Dictators, Democrats and Development in Southeast Asia: Implications for the Rest by Michael T. Rock (review)

Michael Rock’s latest book wrestles with a crucial question that baffles economists, historians, political scientists and social scientists alike: given that growth is often difficult and rare, what is the relationship between politics and economics that produces sustained economic growth over long periods of time?

Rock selects three Southeast Asian countries, namely Indonesia, Malaysia and Thailand (or IMT for short) as cases of countries that have performed very well economically from the 1960s to 2010 to look into what their development journey can teach the rest of the developing world.¹ Much like many developing countries, IMT are resource rich, ethnically diverse, and have weak governments characterized by corruption and rent-seeking. Conventional wisdom states that these phenomena are bottlenecks to economic growth while democracies are best for economic development. Yet the cases of IMT belie these claims.

In the ten-chapter book, Rock presents a thorough, well-organized fact-base to offer a middle ground to the debate between neoliberals who argue for a minimalist state that adopts free trade policies and academics arguing for an interventionist developmental state. He makes a case for the need to “bring back into consideration the agency of political leaders” (p. 3) and “their pragmatic, experimental and muddling through development approach” (p. 18) that have produced sustained growth. His argument is simple but rooted in historical facts: dictators and democrats alike in IMT pursued pro-growth policies because they saw their own political survival as linked to national economic development. To achieve this, they built and sustained pro-growth coalitions that shared the same goal of developing their national economies. Rock argues that political elites of IMT were pragmatic rather than ideological in their pursuit of development goals, relying equally on state intervention or markets when necessary to achieve growth. When either failed to achieve desired results, they used other alternatives. The results included: economic growth; structural change from agriculture towards industrial development; and impressive reduction in poverty. Governments in IMT did not shy away from controlling, repressing, or appeasing social groups such as farmers or students, leveraging the powers of the state when needed. IMT political leaders saw growth as crucial to their political agenda but at the same time understood that coalition building involves rent-seeking, side payments, and providing rewards to supporters. Rock contends that mainstream academic theories have, so far, missed how political elites in IMT selectively used state intervention, corruption and rent-seeking to grow their economies while enriching themselves and those in their patronage networks.

Rock explains counterintuitively that corruption in IMT was “good for growth” due to a few reasons. First, the political elites came to see development as aligned with their long-term interest. Because of this, they were willing to provide the public goods and policies to get growth going. However, the same political elites needed funding to finance their patronage networks, win elections, and enrich themselves. They saw that a domestic capitalist class was needed to grow the economy and that via government promotional privileges (tax breaks, subsidized credit, or preferential access to foreign exchange), a domestic capitalist class could be developed. This group, in turn, provided kickbacks that sustained patronage networks. The delicate balance in IMT is that neither political elites nor the crony capitalists take too much which could lead to economic failure, as was the case with Marcos and the Philippines.

In a chapter setting up the historical context of IMT, Rock points out that the completion of nation-building project in IMT where clear winners have emerged was a prerequisite to sustained economic growth. The winners (typically centre–right coalitions of bureaucratic, military and business elites) tended to be politically and socially conservative, pro-capitalist, and pro-private property but pragmatic and non-ideological. They saw capitalism as necessary to economic growth but were not dogmatic laissez faire believers. Their pragmatic approach to development carried over into the democratization process, too. This...