Territory and Trust: Why Some States Develop Their Economies and Others Do Not

• In Event: Politics of Industrialization and Economic Development

Abstract

This paper takes a novel approach to development economics. Instead of examining standard factors used to explain economic growth, such as international trade policies, industrial and agricultural policies, or comparative advantage, this project focuses on the importance of integrating peripheral areas into the economy.

The paper argues that economic development in weakly institutionalized states is largely shaped by how leaders perceive and manage security threats posed by regional competitors. Where regional political competitors and local strongmen command the daily lives of local populations in peripheral regions, the head of state typically faces continual political challenges and, in some cases, actual threats to their survival. Plagued by such immediate perils, a political leader has neither the freedom, nor desire to initiate political and economic reforms (Dunning 2005; A.A. Goldsmith 2001). Put simply, they are far less likely to build roads to connect the interior to the urban center or electrify the countryside (de Mesquita & Smith 2011). Yet, it is precisely these kinds of infrastructural projects that provide the foundation of national development. Therefore, how leaders manage rivals is critical to state development. Leaders who use a ‘rural political strategy’ by coopting powerful rural opponents will achieve greater stability and be more willing to focus on the rural infrastructural projects needed for political and economic advancement.

The paper draws from Karl Polanyi’s (1944/2001) idea of the creation of a national market as a critical intermediate step in Europe’s development. Polanyi observed that in the early middle ages European trade was not ‘national’ but rather ‘municipal i.e., located in townships and largely focused on long-distance trade. In the countryside, non-competitive local markets existed but were adjacent to social life. It was only because the state took deliberate steps to break down guild barriers and built infrastructure to integrate the countryside into the economy, that internal trade came into being clearing the way for a national market. Similarly, in many countries in the Global South long-distance trade and domestic production are centered in urban areas – often in just one ‘primate city,’ while rural areas, like their historical European counterparts, are largely excluded from the modern economy. This study therefore seeks to understand what conditions are necessary to overcome such economic fragmentation.

The paper, thus, presents a strong case for the importance of leadership to economic outcomes. Historical institutionalists generally avoid analyses of leadership in the interest of developing studies that can be applied to a broad range of cases rather than relegating analyses of political processes to the study of the whims of particular leaders. Thus, several scholars have examined how center-periphery struggles relate to political outcomes. But they have done so by focusing on how structural factors and/or historical legacies structure the degree to which the central government is able to overcome powerful regional actors and assert authority over the territory (Walden 2017; Boone 2014, 2003; Migdal 1988). Without denying the importance of historical and structural conditions in shaping center-peripheral interactions, this paper argues that rival power relations are also shaped by political choices. Central government policies can increase political divisions, undermining cooperation, and exacerbating existing tensions. Conversely, the choices made by the head of government can minimize differences and help foster cooperation. In these ways, leaders’ assessments of security threats and their response to such threats can actually change the nature of those threats. These leadership effects, in turn, can impact the willingness of the center to support rural development. Thus, the typology of political strategies presented here is an endeavor to develop an analytic model that lies at the intersection between leadership and structure; vision and institutional constraints.


The theoretical discussion is substantiated with a comparative case analysis of the three Southeast Asian cases: Malaysia, Thailand and Burma. The countries were chosen because they had similar levels of political integration at the end of the 19th century and have different levels of economic development today. Each country is examined in terms of the historical and structural conditions that shaped core-periphery relations, as well as how leaders assessed security risks, what priorities they focused on, what policies they used to bolster their support base, and how those choices were determinative of state development.

Author

• Beth Rabinowitz, Rutgers University