Compressed Development

The strategies of successful developers must fit the prevailing conditions of the industrial era.  We identify three aspects of development post-1980s that are new: 1) time compression in economic development so extreme that ‘stages’ of development collapse into simultaneity; 2) space compression that integrates economic activity across borders with unprecedented immediacy; and 3) strategy compression that forces firms and even entire national economies to specialize within larger, global production and innovation networks.  While late developers such as Japan and Korea asked ‘How do I catch up?’, compressed developers also need to ask ‘How do I fit in?’ – to a world increasingly characterized by uncertainty, global scale interconnection and extremely rapid change. These changes have consequences.  Observers of structural transformation have long observed that the business systems formed during a country’s initial high-growth phase have a powerful and long-lasting influence on that country’s economic institutions, including innovation systems, business culture, corporate governance and industrial organization.  In other words, rapid growth leaves a lasting imprint. 

In regard to the state, we argue that ‘social upgrading’ was more achievable under the conditions of ‘late development’ than compressed development, where ‘thin industrialization’ and narrow specialization within GVCs, neo-Taylorite labour relations, and capital-favoring strategies work to limit social upgrading and intensify inequality.  Furthermore, the processes of compressed development, because they collapse development stages, have tended to make these ‘double challenges’, e.g., public health systems coping with ‘rich-country problems’ such as type 2 diabetes and obesity while simultaneously fighting malnutrition. This can lead to ‘policy stretch’ –the stretching of state capacity over an unusually wide range of pressing issues.  Policy stretch not only spreads the financial and administrative resources of the state more thinly than would otherwise be the case, but it also demands a range of expertise that opens up space for intervention from international aid bodies, multilateral institutions, and NGOs. Under compressed development the ideal-typical roles of the (national) state are changed from the planning and orchestrating roles of the developmental state, to a more synthetic, facilitative, flexible, and innovating role, which we summarize as the ‘adaptive state.’ This does not mean the abandonment of planning and capability building, but it does require greater strategic responsiveness to events and processes taking place outside its borders.