climbing out the ditch
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Climbing out the Ditch. Managing the Politics of Change: Leadership and the Role of Institutions in East Asia ‘s Rapid Growth. low per capita GDP. high unemployment. crushing poverty. Underdeveloped Country. wide rural-urban disparities. high illiteracy. weak capacity. - PowerPoint PPT PresentationTRANSCRIPT
Climbing out the DitchManaging the Politics of Managing the Politics of
Change: Leadership and the Change: Leadership and the Role of Institutions in East Role of Institutions in East
Asia ‘s Rapid GrowthAsia ‘s Rapid Growth
UnderdevelopedCountry
low per capita GDP
crushing poverty
high illiteracy
high high mortality mortality ratesrates
high high unemploymeunemploymentnt
political political instabilityinstability
inept inept governmentgovernment
wide rural-wide rural-urban urban disparitiesdisparities
weak weak capacitycapacity
poor poor governancegovernance
High per capita GDP
low poverty
high literacy
low mortality rates
Intermittent bouts with unemployment
long term long term political political stabilitystability
well functioning well functioning governmentgovernment
manageable regional disparities
well endowed capacity
good good governancegovernance
DevelopedCountry
The Real Challenge of Development
status quo
(underdeveloped)
DesiredDesiredStateState
(Developed)Managing the
Politics of Change
East Asia’s High PerformersTaking the bull by the horns . . .
. . . managing managing the the politics of politics of changechange
Requisites of Change Management
establishing a sense of urgency
creating a guiding coalition
developing a vision and strategy
communicating the change
vision
empowering broad based
action
generating short term
wins
consolidating gains &
producing more change
embedding change in the
culture
John Kotter, 1996
CHANGE
Requisites of Change Management
establishing a sense of urgency
creating a guiding coalition
developing a vision and strategy
communicating the change
vision
empowering broad based
action
generating short term
wins
consolidating gains &
producing more change
embedding change in the
culture
John Kotter, 1996
Threat of communist takeover
Requisites of Change Management
establishing a sense of urgency
creating a guiding coalition
developing a vision and strategy
communicating the change
vision
empowering broad based
action
generating short term
wins
consolidating gains &
producing more change
embedding change in the
culture
John Kotter, 1996
Shared growth
The Principle ofThe Principle of Shared GrowthShared Growth
The Wealth PieThe Wealth Pie
All share All share in in incrementincrements to the s to the piepie
The Principle ofThe Principle of Shared GrowthShared Growth
The Shared Growth Phenomenon
Gini Coefficient and GDP per Capita Growth Rate, Annual Average, 1970-1990
KoreaArgentina
Peru
Chile
Venezuela
Mexico
Philippines
Colombia Brazil
Thailand
Malaysia
Indonesia
SingaporeHong Kong
Taiwan
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08
GDP per capita growth rate, 1970-1990
Gin
i c
oeff
icie
nt,
1970-1
990
The Shared Growth Phenomenon
Region GNP per capita growth
(per year) 1965- 1990
Income share of bottom 20
percent of households
Income of highest 20 percent of households
Ratio of top 20 percent to bottom 20
percent
East Asia, Fast Growers
6.1 6.7 43.3 7.0
East Asia Slow Growers
3.6 6.1 47.5 8.3
Latin America 1.4 3.6 55.1 16.4
Africa 0.3 4.3 54.0 15.0
South Asia 2.2 8.0 43.5 5.5
Ratio(unweighted average) of Top to Bottom Quintile and per Capita Growth Rate, Selected Years: 1976-1988
The Shared Growth Phenomenon
Region Average Poverty Index
HPAEs 0.25
Other Asia 0.53
Latin America 0.42
Sub-Saharan Africa 0.52
Integrated Poverty Index, 1988
Requisites of Change Management
establishing a sense of urgency
creating a guiding coalition
developing a vision and strategy
communicating the change
vision
empowering broad based
action
generating short term
wins
consolidating gains &
producing more change
embedding change in the
culture
John Kotter, 1996
• Vision 2020• Annual awards for export performance
But Why Shared Growth?
History and path dependence
Thrust of Leadership
The Role of Institutions
status quo
(underdeveloped)
DesiredDesiredStateState
(Developed)Managing the
Politics of Change
democratic institutions
The Western World
East Asia post WWIIEast Asia post WWII ? ? ?
The Predicament of Leadership
Paradox of autocracy
Time inconsistency of economic
policies
The Paradox of AutocracyThe Paradox of Autocracy
Property rights ???
Time Inconsistency
Costs
“today”
Benefits
“tomorrow”
The Predicament of Leadership
Paradox of autocracy
Time inconsistency of economic
policies
credible commitmentcredible commitment
Institutional Foundations of Shared Growth
Deliberation councils
Wealth sharing mechanisms
Competent/functional bureaucracy
Requisites of Change Management
establishing a sense of urgency
creating a guiding coalition
developing a vision and strategy
communicating the change
vision
empowering broad based
action
generating short term
wins
consolidating gains &
producing more change
embedding change in the
culture
John Kotter, 1996
government - businessdeliberation councils
Institutionalizing Consultative Processes: the
Deliberation Council
Coordination and information “leveling”
Rent allocation
Credible commitment
Wealth Sharing Mechanisms
• land reform • developing rural infrastructure• investing in basic education• promoting SMEs/labor intensive manufacturing• allocating corporate equity• worker cooperatives• public housing programs
Land reform
Percent Distribution of owner-cultivated households
Size of Holding (chia) 1939 1960
Less than 0.5 43.2 20.7
Between 0.5 and 1 20.9 45.9
Between 1 and 3 24.6 30.1
Greater than 3 11.3 3.3
Total 100.0 100.0
Distribution of Land and Owner-Cultivated Households in Taiwan, by size of Holding, 1039 vs. 1960
Land reform/rural infrastructureOverall Effectiveness of Simulated Experimental Programs in South Korea, 1978
Simulated Program
Land Reform -4.6
Public works and
small scale industry
-4.7
All Programs -10.7
All Programs but
land reform
-9.6
28.7
30.4
77.6
63.5
RuralIncome ofBottom decile
RuralHouseholds inPoverty (percent)
(insert table 3-1 in Campos, p.32)
Basic education
Primary Secondary
Region/
Country
1965 1987 1965 1987
Indonesia 72 118 12 46
Thailand 78 95 14 28
Malaysia 90 102 28 59
Korea 101 101 35 88
Singapore 105 n.a. 45 n.a.
Hong Kong 103 106 29 74
Primary and Secondary Enrollment Rates in the High-Performing East Asian Economies
Labor intensive SMEs
Categories Value of exports
Export value of small and medium businesses
Percent of small and medium businesses
Manufacturing 436.89 264.26 60.49
Trade Business 235.25 120.96 51.42
Total 672.14 385.22 57.31
Exports of Small and Medium Enterprises in Taiwan (Hundreds of millions of U.S. Dollars)
Malaysia NEP
Year Bumiputra Other Malaysian residents
Foreign residents
1969 1.5 59.6 62.1
1970 2.4 34.3 63.4
1971 4.3 33.9 61.7
1975 9.2 37.5 53.3
1980 12.5 44.6 42.9
1982 15.6 49.7 34.7
1983 18.7 47.7 33.6
1985 19.1 54.9 26.0
1988 19.4 56.0 24.6
1990 19.2 46.8 25.4
Malaysian Ownership of Share Capital of Limited Companies (at par value 1969-1990)
Requisites of Change Management
establishing a sense of urgency
creating a guiding coalition
developing a vision and strategy
communicating the change
vision
empowering broad based
action
generating short term
wins
consolidating gains &
producing more change
embedding change in the
culture
John Kotter, 1996
well functioning bureaucracy
Merit based recruitment and career advancement
Adequate compensation
Implementation Capacity: the Bureaucracy
Implementation Capacity: the Bureaucracy
Country/Region GDP/Capita Senior Level (%)
A B
Singapore 14,920 114 114
South Korea 7,190 69.3 69.3
Taiwan, China 7,954 65.2 65.2
Malaysia 5,900 40 40
Thailand 4,610 47.1 47.1
Philippines 2,320 27.7 27.7
Chile 6,190 70.36 70.36
Trinidad and Tobago
8,510 63.53 63.53
Venezuela 6,740 29.54 29.54
Uruguay 6,000 n.a. n.a.
Argentina 4,680 24.11 24.11
Estimates of per Capita GDP and Ratio of Public to Private Sector Salaries, Developing Countries
Index of bureaucratic Index of bureaucratic capabilitycapability
0.0
0.5
1.0
Philippines Korea
0.2
0.6
Depth of political appointments
Political appointees
Philippines Korea
Secretary
Bureau Director
Service Director
Level 2
Assistant secretary
Regional Director
Under secretary
Minister
Division chief
Level 4
Level 3
Division chief
Ratio of public to private wages Ratio of public to private wages
0
20
40
60
80
100
Philippines Korea
66
26
Percent
Source: WDR 1997
Merit based recruitment and career advancement
Adequate compensation
Accountability
Implementation Capacity: the Bureaucracy
Economic growth and bureaucratic performance
Unexplained Growth Rate and Bureaucratic Effectiveness
Thailand
Korea
Malaysia
Japan
TaiwanSingaporeHong Kong
0
5
10
15
20
25
30
35
-10 -5 0 5 10
Unexplained growth rate (average: 1960-1989)
Ind
ex
of
bu
rea
uc
rati
c
eff
ec
tiv
en
es
s