Are We All Compressed Developers?

Compressed-development influences increasingly flow from developing to developed countries. Reversing our lens to look at the United States and Japan, we observe that the technological and organizational changes that have spurred compressed development in recent developers are also responsible for changes in industry structure, rising inequality, and employment duality in developed economies. A ‘Red Queen’ effect sees developed countries running faster and undertaking parallel socioeconomic changes to stay in the same privileged place. In some ways ‘we are all compressed developers now’. Looking ahead, and returning to our dyadic pairs, the chapter further considers how the ‘digital economy’ may affect developing–developed country interrelations, and whether we are finally entering an age of ‘great convergence’ with the rise of China and a more multipolar economic and geopolitical structure.

Time Compression

Chapter 1 develops the concept of time compression in economic development and highlights how recent developers are experiencing simultaneity in processes which previously unfolded sequentially over extended periods of time, including industrialization and deindustrialization. Time compression has always been a feature of late development, but the extreme forms seen in recent and current developers alter development experiences and processes in important ways. Industrialization has become ‘thin’, reflecting specialization, global value chain engagement, leaps in capital intensity, and the simultaneous casualization and formalization of labour markets. ‘Out-of-sequence’ sectoral shifts, such as an early retail revolution and financialization, and sectoral blurring also contribute to time compression. Demographic transitions have accelerated, with ‘premature ageing’, especially in East Asia.

The Adaptive (Developmental) State

Is the developmental state dead, superseded by the liberal or competition state, a servant of markets, or has it evolved to fit changing geopolitical, economic, and technological circumstances? In affirming the latter, we first consider the national level, then extend our scope to consider decentralization, local developmentalism, and multilevel governance. Relatedly, we examine ‘smart cities’ (or ‘fast cities’) in China and India, which embody many of the processes and tensions of compressed development. Finally, we return to the notion of ‘embedded autonomy’ in state–civil society relations. Compression heightens two paradoxes of the developmental state and raises the importance of the state interacting with a wider range of civil society actors, in addition to business, to address its simultaneous challenges.

Varieties of Compressed Development

Chapter 5 explores the ways in which less-developed countries experience the era-related effects of compressed development and try to cope with them. Chapter 4 compared late-developer Japan and compressed-developer China, but countries with poor or mixed records of economic development also face the opportunities and constraints of compression, and must do so with institutions, policies, and industries which emerged under prior conditions. Large-market less-developed countries such as Brazil, India, and even China face the era effects of compression, with legacies that are often poorly suited and sometimes antithetical to the demands of global value chains and technology ecosystems. Discontinuities and differences across sectors further complicate the role of the state in the era of compressed development.

Social Policy

Social policy has become a new frontier of compression. Compressed developers face simultaneous challenges which early and late developers confronted sequentially. In education this means constructing a higher education and research system at virtually the same time as completing the task of universalizing basic education. Double challenges are further shaped by era influences. Education has been reshaped by three constellations of factors: the influence of human capital theory; the ‘evidence-based’ policy movement which privileges ‘hard’, numerical data, as in the ‘global testing culture’; and participation by a host of new actors, such as policy entrepreneurs, big data analysts, and public–private partnerships. Business and social entrepreneurs increasingly influence, bypass, and at times subvert social policy. Policy ‘stretch’ makes policy integration more challenging even as it has become more important.

Employment, Skills, and Upgrading

Employment and skills are at the heart of economic development and the ‘middle-income trap’. Chapter 6 charts the evolution of ‘standard’ employment, and an expectation that the informal sector would disappear with industrialization. However, not only does the informal sector and informal employment now persist, but ‘nonstandard’ employment has been imported from developed countries, creating new forms of structural dualism. This diminishes the positive feedback loops between technological and economic upgrading on the one hand, and social upgrading or development on the other, intensifying ‘middle-income traps’. Such disjuncture is observed in global value chains, and in specific compressed-developer-country contexts, notably India and China.

Eras

Chapter 3 introduces a second dyadic pair of era influences: organizations and technology. Building on Bodrožić and Adler’s ‘The Evolution of Management Models: A Neo- Schumpeterian Theory’ (2017), the chapter traces the evolution of technology and business models over time, along with their spatial organization. The interplay between organizations and technology has profoundly influenced how developing countries have become integrated into the global economy since the late 1980s. The Fordist corporation was transformed through vertical fragmentation and horizontal integration, creating the information and communication technology–enabled network model, organized spatially through global value chains. This model is currently undergoing further transformation as the ‘digital economy’ moves through its revolutionizing and balancing cycles, and as key actors signal a retreat from trade.

Afterword

The onset of the Covid-19 pandemic has been traced to early December 2019, just as we were submitting our completed manuscript for publication. We were tempted to comb through the manuscript for ways to address what has rapidly emerged as an unprecedented global public health crisis, economic crisis, and more. But, we decided to leave the text be for several reasons. The first is the ongoing nature of the pandemic and its fallout. The scope of the damage and its long-term social, economic, and political effects will not be fully visible for years, and we are resistant to the business of prognostication. The second is that we believe the book, as it stands, can help make sense of some of the distinctive features of the pandemic, including its unprecedented speed of transmission to all corners of the globe and the economic chaos engendered by the disruption of industries embedded in the elaborate global supply chains and technology ecosystems that comprise GVCs. Third, it is very likely that the pandemic will intensify, if not actually cause, the overlapping and interacting crises that we depicted in ...

Compressed Development

The introduction presents the two key features of compressed development, ‘compression’ and ‘eras’ consisting of geopolitical, institutional, and technological dimensions, as an argument for why time and timing matter for economic and social development. Recent ‘successful’ developers grow more quickly than those of the past, but face new challenges as a result. In fact all contemporary developers experience some forms of compression. Additionally, the path of development has changed since the 1980s in ways that have implications for the rebalancing of North-South economic activity, the co-dependence of states and markets, and the interplay between new technology and organization of production. The introduction situates these arguments in prior literature on economic development, and it defines key concepts and outlines the book’s chapters.

China’s and Japan’s Divergent Institutions

China and Japan share some historical affinities, and they faced similar challenges of foreign threats and unequal treaties in the nineteenth century. Their subsequent paths were very different, however. As a late developer, Japan experienced industrialization in two movements, the more recent being the postwar period under the strong influence of the United States and its New Deal institutions. After its 1949 revolution, China also underwent late-developer industrialization, but under the initial influence of the Soviet model. China’s rapprochement with the United States and subsequent opening led to massive institutional change and rapid growth as a compressed developer, with significant foreign direct investment and global-value-chain engagement. A comparison of education and skill development highlights just how different these paths were.