Normatively weak institutions can be functionally strong: A surprising lesson from China

DEV-IN-TRANS-BANNER

By Yuen Yuen Ang, Associate Professor of Political Science at the University of Michigan and the author of “How China Escaped the Poverty Trap


This blog is part of an ongoing series evaluating various facets
of
Development in Transition. The 2019 “Perspectives on Global Development” on “Rethinking Development Strategies” will add to this discussion


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Guangzhou, China. Photo : shutterstock.com

For the past decades, policymakers and development practitioners have clung to the idea that “good governance” is the solution to poverty. If only poor countries could eradicate corruption, enforce laws, hold leaders accountable and achieve a checklist of best practices, their economic and social problems would be resolved.

This thinking, however, runs into a chicken-and-egg problem: in the first place, it’s hard for poor countries to quickly and meaningfully establish good governance. Indeed, if it were easy to achieve good governance, poor countries would have done it long ago.

But if insisting on one-size-fits all good governance is not the solution, then what is the alternative? My research on China’s development reveals a surprising lesson: normatively weak institutions can be functionally strong. Seen through first-world lenses, the norms and structures found in low-income, pre-industrialised countries are often regarded as “weak” or “backward,” that is, as impediments to development. In fact, these institutions can be creatively adapted or repurposed to kick-start development.

China’s Dire Starting Points

Today, with China’s spectacular rise splashed all over the news, it is easy to assume that this success was easily achieved under a purportedly “strong” communist government. In fact, when markets first opened in 1978, virtually no one — not even the reformist leader Deng Xiaoping himself — predicted today’s outcome.

It is useful to recall two basic facts about China’s starting points. First, prior to market reform, China was a very poor country, poorer than Chad and Bangladesh. Second, although market reforms took place under an authoritarian leadership, the bureaucracy had been devastated by a century of decline, foreign invasion, civil war and Mao’s disastrous policies. The Cultural Revolution, which Mao described as “utter chaos and an all-out civil war,” inflicted severe damage upon the bureaucracy. Particularly at the local levels, bureaucrats were hired for their political backgrounds but had limited education and expertise.

Directed Improvisation

How then did China turn around its dire situation? Under Deng’s pragmatic leadership, Beijing transformed from a dictator to a director. Under Mao, the leadership tried to “plan” its way to rapid industrialisation and growth through detailed, top-down commands.

When Deng succeeded Mao, he kept the Chinese Communist Party solely in power but discarded pure central planning. Under his charge, Beijing delegated authority to numerous local governments, encouraging them to leverage whatever existing resources or institutions they had to kick-start economic development.

This adaptive system is what I term “directed improvisation”—a paradoxical mixture of top-down direction (by the central government) and bottom-up improvisation (by local governments).

Ang - Directed improvisation summary

Under directed improvisation, China achieved a distinct pattern of development over the past decades: diverse solutions tailored to local conditions and stages of development. Far from being monolithic, a stunning variety of “China models” exists within China, varying across regions and evolving over time.

Normatively Weak Institutions Can be Functionally Strong

Improvisation — adaptation using existing resources — took place throughout China in different ways. Take the example of coastal provinces, which were the first in China to liberalise and modernise. When markets opened, local governments on the coast did not have the rule of law or professional bureaucracies. They lacked the “good governance” or “best practices” that are widely regarded as prerequisites for economic growth.

Nevertheless, local leaders leveraged what they had at the time: bureaucrats with extensive personal networks. Every county and town mobilised the entire civil service to use personal networks to find investors, and those who succeeded were rewarded with bonuses. In this way, local leaders harnessed a key strength of communism (the ability to mobilise) and of rural conditions (strong personal ties). By utilising the resources they already had, they took the first necessary step in the development process.

The lesson is that normatively weak institutions can be functionally strong. Judged by first-world norms, mobilising all civil servants to recruit investors using personal relations would be considered weak, backward or wrong. Yet this unorthodox arrangement harnessed existing resources and fitted the needs of early development. In that sense, it was functionally strong.

Three Takeaways

Learning is not copying. Other countries should not blindly copy what China did, just as they should not copy the existing best practices of wealthy countries like Denmark or France. Every country requires a different “fit” of institutions, norms and practices.

Instead, we should take away three general principles:

First, achieving good governance in first-world forms is part of the problem of being poor, not its solution.

Second, normatively weak institutions can be functionally strong, meaning institutions that look weak or wrong by first-world standards may function effectively in developing contexts.

And third, instead of copying other countries’ particular policies or practices, each country should build conditions that enable improvisation within its own society or government.


References

Lant Pritchett & Michael Woolcock, “Solutions When the Solution is the Problem,” World Development, Feb 2004

OECD Development Centre Dev Talks, “Which comes first in development: good governance or economic growth,” Feb 7, 2018

Yongmei Zhou, Review of “How China Escaped the Poverty Trap,” The World Bank, Let’s Talk Development Blog, Jan 13, 2017.

Yuen Yuen Ang, “Beyond Weber: Conceptualizing an Alternative Ideal Type of Bureaucracy in Developing Contexts,” 2016

Yuen Yuen Ang, How China Escaped the Poverty Trap, 2016


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