Atabey previously said:

late 1970s and early 1980s, but their efforts would prove too little too late. While the peso’s 1985 devaluation would give birth to a manufactured export boom which would continue all but unabated until the end of the century, it would neither eliminate the country’s dualistic industrial development regime nor facilitate backward linkages from the IFZs. Thus, the majority of the Dominican Republic’s 500 export-oriented manufacturers remain confined to low value added sectors, including apparel and footwear, and import their inputs from overseas; and the island nation is therefore forced to compete by maintaining low wages rather than by creating a positive sum game of wage, profit, and productivity increases.

Discussion

The Caribbean Basin’s late twentieth century development experience has almost invariably been judged against the backdrop?and benchmark?of the East Asian miracle. The comparison should not prove surprising, for the so-called East Asian development model was inaugurated in Puerto Rico and popularized by a Caribbean economist, Sir W. Arthur Lewis. Lewis was well aware of the Caribbean’s demographic and resource constraints, and he therefore believed that the region would have to develop “by importing the products of natural resources and exporting the products of capital and labour.” The proximity of the US market was expected to facilitate the process, and the archipelago was therefore characterized as a key locus for offshore assembly operations well into the 1970s.

Nevertheless, East Asia and the Caribbean would ultimately part company. While the average rate of per capita GDP growth in the Asian NICs would exceed 6 per cent per annum in the years between 1965 and 1990, it would approach 2 percent per annum in the Caribbean. Why have the two regions diverged? Nancy Birdsall accounts for East Asia’s superior development performance by pointing to “the three Es”: exports, education, and enabling government. While the NICs established pro-export industrial incentive regimes, used primary and secondary education to promote human capital and export upgrading, and insulated private agents from the depredations of unscrupulous public officials, their Caribbean counterparts maintained inward oriented development regimes, squandered valuable resources on tertiary education (or worse, vainglorious public works projects), and failed to confront government corruption and public mismanagement. But Birdsall treats the three Es as independent rather than dependent variables, and thereby fails to answer the central question: Why did so many island governments ignore exports, compromise education, and undermine, rather than enable government? The answer is unlikely to lie in the world-system, for the dominant regional power was, as we have seen, trying to promote the three Es?at least in the Dominican Republic.

Is the statist alternative more convincing? An affirmative answer might appear to be in order, for the Dominican Republic’s state apparatus has been characterized as “prebendal” or “predatory” for more than a generation, and the DR would therefore appear to have been an unlikely candidate for upward mobility in the international hierarchy of nations. But South Korea and Taiwan were also governed by predatory rulers in the 1950s, and neither is a paragon of clean governance today. Thus, the statists, like Birdsall, beg the central question: Why did the military rulers of Korea and Taiwan, unlike President Balaguer, accept the US offer and begin to pursue export-led industrialization in the 1960s?

The question actually speaks to two distinct issues: the desire to pursue ELI and the ability to impose a new development regime upon an otherwise recalcitrant capitalist class. While the question of motivation is important, the question of capacity is pivotal, for the debate over the origins of the developmental state, as Vivek Chibber has noted, follows a “long and intense debate over the rise of the welfare state in the West, where many of the same questions about the relative power of the state were raised. Just as it was legitimately asked how states could impose welfare policy on intransigent capitalist classes in the West, we may ask how it came to be that the Korean state acquired its putative dominance over capital.”

In other words, the autonomy of the capitalist state, relative or otherwise, is not an omnipresent reality to be taken for granted but a historical contingency to be explained. While a number of analysts have attributed the Korean state’s autonomy to government control over finance, Chibber has underscored the circularity of their position, and his potent rejoinder is therefore worth quoting at length:
There is no doubt that control over finance considerably increases the state’s power over the business class. But it is not clear how this power could be sufficient to render state managers indifferent to the latter’s reactions to policy changes. Consider the likely scenario if the state tries to unilaterally impose a new set of regulations or a new accumulations strategy—like export-led development—on the domestic bourgeoisie. If there is a widespread sentiment among firms that the new policy will be harmful to their profits or their growth-rates, the most probable reaction will be a cascading decline in business confidence, as firms become unsure of future returns. If this does happen, the tangible result will be an economic slowdown, and this in turn will mean a decline in the demand for finance since firms will be slowing down the pace of investment. Now, if the demand for finance is itself in decline, it is difficult to see how the state’s control over finance can be an effective weapon over the capitalist class. Trying to use finance in this situation will be, to use Keynes’s memorable phrase, like pushing on a string.

In sum, the statists have identified neither the motive nor the mechanism for South Korea’s turn to ELI.
Therefore, Chibber takes an alternate tack and asks how Korean officials “were able to elicit a switch to the new strategy by the business class without triggering a downturn in the investment climate.” He answers by incorporating archival evidence on the growth of the East Asian division of labor and noting that “ELI was not imposed on Korean capitalists but was arrived at consensually; indeed, there was even pressure from business to initiate it. And this enthusiasm was in turn engendered by the ties that were developing between Korean and Japanese firms, which provided the former group with access to export markets that virtually no other country?except Taiwan?enjoyed. It was this access to markets that induced them to have a go at ELI and not the coercive power of the state.”