This article focuses on two inter-related prerequisites for ‘developmental states’ relatively ignored in other analyses – attaining high levels of cross-departmental co-ordination and ramping up human capital formation. The article also argues that most developmental states attain economic success because they move beyond narrow orthodox macro-economic stabilisation strategies to a more mature basket of interrelated micro-economic policies (such as industrial, innovation and skills policies) which seek to move the national economy up the value chain continuously towards higher value-added manufacturing and business services. This latter factor requires high levels of horizontal co-ordination between complementary policy elements such as education and training, industrial development, science and technological innovation, employment and economic growth.
This argument is illustrated via a comparative analysis of the development trajectories of Finland, Ireland and Malaysia over the past three decades. These case studies are raised not as exemplars to be slavishly emulated by South Africa, but as cases which raise interesting comparisons, particularly around the role of horizontal co-ordination and skill formation. They differ amongst themselves with regard to the relative strengths of the manufacturing and financial sectors, the extent of value addition, export orientation, and human capital formation. The conclusion briefly touches on the inability of South Africa to learn from these development trajectories and meet these critical preconditions for success.