DOCSLIB.ORG

Dirigisme Taiwan-Style'

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Dirigisme Taiwan-Style' View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by IDS OpenDocs Dirigisme Taiwan-Style' Robert Wade There isa popular image of Taiwan as a close consistent with the way the government has in practice approximation to a free market economy. Indeed it is behaved. often held up as living proof that the basic prescription of neoclassical economics is sound not only for The government has adopted over a long period of advanced industrial countries but also for countries en time a much more aggressive set of industrial policies roule to that status.Private initiativeisalways than free trading principles would justify. It has been preferred to public, the state is kept firmly in its place. anticipating, rather than simply reacting to, changes in The chief characteristic, and the chief glory of this Taiwan's international competitive position. And it arrangement is the absence of any directional thrust has been selecting between industries and specific imposed by the authority of government. Rather, products in giving substantial incentives. market forces produce the important economic * * * decisions, while the government merely registers them. Industrialisation proceeds by virtue of the sum of the Taketheanticipationpointfirst.Theusual autonomous decisions made by each producer. interpretation says that the push into heavy and chemical industries dates from the early 1970s, after More precisely, the argument for Taiwan is that the and in response to rising real wages, competition from government did meddle in the economy during the other NICs, and rising protectionist barriers in export 1950s imposing all the familiar battery of controls markets. In the words of Samuel Ho, a leading expert and regulations which accompany a strategy of on Taiwan's development: 'import substitution'. Since the late l950s it has been Withprotectionistsentimentsrisinginthe progressively withdrawing, progressively widening the developed countries, continued rapid expansion of room for untrammeled market forces. And progressive the light manufactured exports on which Korea's liberalisation has gone hand in hand with rapid and Taiwan's industrial growth had been based economic progress. It is above all the throwing open of appeared problematic. Rising wages in Korea and the economy to international markets in the early Taiwan also suggested that their comparative 1960s which set in motion the relentless drive for advantage was shifting away from the semi-skilled, efficiencyinresource allocation whichinturn labour-intensive industries that grew so rapidly in produced rapid growth. Other countries are advised to the l960s. To policy-makers in both countries, learn the same lesson. these changes in external and internal conditions Such is the economic legend. It is by no means wholly suggested a need to restructure the industrial false.Anditiscertainlythecasethatthe sector. overwhelming majority of Taiwan's academic and Accordingly: government economists since the 1960s have believed in the virtues of the freely functioning market as an In both Korea and Taiwan, the economic plans article of faith as well as of rhetoric. Yet it is not fully that emerged in the mid-1970s (Taiwan's Seventh This article is a condensed version of part of the argument of a Plan for 1976-81 . .) reflected these concerns. forthcoming book, Guiding the Market: Taivanese industrial polict'. Planners advocated a move away from the labour- As well as saying much more about the policies that have been intensive industries.. .This new direction of followed, the book discusses the institutions involved n guiding the industrialisation [towards heavy and chemical, as market, and theencompassing political institutionsandattitudes Ji wellas was also considers how the interpretation of the role of government technology-intensiveindustries] given here fits with the three prevailing interpretations of how mapped out in the mid-1970s, shortly after the first Taiwan did it' lsee also Wade 1982]. oil crisis ... [Ho 1981; 1,179-81]. IDS So/leim, 19/14. vol5 ni, 2, tnsiiiuic of Development Studies. Susvox 65 This is the 'reactive' view of how it happened. In fact, export of labour-intensive manufactures boomed all however, the move into heavy and chemical industries around them. was planned long before the early 1970s. The 1965-68 Plan is emphatic that: For further development, stress must be laid on basic heavy industries (such as chemical wood pulp, petrochemical intermediates, and large-scale What methods have been used to pursue the strategy integrated steel production) instead of end product of secondary import substitution and new export manufacturing or processing. Industrial develop- promotion? In particular, how much selection have ment in the long run must be centred on export government officials made between industries and products that have high income elasticity and low specific products; and how much discretion have they transportation costs. And around these products exercised on a case-by-case basis? It needs to be there should be development of both forward and recalled that of all the prescriptions of neoclassical backward industries, so that both specialisation economics, that which says that government officials and complementarity may be achieved in the shouldnotattempttoexerciseselectiveand interest of Taiwan's economy. discretionary judgement on such matters is one of the sternest. If this is done: We shall then be able to meet the changing Take first the trade regime. For all the characterisation situation in the world market brought about by the of Taiwan as a free trade economy, the government rapid industrial progress of the emerging nations has not allowed the use of foreign exchange, the and the growing sophistication of the industries of composition of imports, to be decided by domestic the developed countries [Government of Republic demand in relation to prices set outside Taiwan. It has of China 1965:122, 124]. influenced the volume and composition of imports by a combination of very selective controls on trade, both These arguments were formulated in 1962-64, several (non-discretionary) tariffs and (discretionary) quanti- years before the end of labour surplus (conventionally tative controls. It must be stressed that the reason for put at1968-70),stilllonger before protectionist the elaborate apparatus of trade management is not to barriers began to rise, and more than 11 years before save scarce foreign exchange. Taiwan is in the unusual the Plan to which Ho attributes the first expression of position of having run balance of payments surpluses restructuring concerns. in most years since 1970, and the foreign exchange gap has not been a serious preoccupation of the planners The first ha/f of the 1960s saw the rapid establishment since the late 1960s (in sharp contrast to South Korea). of a petrochemical industry on the island; by 1980 The main objective has been to build up technological Taiwan was the fourth biggest producer of synthetic and supply capability within Taiwan, secondly to use fibres in the world. The government took the leading trade as a substitute for diplomatic relations now that roleinpromotingthesteelandshipbuilding the country has been diplomatically isolated by industries, from the early l960s onwards. The first Mainland China, and thirdly to raise government nuclear reactor was started in 1968, and came on revenue (nearly a quarter of total taxes came from stream in 1976 in time to help the country recover from tariffs in the late 1970s). the firstoil shock and weather the second. The government establisheda number of industrial Government officials are required to exercise a high research and serviceorganisationstopromote degree of selectivity in setting tariff rates. The tariff technological and managerial upgrading in specific regime is extremely differentiated by product, with sectors; such as the Metal Industries Development tariffs ranging from zero to well over 100 per cent. It is Centre, established in 1963 to demonstrate improved quite inconsistent with the two-tier structure recently production and quality control methods and to recommended by some neoclassical theorists for provide management training courses; and the China developing countries; a 10-15 per cent unitirm rate of Data Processing Centre, established to push the effective protection for all manufacturing activities introduction of computers in Taiwanese industries, in other than the infant industries, which should get a 1965.Other government sponsored and guided uniform rate no more than double the normal rate research and service organisations were established [eg Balassa 1975]. Published tariffs are not an accurate for chemicals, mining, energy, glass, textiles and food guide to the rates a potential importer must pay; for processing. All this activity was part of the foundation the basis of import valuation for tariff purposes is the for what the engineers of the Industrial Development cif price plus 10 per cent (down from 15 per cent prior Bureau unabashedly call 'the second era of import to 1983, and 20 per cent before 1979) pIus one or two substitution industrial development' [1982:1], which other charges. The average ad valorem tariff on they already anticipated during the 1960s even as the dutiable imports in 1977 was about 20 per cent. 66 Quantitative import controls provide a more subtle traders get the windfalls); and restrictions on where and flexible instrument than tariffs. For the most the imports can come
Load more

Recommended publications
  • THE FREE-MARKET WELFARE STATE: Preserving Dynamism in a Volatile World
    Policy Essay THE FREE-MARKET WELFARE STATE: Preserving Dynamism in a Volatile World Samuel Hammond1 Poverty and Welfare Policy Analyst Niskanen Center May 2018 INTRODUCTION welfare state” directly depresses the vote for reac- tionary political parties.3 Conversely, I argue that he perennial gale of creative destruc- the contemporary rise of anti-market populism in tion…” wrote the economist Joseph America should be taken as an indictment of our in- 4 Schumpeter, “…is the essential fact of adequate social-insurance system, and a refutation “T of the prevailing “small government” view that reg- capitalism.” For new industries to rise and flourish, old industries must fail. Yet creative destruction is ulation and social spending are equally corrosive to a process that is rarely—if ever—politically neu- economic freedom. The universal welfare state, far tral; even one-off economic shocks can have lasting from being at odds with innovation and economic political-economic consequences. From his vantage freedom, may end up being their ultimate guaran- point in 1942, Schumpeter believed that capitalism tor. would become the ultimate victim of its own suc- The fallout from China’s entry to the World Trade cess, inspiring reactionary and populist movements Organization (WTO) in 2001 is a clear case in against its destructive side that would inadvertently point. Cheaper imports benefited millions of Amer- strangle any potential for future creativity.2 icans through lower consumer prices. At the same This paper argues that the countries that have time, Chinese import competition destroyed nearly eluded Schumpeter’s dreary prediction have done two million jobs in manufacturing and associated 5 so by combining free-markets with robust systems services—a classic case of creative destruction.
    [Show full text]
  • Bringing the State Back In: Lessons from East Asia's Development Experience*
    Bringing the State Back In: Lessons from East Asia’s Development Experience* ROBERT H. WADE ince the end of communist regimes in Eastern Europe, policy makers Sand policy analysts in these »transition« states have resolutely turned away from learning about East Asia’s development experience. They have been very keen, on the other hand, to learn about Western European and North American experience – for this is the world they wish to join, or rather, re-join after the communist hiatus. With few exceptions, they un- derstand the causes of the prosperity of Western Europe and North America through the lens of »liberal« economics – as due, in large part, to the combination of (a) liberal markets for goods and financial assets only lightly restrained by public policies, (b) well-defined and well-en- forced property rights allowing secure profit-taking by owners, and (c) the rule of law, which makes government, and all other economic agents, subject to a common set of rules. This is the combination they wish to copy, in the expectation that it will yield »catch-up« growth. To the extent that they pay attention to East Asia’s catch-up experience, they under- stand it to validate the same model. To the extent that they acknowledge the existence of pro-active industrial and technology policy in either Western Europe or East Asia, they treat it as an aberration or decoration on the central thrust for largely free markets. The last thing Eastern European policy makers and policy analysts want is a state that intervenes to alter the composition of economic activ- ity within their borders; for this is what the communist state did, to di- sastrous effect.
    [Show full text]
  • Robert Wade on Zombie Ideas, Being Inside the World Bank, and the Death of Ethics in Economics After the Marginal Revolution
    Theory Talks Presents THEORY TALK #72 ROBERT WADE ON ZOMBIE IDEAS, BEING INSIDE THE WORLD BANK, AND THE DEATH OF ETHICS IN ECONOMICS AFTER THE MARGINAL REVOLUTION Theory Talks is an interactive forum for discussion of debates in International Relations with an emphasis of the underlying theoretical issues. By frequently inviting cutting-edge specialists in the field to elucidate their work and to explain current developments both in IR theory and real-world politics, Theory Talks aims to offer both scholars and students a comprehensive view of the field and its most important protagonists. Citation: Schouten, P. (2015) ‘Theory Talk #72: Robert Wade on Zombie Ideas, Being Inside the World Bank, and the Death of Ethics in Economics after the Marginal Revolution’, Theory Talks, http://www.theory- talks.org/2015/12/theory-talk-72.html (07-12-2015) WWW.THEORY-TALKS.ORG ROBERT WADE ON ZOMBIE IDEAS, BEING INSIDE THE WORLD BANK, AND THE DEATH OF ETHICS IN ECONOMICS AFTER THE MARGINAL REVOLUTION The global economy is at the core of some of the main issues in contemporary International Relations. But how do we understand the global economy and what impact does that have on how we deal with the power politics around it? A fault line seems to have emerged between those who take economic theory seriously and those who denounce it for being part of the problem. Informed by his training as an anthropologist, Robert H. Wade—professor at the LSE—takes a different tack: he bases his engagement with the way in which Adam Smith has been appropriated to advocate for a dominant view of ‘free markets’ on real-world economics and in-depth accounts of insiders.
    [Show full text]
  • 02 Gallagher-Interview.Indd
    The Economic Crisis and the Developing World CRISIS AND REGULATION The Economic Crisis and the Developing World: What Next? Interview with Robert Wade and José Antonio Ocampo Kevin Gallagher Some believe that the current fi nancial and economic crises have ended the dominance of the Washington Consensus once and for all. In a ceremony at Tufts University, two eminent international economists, Robert Wade and José Antonio Ocampo, were recently awarded the Leontief Prize for advancing economic thought. They were interviewed by Kevin Gallagher on the many issues affecting the future of developing economies, including trade agreements with the developed world. The perceptive interview and provocative responses provide rare, clear-minded discussion about enlightened policy for the world’s poorer nations. ROBERT WADE is professor of political economy and development at the London School of Economics. JOSÉ ANTONIO OCAMPO is a professor of international and public affairs and codirector, with Joseph Stiglitz, of the Initiative for Policy Dialogue, Columbia University. KEVIN GALLAGHER is assistant professor of international relations at Boston University and research associate at the Global Development and Environment Institute (GDAE), Tufts University. This interview with José Antonio Ocampo and Robert Wade was conducted on the occasion of their being awarded the GDAE’s 2008 Wassily Leontief Award for Advancing the Frontiers of Economic Thought, November 17, 2008. Challenge, vol. 52, no. 1, January/February 2009, pp. 27–39. © 2009 M.E. Sharpe,
    [Show full text]
  • From Dirigisme to Realism: Chinese Industrial Policy in the Era of Globalisation Jean-François Huchet
    From Dirigisme to Realism: Chinese Industrial Policy in the Era of Globalisation Jean-François Huchet To cite this version: Jean-François Huchet. From Dirigisme to Realism: Chinese Industrial Policy in the Era of Globalisa- tion. Xavier Richet, Violène Delteil, Patrick Dieuaide. Strategies of Multinational Corporations and Social Regulations, Springer-Verlag, pp.57-76, 2014, 978-3-642-41368-1. 10.1007/978-3-642-41369- 8_4. hal-01325264 HAL Id: hal-01325264 https://hal-inalco.archives-ouvertes.fr/hal-01325264 Submitted on 2 Jun 2016 HAL is a multi-disciplinary open access L’archive ouverte pluridisciplinaire HAL, est archive for the deposit and dissemination of sci- destinée au dépôt et à la diffusion de documents entific research documents, whether they are pub- scientifiques de niveau recherche, publiés ou non, lished or not. The documents may come from émanant des établissements d’enseignement et de teaching and research institutions in France or recherche français ou étrangers, des laboratoires abroad, or from public or private research centers. publics ou privés. From Dirigisme to Realism: Chinese Industrial Policy in the Era of Globalisation Jean-François Huchet Professor, INALCO-Langues'O, Sorbonne Paris Cité The 2012 "Fortune 500" classification of the world’s largest companies includes 73 Chinese firms (32 for France and 68 for Japan), whereas there were none only 15 years ago.1 Meanwhile, Chinese firms are increasing their overseas operations with nearly $60 billion of foreign direct investment per year, on average since 2008, compared to less than $1 billion annually before 2000. Fifteen years ago, Chinese exports were mainly composed of primary products and goods with a low technological content.
    [Show full text]
  • 13 Apr 2011 DRAFT – NOT for QUOTATION the RETURN of INDUSTRIAL POLICY Robert Wade London School of Economics
    1 13 Apr 2011 DRAFT – NOT FOR QUOTATION THE RETURN OF INDUSTRIAL POLICY Robert Wade London School of Economics ABSTRACT: Recent events (like the global financial crisis, the long North Atlantic slump, and the uprisings in the Middle East and North Africa), on top of accumulating evidence that many middle income countries are stuck in a “middle income trap”, have generated a renewed interest in industrial policy – in the state playing a more active role in accelerating industrial upgrading and diversification than sanctioned by the neoclassical mainstream. In other words, a renewed interest in moving beyond the “regulatory” state towards the “developmental” state. After the introduction, this paper describes the core arguments of the neoclassical mainstream against industrial policy, and the kinds of empirical evidence used to support the negative judgement. It then outlines some of the main flaws in this evidence. The standard empirical tests consider industrial policy only in its “hard”, price distorting forms, such as protection and subsidies. And they examine effects mainly at the “micro” level, in the link between the policies and various aggregates of individual firms. The paper argues that industrial policy also consists of “soft” measures, not readily captured by measures of money spent or prices distorted; and it also has “meso” level effects on supra-firm structures, which are also not readily captured by the standard tests. With the “hard/soft” and “micro/meso” distinctions in mind, the paper shows that the US – generally understood to be a classic “regulatory” state, without industrial policies (or else ones which pick losers) – has long deployed “under the radar” soft industrial policies operating at the meso level; in particular, public policies and institutions for creating and sustaining networks between firms, venture capitalists, universities, and public agencies.
    [Show full text]
  • What's Left of the Left: Democrats and Social Democrats in Challenging
    What’s Left of the Left What’s Left of the Left Democrats and Social Democrats in Challenging Times Edited by James Cronin, George Ross, and James Shoch Duke University Press Durham and London 2011 © 2011 Duke University Press All rights reserved. Printed in the United States of America on acid- free paper ♾ Typeset in Charis by Tseng Information Systems, Inc. Library of Congress Cataloging- in- Publication Data appear on the last printed page of this book. Contents Acknowledgments vii Introduction: The New World of the Center-Left 1 James Cronin, George Ross, and James Shoch Part I: Ideas, Projects, and Electoral Realities Social Democracy’s Past and Potential Future 29 Sheri Berman Historical Decline or Change of Scale? 50 The Electoral Dynamics of European Social Democratic Parties, 1950–2009 Gerassimos Moschonas Part II: Varieties of Social Democracy and Liberalism Once Again a Model: 89 Nordic Social Democracy in a Globalized World Jonas Pontusson Embracing Markets, Bonding with America, Trying to Do Good: 116 The Ironies of New Labour James Cronin Reluctantly Center- Left? 141 The French Case Arthur Goldhammer and George Ross The Evolving Democratic Coalition: 162 Prospects and Problems Ruy Teixeira Party Politics and the American Welfare State 188 Christopher Howard Grappling with Globalization: 210 The Democratic Party’s Struggles over International Market Integration James Shoch Part III: New Risks, New Challenges, New Possibilities European Center- Left Parties and New Social Risks: 241 Facing Up to New Policy Challenges Jane Jenson Immigration and the European Left 265 Sofía A. Pérez The Central and Eastern European Left: 290 A Political Family under Construction Jean- Michel De Waele and Sorina Soare European Center- Lefts and the Mazes of European Integration 319 George Ross Conclusion: Progressive Politics in Tough Times 343 James Cronin, George Ross, and James Shoch Bibliography 363 About the Contributors 395 Index 399 Acknowledgments The editors of this book have a long and interconnected history, and the book itself has been long in the making.
    [Show full text]
  • An Inquiry Into the Development of Nations
    OUP CORRECTED PROOF – FINAL, 05/08/19, SPi Asian Transformations OUP CORRECTED PROOF – FINAL, 05/08/19, SPi UNU World Institute for Development Economics Research (UNU-WIDER) was established by the United Nations University as its first research and training centre and started work in Helsinki, Finland, in 1985. The mandate of the institute is to undertake applied research and policy analysis on structural changes affecting developing and transitional economies, to provide a forum for the advocacy of policies leading to robust, equitable, and environmentally sustainable growth, and to promote capacity strengthening and training in the field of economic and social policymaking. Its work is carried out by staff researchers and visiting scholars in Helsinki and via networks of collaborating scholars and institutions around the world. United Nations University World Institute for Development Economics Research (UNU-WIDER) Katajanokanlaituri 6B, 00160 Helsinki, Finland <www.wider.unu.edu> OUP CORRECTED PROOF – FINAL, 05/08/19, SPi Asian Transformations An Inquiry into the Development of Nations Edited by DEEPAK NAYYAR A study prepared for the United Nations University World Institute for Development Economics Research (UNU-WIDER) 1 OUP CORRECTED PROOF – FINAL, 05/08/19, SPi 1 Great Clarendon Street, Oxford, OX2 6DP, United Kingdom Oxford University Press is a department of the University of Oxford. It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide. Oxford is a registered trade mark of Oxford University Press in the UK and in certain other countries © United Nations University World Institute for Development Economics Research (UNU-WIDER) 2019 World Institute for Development Economics Research of the United Nations University (UNU-WIDER), Katajanokanlaituri 6B, 00160 Helsinki, Finland The moral rights of the authors have been asserted First Edition published in 2019 Impression: 1 Some rights reserved.
    [Show full text]
  • 60 Years of Social Market Economy
    THE SOCIAL MARKET ECONOMY IN EASTERN EUROPE – AN UNDERESTIMATED OPTION? Marc Stegherr 1. ABSTRacT After the fall of the Berlin wall, the former Communist-ruled Eastern European countries did not set up a Social Market Economy according to the successful German model, but one which was “without attributes”, according to the current Czech president, Václav Klaus. As the victor of the Cold War, the United States and their unregulated market economy model were seen as a role model for the new rulers in Cen- tral and Eastern Europe, and also in the former Yugoslavia. For ideological reasons, Russia could not acknowledge the USA as a role model. However it moved towards an exten- sive free market economy with the considerable restriction that its laws placed on the small social stratum of the so- called oligarchs, while the middle stratum was left empty- handed. On the one hand the excessive social state influ- enced by Germany is a deterrent, on the other hand the social problems of an unregulated economic system are becoming increasingly clear, especially in the light of the financial crisis. The only way out is through reflection upon the actual nature of the Social Market Economy. This is currently on the agenda in Germany. 190 2. INTRODUCTION Critics of the Social Market Economy, whether in their own countries or in other eastern European countries, see this as an outmoded model. After the collapse of communism and the end of the system debate, it was not German ordoliberalism which succeeded, but “liberalism without a prefix” and the “market economy without an adjective”, as the current president of the Czech Republic, Václav Klaus, called it.
    [Show full text]
  • Public Lecture: 'Globalization, Development and Inequality' by Joseph Stiglitz, Ravi Kanbur and Robert Wade
    Public Lecture: 'Globalization, Development and Inequality' by Joseph Stiglitz, Ravi Kanbur and Robert Wade Date / Time: January 8, 2013 - 5:00pm - 7:00pm Venue: Sathya Sai Samskruta Sadanam, Hosur Road, Next to Forum Mall, Bangalore - 560029 Enquiries / RSVP: [email protected] Facebook Link: Link to Facebook Abstract: The speakers are interested in identifying the complex global interactions that influence poverty and development as well as strategies for development that have proven successful in promoting equitable growth, promoting capabilities and reducing poverty. Given these enormous challenges and the need for a great variety of initiatives at multiple levels to resolve them, the first step is to build a new generation of scholars and practitioners that understand these issues. One of the key problems in realizing the potential of globalization, to make it fairer and to tackle the scourge of poverty, is that the approach must be integrated across not only different disciplines, but also regions. A Note on the Speaker: About Joseph Stiglitz Joseph E. Stiglitz was born in Gary, Indiana in 1943. A graduate of Amherst College, he received his PHD from MIT in 1967, became a full professor at Yale in 1970, and in 1979 was awarded the John Bates Clark Award, given biennially by the American Economic Association to the economist under 40 who has made the most significant contribution to the field. He has taught at Princeton, Stanford, MIT and was the Drummond Professor and a fellow of All Souls College, Oxford. He is now University Professor at Columbia University in New York and Co- Chair of Columbia University's Committee on Global Thought.
    [Show full text]
  • After the Crisis: Industrial Policy and the Developmental State in Low-Income Countrie
    Global Policy Volume 1 . Issue 2 . May 2010 150 After the Crisis: Industrial Policy and the Developmental State in Low-Income Countries Research Article Robert Wade London School of Economics and Political Science Abstract Policy Implications The current global economic crisis has been • Liberalizing markets, attracting FDI and pro- disastrous for many millions of people. But it has moting good governance are not necessary condi- also had the desirable effect of prompting a little tions of long-term economic growth and more skepticism towards the economic beliefs that development in low-income countries. have constituted the mainstream view about public • In the wake of the global financial crisis and the economic strategy for the past three decades, both impending surge of new technologies, the role of in the major western states and in international industrial policy – promoting some sectors or lending organizations like the World Bank and the products ahead of others – should be expanded. IMF. They have at their core the proposition that • Import replacement as well as export orientation ‘government failure is generally worse than market are crucial components of a successful industrial failure’, which supports the default policy setting of policy. ‘more free market’ in most countries most of the • Four organizational features are important in a time. The new crisis-induced skepticism is good developmental state: (1) an even balance between news because the previous confidence rested more the state and business groups; (2) a public service on what J. S. Mill called ‘the deep slumber of a mindset among state officials; (3) delivery of settled opinion’ than on a solid empirical base.
    [Show full text]
  • The Management of Common Property Resources: Collective Action As an Alternative to Privatisation Or State Regulation
    Cambridge Journal of Economics 1987,11, 95-106 The management of common property resources: collective action as an alternative to privatisation or state regulation Robert Wade* Under what circumstances will villagers co-operate to supply themselves with goods and services that they all need but could not provide for themselves individually? In what circumstances are those who face a potential 'tragedy of the commons' able to organise a system of rules by which the tragedy is averted? Many writers on collective action and common property consider that these circum- stances are very limited. A long line of collective action theorists has argued that people placed in a situation in which they could all benefit from co-operation will be unlikely to co-operate in the absence of an external enforcer of agreements. An equally long line of theorists on property rights has argued that common property resources are bound to be over-exploited as demand rises. The only solution is private enclosure, according to some theorists, or state regulation, according to others.1 In Robert Smith's words, 'it is by treating a resource as a common property that we become locked in its inexorable destruction' (1981, p. 465). My own research findings from South India are difficult to reconcile with these argu- ments. Within one small area, I found some villages with a more sophisticated set of arrangements for regulating canal irrigation and grazing (and for supplying other public goods as well) than had been previously reported for Indian villages. Other villages nearby, however, showed no sign of these arrangements.
    [Show full text]