Escape from Empire: The Developing World’s Journey through Heaven and Hell (review)

This little book is a tour de force about how postwar U.S. foreign economic policy shaped the development prospects of the so-called Third World. Amsden’s previous iconoclastic work on the political economy of late industrialization provides the organizing framework of this historically informed book. East Asia and Latin America predictably get most of the attention, whereas the pre-industrial “bottom billion” in Africa, the Caribbean, and western Asia receive short shrift.

The book comprises eleven birds-eye-view chapters. The first two provide an overview and historical context; the next six characterize what the author calls the First American Empire (fae), which fell between World War II and Diem Bien Phu; and the last four chapters focus on the Second American Empire (sae), which ushered in a dark age of stagnation and income polarization—the rise of China and India (Chindia) providing the turning point.

Amsden boldly encapsulates the central thesis: “The idea presented in this book is a hot potato because it turns the meaning of laissez-faire on its head: instead of free markets, laissez-faire signifies free developing economies. Freedom is truest when the great powers let the developing world chart its own economic course and choose its own mix of market and state, as done to a tee by the fastest-growing late developers”(vii). The author envisions two roads to development, the second being superior: “Economic development thus has two approaches. One, which supposedly is applicable to rich and poor countries alike, recommends free markets to maximize efficiency. . . . The other, a less formal body of thought, likens development to learning technological capabilities and getting institutions to work, including markets—themselves institutions”(163).

fae (1950–1980) spearheaded a golden age of growth under the clouds of the Cold War decades. It was permissive to the extent that it tolerated autonomy for former European and Japanese colonies to learn and experiment; it was flexible in providing aid and foreign direct investment (fdi) while permitting protectionist policies of import-substituting industrial development and the nationalization of key resource-based industries; and it provided nonreciprocal access to the markets of developed countries. As a result, nationalist Asia thrived while comprador Latin America, despite its pre-war manufacturing experience, did not fare so well. The reason is that “without land reform, without the flight of foreign firms, and without the creation of a critical, minimum number of professionally managed national companies, Latin America was unable to exercise its skill to survive in a high-tech world” (147).

sae (1980—), experiencing a number of shocks (Vietnam, opec, and the end of Communism), became too arrogant and too ideological (free markets) in insisting that all spheres besides labor occupy a level playing field; big finance successfully pushed for growth-stunting privatization, deregulation, and liberalization (especially of capital markets) in developing countries; and only a handful of developmentalist states managed to engineer growth miracles under this unforgiving regime (most notably Taiwan, the People’s Republic of China, India, and South Korea). The deceleration of productivity-driven growth in the era of the Washington Consensus, despite market-oriented reforms, is attributed to the neglect of key features of late development: “For the disadvantaged, specialization and comparative advantage were suffocating traps” (42). The recurring theme is that “unless a country has its own nationally owned firms, it can’t ‘globalize’ in the form of outward foreign investment” since “import substitution industrialization and its offspring, manufacturing exports, lay at the heart of the Third World’s experimentation” (24, 74).

Why would a postcolonial imperial power like the United States, inherently hostile to the emergence of nationalistic competitors, become so “heaven-sent” in the third quarter and so “hell-bound” in the fourth quarter of the twentieth century? Are external factors, imperial powers and their global governance institutions, really the preponderant drivers of the economic fate of five-sixths of the world’s population?

Amsden argues that fae was...