No Miracle: What Asia Can Teach All Countries About Growth by Mitchell Wigdor (review)

There are many books about the Asian miracle economies and what other countries can learn from them. Scholars in the neo-liberal tradition have suggested that these countries demonstrate the virtues of markets and openness. Those following the world system and "dependencia" tradition have emphasized the exceptional global/regional circumstances that produced a dependency reversal. Culturalist scholars have highlighted particular deep-rooted values and belief systems. Other scholars have stressed the role of entrepreneurship and socio-cultural networks. Finally, statist scholars have explained the region's impressive economic growth by reference to the way in which the political-bureaucratic elites have guided the market, and the nature of state-business interaction. No Miracle: What Asia Can Teach All Countries About Growth belongs to the latter strand but is mostly concerned with relating itself to and criticizing the influential New Institutional Economics (NIE) approach.

The book explores how institutions matter for economic transformation and in bridging the digital divide. More precisely, the "purpose is to allow a greater understanding of the role of institutions as a mediating factor in the relationship between ICT usage and growth and to provide actionable advice to the governments of less economically developed countries and others concerned with economic development who must decide which institutions are important and determine how to build them" (p. 22). Mitchell Wigdor is a Toronto-based lawyer and a business advisor who has twenty-five years of practical experience. The book is based on the author's dissertation from the University of Toronto, Faculty of Law (2010). Wigdor is a strong believer in interdisciplinary approaches and the book cuts across the disciplines of economics, organization studies, law, business studies, innovation studies, and development studies. Apart from the introduction and conclusion, the book is organized into two parts.

The first part looks upon ICT and institutions. Chapters 1 and 2 examine the increasingly strategic role of information and communication technology (ICT) for sustained growth. The author argues that ICT is a general purpose technology — the usage of which plays the same growth-enabling role as electrification did at an earlier stage. However, the link between ICT and economic growth is mediated by four critical factors: telecommunication infrastructure, investments in ICT use, human capital needed for effective use, and institutions. Chapter 3 studies FDI and growth because FDI represents the most likely channel for obtaining the ICT needed to expand economies. While the ICT chapters draw upon the endogenous growth theory, the FDI chapter mostly builds upon John Dunning's "eclectic paradigm". The author forcefully demonstrates that there is no "free lunch", so that it is important for governments "to determine what they want from FDI, how to get it and, once they get it, how to make most out of it" (p. 58). Furthermore, the spreading of potential benefits from FDIs is argued to be dependent upon three key factors: technology, human capital, and institutions. The first three chapters are well-organized and make a contribution to the literature in the way it combines existing approaches and empirical studies within the chosen themes.

Wigdor argues that the importance of institutions for ICT use and as a locational determinant of FDIs are under-researched, which leads him to focus on institutions in the two following chapters. Chapter 4 is used to demonstrate that economists in general, and NIE (Douglas North) in particular, have mostly been concerned with whether institutions matter for growth and have presented institutions as slow-moving and outside what governments can influence. Moreover, the author finds that the definitions of institutions are unclear and/or unworkable. To reconnect theory and practice, the author suggests that focus should shift to which institutions are important for growth, just as scholars should come with suggestions about how to build them. The first step is a practice-oriented redefinition of "institutions" to "refer to governments and quasi-governmental bodies and agencies charged with the formulation, interpretation, implementation or enforcement of public policy or laws' (p...