Singapore: ISEAS, 2014. xxv, 399 pp. (Tables, figures, maps.) US$49.90, paper. ISBN 978-9-814414-53-1.
Architects of Growth is essentially a collection of ten case studies on the nature and role of provincial or state governments in growing and nurturing electronics hardware manufacturing across a range of countries in Southeast Asia. The region is well known as a hub for high technology manufacturing and within it the electronics industry.
In fact the sector has been very important for the catch-up of these industrializing countries. Three of these countries—namely China, Korea and Taiwan—have indeed become world leaders in the design, manufacture and sale of various electronics products such as telecommunications equipment, semiconductors and notebook and tablet computers. It is also well documented that the governments of these countries did play an important part in shaping the trajectory of this technology-intensive industry, which is prone to various sorts of market failures. In fact even in advanced countries such as in the United States and Japan, the state had an important role in promoting the growth of the electronics industry. However in the literature the role of the state is very often equated with the central or national government. But in more ways than one the sub-national governments, especially at the level of states or provinces, also do have a strong and important role to play. The role manifests itself in two broad ways. First the state itself directly embarks on the manufacture of these products by setting up state-owned undertakings and second, the state providing the necessary incentives, usually fiscal, for the product to be manufactured by the private sector. It is this multifaceted role of the state that is analyzed by the collection of case studies in the book and given the fact that the role of sub-national entities is very rarely discussed or understood, the book under review is a welcome addition to the literature on decentralization, which so far has been preoccupied mainly with governance issues and not commodity producing ones.
The book is structured into 13 chapters of which ten are case studies that constitute the core of the book. The case studies are grouped into three categories, namely: on the basis of geographical location of the countries, size of the economies and according to the degree of industrialization in a mutually exclusive fashion. In fact the use of multiple criteria to situate the cases limits to some extent the comparative picture that the cases are supposed to throw light on. The first set of cases is four Southeast Asian countries: the Philippines, Malaysia, Thailand and Vietnam, all in different stages of development as far as electronics manufacturing is concerned. The second set focuses on two large countries: China and India, and the third set consists of four cases of industrialized countries: Singapore, Korea, Taiwan and the Netherlands. Here the inclusion of both Singapore and the Netherlands is likely to raise some eyebrows. The concept of sub-nationalism may not at all apply to Singapore and the Netherlands is not an Asian country and hence one does not find sufficient justification for its inclusion especially given the fact that the book focuses on the role of sub-national governments in promoting industrialization through the diffusion of the electronics industry in Asia. Although the case that the author discusses, North Brabant province, is important for high technology development within the Netherlands, the role of the national government too was equally relevant. As important is the location of a leading electronics MNC in that region which would have spawned in any case a cluster of electronic component suppliers. The cases do not adopt a common theoretical framework and hence the results of the individual cases are not easily comparable despite the heroic attempt made in the concluding chapter to draw out lessons from their role in promoting industrialization. This is because the chapters are edited versions of a conference organized in 2011. The absence of a common framework does indeed limit the usefulness of this otherwise laudable project on an underexplored but important theme. However without any doubt the book places on the table the growing importance of sub-national entities at a time when all economies are globalizing and even the importance of national-level policies for industrialization has come under some strain.
The most refreshing aspect of the book is the central question that the editor raises, namely the extent to which sub-national governments design and implement policies to address needs regarding their industrial sectors. The ten case studies do provide enough evidence to the effect that they do, and in that process earn the title of being architects of growth. This central question is then followed by three sub-questions: (1) when do sub-national governments take on the role of architects?; (2) to what extent can they become the prime drivers of industrialization; and (3) which of the strategies and policy measures that are available to them are productive, and under what conditions? These are then answered through the case studies although there is considerable variation in the clarity with which these are dealt with in the successive case studies.
An important but interesting issue that is under-explored in the case studies is the extent to which the sub-national entities across the range of country cases have actually used fiscal incentives of various sorts (notably tax concessions) to attract FDI and through that process industrialization. In fact this incentive-induced industrialization has led to a competition of sorts between the sub-national entities to attract large FDI projects. The belief was that this would accentuate the creation of additional employment in the local economy. The fact that almost all these countries have experienced “jobless growth” (defined as rate of growth of industrial employment being at a much slower rate than the rate of growth of GDP) has diminished one’s faith in this type of industrialization. There are, of course, well-known exceptions to this where provincial governments have successfully used policies to raise both employment growth in tandem with overall rate of growth of GDP. It is in this context that one can appreciate the North Brabant case, although commentators familiar with the Netherlands may consider the province of Limburg to be a better case of transformation. Although there are discussions of linkages (horizontal and vertical), the discussion of it is rather skimpy across the cases.
That said the book is stimulating and readable and a systematic appreciation of it can lead to the emergence of research on the welfare implications of incentive-induced industrialization at the sub-national level.
Sunil Mani
Centre for Development Studies, Trivandrum, India
pp. 261-263