanese miracle’: Hong Kong, South Korea, Singapore and Taiwan in the 1960s and 1970s; China, Indonesia, Malaysia and Thailand in the 1980s and 1990s; Laos, Vietnam, Cambodia, Mongolia and the Philippines since 2000. East Asian exceptionalism started with Japan in the late nineteenth century, which became the only country outside of Western Europe and its settler colonies to industrialise before World War I. Japan’s post-World War II economic miracle made it the paradigm of the ‘East Asian Model’. The World Bank considers the first wave to have achieved developed – or central – status and maintains that five Southeast Asian economies – Indonesia, Malaysia, Philippines and Thailand – will soon join them. It believes ‘These countries can now realistically aspire to becoming high-income within the next generation or two, with the rest not far behind’ (Mason and Shetty 2019, 28). The World Bank remains optimistic despite its own warnings that labour productivity growth in Southeast Asia is slowing.
Amin contends that the decades of high growth in the Southeast Asia do not mean these economies are on their way to becoming central, because ‘under-development is not stagnation of the forces of production but absence of national control over their development.’ He dismisses Indonesia’s growth pattern, for example, as ‘quasi-colonial’ (2019, 255), since it is based on the extraction of natural resources, in this case tropical forestry. Peripheral states do periodically obtain concessions from imperialist states and capital, often
purely formal (such as ownership of the mines without technological control or control of markets), and sometimes genuine but insignificant, enabling them for example to develop an agrarian economy to the benefit of the rural bourgeoise and the state or a minor import substitution industry. (Amin 1990, 139)
Korea and Taiwan, paragons of delinking
Taiwan’s history from 1950 to 1980 demonstrates the essential features of delinking. Its defeat by the Red Army in 1949 taught the Nationalist Party of China (KMT)’s leadership to fear the rebellious potential of an impoverished peasantry in Taiwan. As a result, the government of Chiang Kai-shek (1950–1975) first capped rural rents, then distributed public lands and finally set a maximum landholding size. By 1953 it had virtually eliminated the landlord class, and most rural Taiwanese farmed their own small plots. The result was a relatively egalitarian income distribution, much less unequal than the rest of the periphery (Amsden 1979, 353).
The KMT also promoted agricultural productivity by stabilising crop prices and providing credit to peasants directly. The government imposed its own monopoly over the marketing of crops, replacing the foreign intermediary traders who had previously dominated agricultural marketing and credit. Peasants produced enough food for the country to be self-sufficient – and later to export. High productivity in agriculture saved on precious foreign exchange, provided a domestic market for industrial output, set a floor on industrial wages and created political stability. A more egalitarian distribution of income allows for a different demand structure, one geared towards the formation of a broad domestic market. Amin continually stresses the positive relationship between egalitarian income distribution and growth (1994, 167).
The KMT government also acted as venture capital, investing in sectors considered essential for the industrialisation drive but which attracted little interest from private capital, and helped to coordinate production in the private sector (Amsden 1979, 367). The Taiwanese government owned and managed firms in key industries, like heavy machinery, steel, aluminium, shipbuilding, fertilisers and banking. The state accounted for approximately 40% of total investment and influenced the rest through indicative planning. Crucially, as soon as some Taiwanese firms became competitive in global markets, the government adapted the forms of its support to business. Instead of protecting import-competing firms from foreign competition, the KMT started protecting exporters from competition with each other in foreign markets by encouraging the formation of cartels (Ibid., 364–365).
Finally, the government resisted foreign ownership, especially in the financial sector. Until 1969 foreign ownership of banks was prohibited, and the government was a major shareholder in all domestic banks. The Chiang Kai-shek government, Amsden observes, ‘cannot be said to have delivered Taiwan into foreign hands, either by letting merchant capital dominate foreign trade or by letting monopoly capital dominate manufacturing’ (Ibid., 368). By the late 1970s, Taiwan had a diverse and complex industrial base and tight labour markets.
Similarly, Amsden’s study of South Korea exemplifies delinking as defined by Amin. A noteworthy land reform after the Korean Civil War boosted agricultural production and created a more egalitarian income distribution. The military government of Park Chung Hee (1963–1979) also worked closely with business groups. Amin contends that ‘The significance of statist intervention has been so great that the private form taken by the consortiums – in Korean chaebol (analogous to the Japanese zaibatsu) – is perhaps only a form of the national bourgeois state’ (1990, 37). The Korean state played a similar venture capital role, leading the way in heavy industry, for example, before the chaebol could see the profit potential in these new sectors. After the ineffectual government of Syngman Rhee, South Korean leadership was suspicious of foreign capital. Like the KMT, it outlawed foreign ownership in the banking sector and protected the domestic market for the chaebol. Critically, it also encouraged native technological capacity.
In the 1970s, South Korean firms became adept at adapting foreign technologies. Initially, Korean growth was based on ‘entrepreneurship without innovation’, as ‘late industrializers’ must rely on borrowing, stealing and perfecting foreign technology to work their way up global value chains. High rates of industrial growth promoted higher productivity growth, in a process of ‘circular and cumulative causality’ (Amsden 1989, 110). The government provided export subsidies and, more importantly, withdrew those subsidies when firms failed to meet export targets. ‘The state’s strategy’ regarding technology,
then, is nationalist, and if it resorts to multinational corporations and their technologies, it does so in accordance with the imperatives of a plan that outlines the stages of a rise through the hierarchy of production, the development of capacities to absorb the technologies (through the emphasis put on training and the rules imposed on multinationals in these areas). (Amin 2019, 255)
South Korea has overcome peripheral status to become a central economy, having developed a large, autonomous technological sector. South Korea now boasts the second most researchers per capita – 6586 researchers per million inhabitants – in the world and spends a greater share of its income on research and design than any other nation – 4.3%. Only the United States, China, Japan and Germany spend more in absolute terms.6 As a result, South Korea is now at the technological frontier for a range of goods, famously in consumer electronics like cell phones and televisions.
Dependency and development-state scholars largely agree on the type of political coalitions and policies necessary for successful delinking – or the formation of a strong developmental state – but they disagree on the importance of external factors. Amin highlights the role of geopolitical alliances in explaining successful capitalist development in Taiwan, and Korea.
Chang (2008b, 143) describes how ‘dependency theorists tried to deal with the East Asian [New Industrialised Countries] by pointing out their success is largely explained by a number of unique historically and/or externally determined conditions that cannot be replicated in other periphery countries.’ He counters the argument that high levels of US foreign aid during the Cold War facilitated Taiwan and South Korea’s industrialisation by noting that while they received more aid compared to other Asian and Latin American countries, it was similar to the African average. But official US grants and loans were crucial to financing Korea’s current account deficits as it industrialised, loosening the ‘balance of payments constraint’ faced by other late industrialisers like Brazil (Fischer 2018).
More importantly, US foreign policy did not simply facilitate Taiwan and Korea’s development; it allowed it to happen. The US permitted Taiwan and South Korea to delink, while it obstructed dozens of attempts by governments in Africa, Latin America, Asia and the Middle East from challenging their role in the global economy in the last 70 years through sanctions, invasions and coups. Amin maintains that South Korea and Taiwan owe their
success to the geostrategic reasons that led the United States to allow them to achieve what Washington prohibited others from doing. The contrast between the support of the United States to the state capitalism of these two countries and the extremely violent opposition to state capitalism in Nasser’s Egypt or Boumediene’s Algeria is, on this account, quite illuminating. (2019, 347)
Furthermore, South Korea’s leaders were highly motivated to pursue economic development as part of their political and military rivalry with North Korea. It may be hard to believe today, but in the 1960s it was not certain that South Korea would be more prosperous than the North. In her brief section on the Cold War, Amsden (1989) concedes that the land reform in the South which led to the more egalitarian path of development was partly a response to radical land reform in the North. Similarly, the push to develop heavy industries that Amsden describes was also motivated by national security concerns; ‘Although South Korea’s success would not have been possible without the North Korean threat, many people fail to see the link between them’ (Vernengo 2017, 89).
Similarly, US support for Chiang Kai-shek’s regime was motivated by its opposition to Maoist China. Taiwan’s foundational land reform ‘was engineered exogenously, by the [KMT], in alliance with the Americans. The Taiwanese landed aristocracy could be expropriated because the Americans and Mainlanders were under no obligation to it’ (Amsden 1979, 373). The US government supported the overthrow of many peripheral governments for proposing more modest land reforms. Yet in Taiwan, ‘US aid kept the regime in power in its earliest years’ (Ibid.).
China and the long, winding road to socialism
Amin praises the Chinese Communist Party (CCP) for successfully delinking through ‘state capitalism’, while warning of the many challenges ahead (2013, 2019). China has raised agricultural productivity and had a relatively controlled – and historically unprecedented – wave of urbanisation. It has built one of the largest financial sectors in the world, while maintaining domestic ownership. Similarly, the domestic market is reserved largely for Chinese firms. China has become one of the biggest importers of raw materials and is building the military capacity necessary to protect trade routes – strengthening its navy, for example. This last point was less important for Taiwan and Korea, which were under the US military umbrella and were thus guaranteed access to trade with raw materials suppliers in the periphery. Finally, China has built a formidable industrial sector with growing domestic technological capacity.
Amin commends the CCP’s support for small-scale agricultural production without private landownership. He asserts that post-Maoist China is not capitalist because land is not yet commodified. Public ownership of land and economic planning allowed for both a major increase of food production and
a relatively controlled rural-to-urban migration. Compare that with the capitalist road, in Brazil, for example. Private property in agricultural land has emptied the countryside of Brazil – today only 11 percent of the country’s population. But at least 50 percent of urban residents live in slums (the favelas) and survive only thanks to the ‘informal economy’ (including organized crime). (Amin 2013, 19)
Even during the more market-oriented period starting with Deng Xiaoping in 1980, state planning and ownership in China have remained essential, especially in transportation and housing. Although Amin thinks market reforms – especially the introduction of autonomous firm management – were necessary to avoid Soviet-style stagnation, he also asserts that their success would not have been possible without the land reform and investments in public health and education of the Maoist era. The contrast with India, which never had a similar social revolution, is striking (Amin 2013, 23).
China’s integration with world markets has been ‘partial and controlled’. The CCP remains committed to capital controls, for example, despite the growing international prominence of the renminbi. Chinese banks continue to be ‘completely national and focused on the country’s internal credit market’ (Ibid., 24).
Most importantly, the CCP has built a large and autonomous technological sector. The state has required Western and Japanese firms to form joint ventures with Chinese companies, to allow them to absorb and master foreign technologies; ‘There is nothing similar elsewhere, even in India or Brazil, a fortiori in Thailand, Malaysia, South Africa, and other places’ (Amin 2019, 345). China is now the world’s second largest investor in research and design. To Amin, ‘what Chinese state capitalism has achieved between 1950 and 2012 is quite simply amazing’ (2013, 21).
Amin argues that the development of state capitalism is a necessary stage for delinking, while condemning the exploitation of workers and the environment it requires. The degrading working conditions in many of China’s factories are ‘scandalous for a country that claims to want to move forward on the road to socialism’ (Amin 2013, 20). Even developed capitalist countries, however, will have to go through state capitalism; ‘It is the preliminary phase in the potential commitment of any society to liberating itself from historical capitalism on the long route to socialism/communism’ (Ibid.). But as Amin notes, there are many kinds of state capitalism; the indicative planning and public ownership of the de Gaulle and Pompidou governments in France (1958–75), for example, were meant to strengthen French capitalism, not to transcend it.
Despite its remarkable economic development in the last four decades, China remains a poor country with many obstacles – especially growing American antagonism – to overcome before reaching central status. China is still at only one-fifth the average GDP per capita of rich countries (Mason and Shetty 2019, xi). Moreover, China’s labour productivity levels are still much lower than those in the central economies. Former president Donald Trump repeatedly complained about the US trade deficit with China and promised to launch a trade war. Much of the tension with the US capitalist class is rooted in Chinese industrial espionage and violation of intellectual property rights. Amin believes China’s sovereign project is threatened by political tensions with the United States as well as the temptation for the Chinese bourgeoisie to maximise short-term gains by liberalising trade and finance – thereby ‘compradorising’ itself (2019, 347).
Amin’s delinking and dependency framework better elucidates the conditions that have allowed for the economic development of Taiwan, South Korea and China and hindered it elsewhere. Korea and Taiwan are exemplary cases of delinking, that are nonetheless exceptional since they did not face the typical imperialist aggression that accompanies such challenges to the established hierarchy of nations. External threats from North Korea and mainland China also changed the political calculus of domestic elites and justified American concessions, allowing for crucial land reforms that established a more egalitarian and auto-centric development path. China started on a socialist delinking path after its revolution in 1949 and has made impressive economic gains since 1980, but must navigate treacherous geopolitical terrain to continue its rise to central status, chiefly the possibility of a new Cold War with the United States.
Conclusion: delinking in Ethiopia
Many scholars consider Ethiopia a contemporary example of an East Asian-style developmental state in Africa (Clapham 2018).7 Starting under the rule of Meles Zenawi (1991–2011), the Ethiopian developmental state has nurtured infant industries in leather goods and cut flowers for export (Abebe and Schaefer 2015). The leather goods industry relies on backward linkages to Ethiopia’s large cattle industry. The cut flower industry has built forward linkages, being possible only because the government expertly championed the rise of Ethiopian Airlines to world-class status. In both cases, the government provided credit through the Development Bank of Ethiopia, facilitated training and international exchange and exposure for managers, created new agencies as a coordination mechanism and maintained close ties with business. The Development Bank has also learned how to monitor firms in the floriculture sector, exercising the disciplining function that distinguishes the few effective developmental states from the many failures. The government has also invested heavily in infrastructure, transportation, communications, hydroelectricity, and education.
Despite average annual GDP per capita growth higher than 7% from 2004 to 2019, Ethiopia still has a long way to go before becoming even a middle-income country. Ethiopia is still less industrialised than the average in sub-Saharan Africa, with manufacturing value added at 5.5% of GDP compared to 11.3% for the region in 2019.8
An estimated eight million Ethiopians are food insecure, and no peripheral country can achieve auto-centric development without food self-sufficiency.9 Foreign investment in plantation agriculture is likely to aggravate inequality while failing to address hunger. Amin’s delinking framework also suggests that the Ethiopian government should safeguard domestic ownership of its banking system, invest in native technological capacity, and make sure foreign investments fit into national development plans.
The biggest threat to the Ethiopian developmental state’s prospects is likely to be political instability, especially a relapse into civil war precipitating the further disintegration of the country. While the Ethiopian government is a close military ally, the US may become antagonistic if it feels Ethiopia’s development threatens its hegemony in the geostrategic Horn of Africa region. Amin warns that Washington will push to split the country along ethnic lines in order to weaken it (2019, 138).
Instead of a balkanised continent of peripheral economies dependent on low-value-added agricultural and mineral exports by foreign corporations, Amin insists that
The alternative, from an African point of view needs to combine the building of auto-centred economies, social structures, and societies in order to participate more equally and fully in the global economy. This general law is valid for Africa today as it has been throughout modern history for all the regions of the world. (Amin 2014, 36)