Developmentalism

Developmentalism is a political and economic outlook that makes rapid industrial growth the central goal of national policy and gives the state the leading role in achieving it. Developmentalists argue that countries which export mainly raw materials stay poor and dependent, and that free markets alone will not build modern industries in time. They favor tariffs to protect new industries, public investment in infrastructure, state banks that steer credit, and close cooperation between government planners and firms. The term covers both the Latin American desarrollismo of the mid-twentieth century and the East Asian developmental states studied by political scientists.

Early arguments for state-led industry appeared in Alexander Hamilton's Report on Manufactures of 1791 and in the work of the German economist Friedrich List, whose National System of Political Economy appeared in 1841. In the twentieth century, the Argentine economist Raúl Prebisch, who led the United Nations Economic Commission for Latin America from 1950, argued that trade between industrial centers and the commodity-exporting periphery favored the center. His ideas, developed with economists such as Celso Furtado, encouraged import substitution industrialization across Latin America. Juscelino Kubitschek in Brazil (1956-1961) and Arturo Frondizi in Argentina (1958-1962) are often described as developmentalist presidents. In East Asia, Japan's Ministry of International Trade and Industry guided postwar industrial policy, and South Korea and Taiwan followed with state-directed, export-oriented growth. Chalmers Johnson's 1982 study of Japan popularized the term developmental state. Latin American import substitution lost ground after the debt crisis of the 1980s, when many governments turned to market reforms.

Latin American developmentalism focused on producing at home goods that had been imported, behind high tariffs. The East Asian developmental state model combined protection with strict export targets and discipline on firms that received state support. Some scholars describe a new developmentalism that accepts open markets but keeps an active industrial policy. China's state-led growth since the 1980s is sometimes compared with the developmental state, though scholars debate how far the comparison fits.

Market economists argue that protection created inefficient industries, shortages and inflation, and that the state often picked the wrong sectors. Critics of import substitution point to slow job growth, neglect of agriculture and the debts that many Latin American countries built up. Dependency theorists on the left argued that it could deepen reliance on foreign corporations. Political critics note that several developmental states were authoritarian and repressed labor unions and dissent in the name of growth.

Developmentalist policies built steel, automobile and energy industries in Brazil, Argentina and Mexico, along with new infrastructure such as Brazil's capital, Brasília. In Japan, South Korea and Taiwan, state-guided industrialization coincided with decades of rapid growth and rising incomes. Interest in industrial policy has revived in many countries since the 2010s, including in debates over semiconductors and green technology.