East Asia and the Allure of Authoritarian Development

Bryan Cheang is the Assistant Director and a Research Fellow at the Centre for the Study of Governance and Society at King’s College London, where he obtained his PhD in Political Economy. He is the author of a recent book Economic Liberalism and the Developmental State: Comparing Hong Kong and Singapore’s Post-War Development published by Palgrave Macmillan.  

Hong Kong is one of the ‘Four Asian Tigers’ that experienced rapid economic development in the late 20th century. The development of these East Asian nations in a single generation led to much debate in political economy over the proper role of the state and market in development policy. This is because most of these nations, with the notable exception of Hong Kong, adopted an authoritarian developmental state variant of capitalism in their journey to first world status. This model in turn posed questions as to the universal applicability and attractiveness of Western liberalism and market economics. 

The challenge the East Asian model of development poses to liberalism remains important today, especially in a world with an increasing democratic deficit, and where the actions of states like Russia and China threaten to usher an authoritarian century. It is my contention that to understand for example the nature of China and the threat that it poses to the world order, it is important to look back into East Asia’s development, and understand their complicated links between economic and political freedoms, state-market arrangements. 

In this context, my recent book Economic Liberalism and the Developmental State, I conducted a comparative case study analysis of Hong Kong and Singapore’s post-war development, as a means to understand East Asia more broadly. In this book, I find that contrary to many market-oriented economists, East Asia’s development occurred under the backdrop of heavy government intrusion, especially through industrial policy and restructuring. This means that economic freedom statistics, which consistently rank Hong Kong and Singapore as the two freest economies in the world, are misleading, because they cannot account for the state-driven hybrid model in Singapore, which stands in contrast to Hong Kong’s liberal entrepreneurial capitalism. 

Through detailed evidence gathering, I establish a sharp divergence between the political economies of Hong Kong and Singapore. While both are generally trade-oriented open economies, the Singapore state intervenes in the industrial structure, capital, and labour markets in ways that the Hong Kong colonial state never even considered to. This is an important distinction to make, because it challenges the assumption that economic freedom necessarily contributes to or at least occurs in tandem with political liberalism. The fact that Singapore achieved rapid growth under authoritarian institutions is a phenomenon that anyone who cares about liberalism should find at least puzzling. 

For readers of this blog, the nature of Singapore as an authoritarian developer is related to a similar story of China as well, which has over the years become more capitalist, but not more liberal. In fact, some social scientists have found that many of China’s authoritarian leaders sought to emulate Singapore, for it has seemingly been able to balance an open economy with a closed political system. Arguably, Singapore and China are today two nations which seek to garner the fruits of market-based development without yielding authoritarian political control – a phenomenon that warrants further attention given global concern about China. 

Ultimately however, my book is an argument for why liberalism remains an attractive ideal. Even though both Hong Kong and Singapore (with other East Asian nations), achieved rapid economic development, the quality of said development is not the same between the two. Authoritarianism is indeed a useful tool, because it allows political elites to trump special interests and private coalitions that may oppose development projects. Authoritarian states may be able to quickly mobilise resources, construct ambitious industrial projects, and put many people to work. However, at the risk of sounding trite, it is only under conditions of freedom where genuine human progress occurs. 

Accordingly, the second part of my book shows that a deeper analysis of Hong Kong and Singapore’s development record will reveal that the latter suffers from structural problems in productivity, innovation, and organic entrepreneurship. While aggregate statistics do show both countries have comparable levels of economic performance, a detailed look beyond aggregate statistics reveals several important differences. For example, both countries rank highly on the Global Innovation Index. Yet, an analysis of pre-1997 Total Factor Productivity shows that Hong Kong eclipsed Singapore in every single year, despite it having virtually no industrial subsidies or support for firms. More significantly, most of the R&D spending and patents registered in Singapore are concentrated in the state-linked and foreign sectors, rather than accruing from organic and indigenous entrepreneurs. Additionally, the top-down nature of Singapore’s innovation policy means that it exhibits a comparatively lower level of economic efficiency, a problem best articulated by the 2014 Creative Productivity Index (Asian Development Bank and Economist Intelligence Unit, 2014). 

By contrast, Hong Kong’s post-war development was achieved in the absence of a central industrial strategy and was in fact kickstarted by the influx of immigrants in the 1960s. These migrant entrepreneurs in turn facilitated industrialisation from the bottom-up, contributing to a dynamic and adaptive economy. The edge that Hong Kong had over Singapore was always in the realm of culture. Significantly, Hong Kongers are more likely to become entrepreneurs than Singaporeans, who prefer less risky occupations. Significantly, Hong Kong, and in fact most other East Asian nations, have vibrant creative sectors as compared to Singapore which has struggled on this front despite high amounts of government funding. For example, Hong Kong has an illustrious history of ‘Cantopop’ and its film industry, being the third largest in the world at various points, has over many decades comparable to K-Pop, America’s Hollywood, and India’s Bollywood (see Chu, 2017).

Hong Kong today is unfortunately very different than in the late 20th century, which is the focus of my study. Since then, its liberalism has sadly been stunted by China’s increasing encroachment. For readers of this blog, this is a familiar theme. If there’s one main message of my book, is that individual freedom, both political and economic, are connected, and should very much be appreciated, understood, and cherished, wherever they are found. 

References:

• Asian Development Bank & Economist Intelligence Unit. (2014, August). Creative productivity index: Analysing creativity and innovation in Asia. Retrieved from Asian Development Bank: https://www.adb.org/publica­tions/creative-productivity- index- analysing-creativity-and-innovation-asia

• Chu, Y.-W. (2017). Hong Kong Cantopop: A Concise History. Hong Kong University Press.