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Limits of State Strength: Toward an Institutionalist View of Economic Development

Published online by Cambridge University Press:  13 June 2011

Richard F. Doner
Richard F. Doner
Affiliation:
Emory University
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Abstract

Analyses of economic growth have drawn on the experiences of the East Asian newly industrializing countries to highlight the contribution of cohesive and autonomous states in the resolution of market failures. Within an explicit collective action and public goods framework, this article argues for an institutionalist approach to development that incorporates, but also goes beyond, statism. Through an examination of auto manufacturing in five countries in Southeast and Northeast Asia, the article identifies specific collective action problems central to the development process, and it explores limits to the capacities of even strong states to resolve such problems. The article stresses the role of private sectors and joint publicprivate sector institutions, identifies systematic differences within and among local entrepreneurs with regard to development issues, emphasizes the need for research on factors influencing the supply of institutions; and argues for an approach to development that emphasizes cooperation among domestic interests rather than domination.

Type
Research Article
Information
World Politics , Volume 44 , Issue 3 , April 1992 , pp. 398 - 431
Copyright
Copyright © Trustees of Princeton University 1992

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References

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19 Note, however, that the division of Korea deprived the South of many of the major industries developed by the Japanese. Back (fn. 16), 99.

20 In Asia, the tendency toward relocation took the form of a Ford-initiated regional production scheme in which the Philippines would play a major role. See Harold C. Livesay, “The Philippines as an Example of the Ford Motor Company's Multinational Strategy,” in Norman G. Owen, ed., The Philippine Economy and the United States: Studies in Past and Present Interactions, Michigan Papers on Southeast Asia, no. 22 (Ann Arbor: Center for South and Southeast Asian Studies, University of Michigan, 1983). On the industry's general maturation, see Dankbaar, Ben, “Maturity and Relocation in the Car Industry,” Development and Change 15 (September 1984CrossRefGoogle Scholar); Altshuler, Alan et al., The Future of the Automobile (Boston: MIT Press, 1984Google Scholar).

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24 See the essays in Hughes (fn. 2); and Crone, Donald K., “State, Social Elites, and Government Capacity in Southeast Asia,” World Politics 40 (January 1988CrossRefGoogle Scholar).

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28 The number of vehicles assembled locally went in Indonesia from 17,600 in 1971 to 108,600 in 1978 to 153,600 in 1984; in Malaysia from 25,000 in 1969 to 88,600 in 1979 to 124,000 in 1984; in the Philippines from 20,100 in 1969 to 52,900 in 1979 to 41,600 in 1983; and in Thailand from 11,700 in 1969 to 88,800 in 1979 to 110,700 in 1984. Figures from Doner (fn. 16), Table 3.10.

29 For the Thai case, see Thanamai, Patcharee, “Patterns of Industrial Policymaking in Thailand: Japanese Multinationals and Domestic Actors in the Automobile and Electrical Appliance Industries” (Ph.D. diss., University of Wisconsin, Madison, 1985Google Scholar). For Indonesia, see Ian Chalmers, “The Erosion of Nationalist Automotive Development Policy” (Paper presented at a conference on Economic Policy-Making in Indonesia, Bali, September 6–9, 1990).

30 Bennett and Sharpe (fn. 4), 262.

31 Doner (fn. 16), chap. 5.

32 Chalmers (fn. 26), 15–16, 19.

33 Information on state policy initiatives is found in Chuk Kyo Kim and Chul Heui Lee, “Ancillary Firm Development in the Korean Automobile Industry,” in Odaka (fn. 16), 287—93; Back (fn. 16); and Alice Amsden and Linsu Kim, “The Role of Transnational Corporations in the Production and Exports of the Korean Automobile Industry” (Boston: Harvard Business School Working Paper, 1985).

34 Back (fn. 16), 119.

35 Ibid., 127.

36 Ibid., 138.

37 Sinjin linked up with GM in 1972 and became GM-Korea after Toyota opted to concentrate on the China market. The firm changed its name to Saehan in 1977 but became Daewoo in 1982. Daewoo had bought out Sinjin's shares in 1978 after low profits depleted Sinjin's finances.

38 Amsden and Kim (fn. ii), 5.

39 Back (fn. 16), 185–86.

40 Hood, Neil and Young, Stephen, “The Automobile Industry,” in Guisinger, Stephen E. and Associates, Investment Incentives and Performance Requirements (New York: Praeger, 1985), 156Google Scholar.

41 For the purposes of this paper, I generally refer to externalities and public goods as analogous phenomena. It is important to note, however, that they are distinguished by two factors: their intentionality and the uniformity of their consequences. The impact of a public good is intentional, whereas an externality occurs when the consumption or production activity of one individual or firm has an unintended impact on the production of another individual or firm. Also, a public good is one that “must be provided in equal quantities to all members of the community,” whereas the positive or negative externality “consumed by the second parties may differ from that consumed by the direct purchaser.” Mueller, Dennis C., Public Choice II (New York: Cambridge University Press, 1989), 25Google Scholar, 27.

42 The distinction between transaction and information costs is fuzzy at best. The former refer to the costs of running the economic system and are “the economic equivalent of friction in physical systems.” See Williamson, Oliver E., The Economic Institutions of Capitalism (New York: Free Press, 1985), 18–19Google Scholar. The latter may be understood as a subset of transaction costs. See Myhrman, Johan, “The New Institutional Economics and the Process of Economic Development,” Journal of Institutional and Theoretical Economics 45 (1989), 43Google Scholar.

43 On the problem in Latin America, see Jenkins, Rhys, Dependent Industrialization in Latin America: The Automotive Industry in Argentina, Chile and Mexico (New York: Praeger, 1977Google Scholar). For Asia, see also Susumu Watanabe, Technical Cooperation between Large and Small Firms in the Filipino Automobile Industry (Geneva: International Labor Organization, 1979); Tang, Roger, “The Automobile Industry in Indonesia,” Colombia Journal of World Business (Winter 1988Google Scholar); Back (fn. 16); and EIU (fn. 16).

44 Noble, Gregory W., “Between Competition and Cooperation: Collective Action in the Industrial Policy of Japan and Taiwan” (Ph.D. diss., Harvard University, 1988), 19–20Google Scholar.

45 On production techniques, see Hoffman, Kurt and Kaplinsky, Raphael, The Global Restructuring of Technology, Labor, and Investment in the Automobile and Components Industry (Boulder, Colo.: Westview Press, 1988Google Scholar); and Womack et al. (fn. 16). On home-based rivalries, see Duncan (fn. 22). On the financial strength and long-term profit horizons of Japanese assemblers, see Anderson, Martin, “Financial Restructuring of the World Auto Industry” (Cambridge: Future of the Automobile Program, MIT, 1982Google Scholar).

46 For comparative figures, see Amsden and Kim (fn. 33); EID (fn. 16); “South Korea: Japan's Off-Shore Assembly Base,” Japanese Motor Business 14 (December 1987Google Scholar); and Doner (fn. 16), chap. 3.

47 Unless otherwise noted, information on South Korean rationalization attempts is drawn from Back (fn. 16); and Kim and Lee (fn. 33).

48 Langston, Nancy, “Be unConfucian and Fire Your Chauffeur,” Far Eastern Economic Review, February 19, 1982, p. 44Google Scholar.

49 ”Samsung Plan Upsets Korean Vehicle Makers,” Far Eastern Economic Review, July 12, 1990, p. 75Google Scholar; Darlin, Damon, “Korea's Car Companies Expand Like Crazy Despite Lagging Sales,” Wall Street Journal, March 2, 1990Google Scholar; and personal communication from Nae Young Lee, University of Wisconsin, Madison.

30 H. D. Shim, “Background of Development of All-Korean Car, Pony: A Suggestion on ASEAN Car” (Hyundai presentation to a delegation from the ASEAN Automotive Federation, Seoul, n.d.).

51 On the Malaysian case, see Tan Bok Huai, “The Malaysian Car Project: A Financial Economic/Social Cost-Benefit Analysis” (Kuala Lumpur: Institute for Strategic and International Studies, 1985). On Thailand, see Thanamai (fn. 29). On Indonesia, see BPPT, “Strategic Plan for the Indonesian Automotive Industry” (Jakarta: Agency for Research and Application of TechnologykStanford Research Institute, 1979); Chalmers (fn. 26); and Tang (fn. 43). On the Philippines, see Watanabe (fn. 43); and Tiglao, Rigoberto, “Wheels within Wheels,” Far Eastern Economic Review, March 29, 1990, p. 71Google Scholar.

52 Doner (fn. 16), chap. 3; Bangkok Ban{ Monthly Review, July 1990, pp. 291–95.

53 Doner (fn. 16), chap. 8; and interviews with Astra officials, July 1991.

54 By 1990, Astra had secured the agencies for ten out of the twenty-two brands sold in Indonesia. Chalmers (fn. 29), 17. See also the description of Astra's flexibility in adapting new technology in “Manufacturing a Competitive Edge,” World Executive Digest (Manila) (October 1991), 74Google Scholar, 76.

55 On the South Korean merger movement, see Richardson, Ron, “More Marriages Are Arranged,” Far Eastern Economic Review, October 17, 1980, p. 91Google Scholar. On the Malaysian firms, see “Tan Chong Reduces Loss Despite Sluggish Market,” Star (Kuala Lumpur), April 2, 1988; “Tan Chong Moves Upmarket in Face of New Challenges,” Star, May 10, 1989.

56 This is the central argument of Back (fn. 16).

57 Overholt, William H., “Thailand: A Moving Equilibrium,” in Ramsay, Ansil and Mungkandi, Wiwat, eds., Thailand-U.S. Relations: Changing Political, Strategic, and Economic (Berkeley: Institute of East Asian Studies, University of California, 1988Google Scholar).

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60 This is the flip side of the transaction cost economics argument concerning transaction-specific investments. Under certain conditions, such an investment by a local supply firm can provide it with some leverage vis-a-vis the foreign firm it is supplying. See Murtha, Thomas P., “Surviving Industrial Targeting: State Credibility and Public Policy Contingencies in Multinational Subcontracting,” Journal of Law, Economics and Organization 7 (Spring 1991Google Scholar).

61 Mardon, Russell, “The State and the Effective Control of Foreign Capital: The Case of South Korea,” World Politics 43 (October 1990CrossRefGoogle Scholar); Luedde-Neurath (fn. 2), 56–59; Enos, John, “Government Intervention in the Transfer of Technology: The Case of South Korea,” IDS Bulletin 15 (April 1984), 27–31CrossRefGoogle Scholar.

62 Luedde-Neurath (fn. 2).

63 On the lack of technological screening in the Thai auto and electronics industries, see Kanthachai, Nathabhol et al., Technology and Skills in Thailand (Singapore: Institute of Southeast Asian Studies, 1987), 32–33CrossRefGoogle Scholar. On the general lack of screening in Malaysia, see United Nations Industrial Development Organization (UNIDO), R & D and Technology Policies (Medium and Long Term Industrial Master Plan — Malaysia, 1986–1995), vol. 3, pt. 6 (Kuala Lum-pur: UNIDO and Malaysian Industrial Development Authority, 1985Google Scholar).

64 Paul Chan, “Economics of Regulation in Malaysia with Reference to the Motor Vehicle and Component Industry” (Photocopy, University of Malaya, Kuala Lumpur, 1984); and Paul Low, “Local Content Programme: The Manufacturers' Experience” (Paper presented at Seminar on Automotive Components Manufacturing—Technologies and Trends, Kuala Lumpur, May 15, 1985), 9. There is some cross-firm variation in deletion allowances. According to interviews, Peugeot granted generous allowances to its Thai operations in order to break into the Southeast Asian market.

65 Also critical to the government's initial success on this issue was the willingness of Mitsubishi Motors to break with the other Japanese assemblers in complying with price limits. But this compliance reportedly came only in exchange for the government's loose interpretation of Mitsubishi's prices. Doner (fn. 16), chap. 7; and interview with official of Delta Motors, Manila, 1985.

66 Interviews with officials of Astra, Jakarta, June 1985, and with officials of Japanese assembly firms, Bangkok, July 1991.

67 Interviews with official of Malaysian auto parts manufacturers' association, Kuala Lum-pur, July 1991; and “Tariff on Motor Parts for Saga to Be Lifted,” Business Times (Kuala Lumpur), July 19, 1985.

68 Doner (fn. 16), chap. 8; and interviews with official of Malaysian auto parts manufacturers' association, Kuala Lumpur, July 1991.

69 Kim, Khee Young, “American Technology and Korea's Technological Development,” in Moskowitz, Karl, ed., From Patron to Partner: The Development of U.S. -Korean Business and Trade Relations (Lexington, Mass.: D. C. Heath, 1984), 90–94Google Scholar; and Economist Intelligence Unit, “South Korea: Japan's Off-Shore Assembly Base?” Japanese Motor Business, no. 14 (December 1987Google Scholar).

70 Kim (fn. 69); and Amsden and Kim (fn. 33).

71 The quote is from Amsden and Kim (fn. 33), 8. Information on the conditions of the Mitsubishi linkup also from Back (fn. 16), 191; and Khee (fn. 69).

72 Mardon (fn. 61); Amsden (fn. 1), 328; and Khee (fn. 69), 78–79.

73 For evidence on Hyundai's superiority, see Amsden and Kim (fn. 33), 6–15. On Hyun-dai's initiatives, see ibid.; Back (fn. 16); and personal communication from Jong Gook Back, September 1990.

74 Interviews with official of Malaysian auto parts manufacturers' association, Kuala Lum-pur, July 1991; and “PS to Get German Expertise,” New Straits Times (Kuala Lumpur), July 22, 1985.

75 On tied purchases in foreign investment, see Kanthachai et al. (fn. 63), 40. On the strength of local capital in the parts industry, see Thai Department of Industrial Economics, “The Automobile Parts Manufacturing Industry” (in Thai), Bangkok, Ministry of Industry, 1986. Information on efforts to diversify technology sources from interviews with officials from parts firms in Bangkok, July 1991; and Siam Nawaloha, “The Siam Nawaloha Foundry Co., Ltd.” (Company report, Bangsue, Thailand, n.d.).

76 BPPT/Stanford Research Institute (fn. 51); Chalmers (fn. 26), chap. 10; and Doner (fn. 16), chap. 6.

77 Interviews with officials of Astra Technology Development Department, Jakarta, June 1985, and with officials of Japanese assembly firms, Bangkok, July 1991.

78 For a discussion of these problems in the Mexican auto industry, see Bennett and Sharpe (fn. 4), 236. For the Philippines, see Watanabe (fn. 43). For South Korea, see Kim and Lee (fn. 33).

79 Womack et al. (fn. 16) chap. 6. See also Smitka, Michael J., Competitive Ties: Subcontract ing in the Japanese Automotive Industry (New York: Columbia University Press, 1991Google Scholar).

80 On the weak links between assemblers and suppliers in South Korea, see Kim and Lee (fn. 33), 312–16. Measures to strengthen small and medium-size firms included financial and tax incentives for their modernization, promotion of cartels, requirements for frequent payment to suppliers, reservation of certain spheres for them, and a ban on prime contractors buying them out through stock ownership. On the impact of these measures in the automobile industry, see Amsden (fn. 1), 180–88. I am grateful to Nae Young Lee for information on state support for the Korean parts association. Interviews with officials of Malaysian auto parts manufacturers' association, Kuala Lumpur, July 1991.

81 On the political origins of support for parts firms, see Moon (fn. 13).

82 On the political arrangements, see Overholt (fn. 57). On the importance of informal credit markets, see Robert J. Muscat, “Government, Financial Systems, and Economic Development: Thailand” (Interim paper for workshop on “Government, Financial Systems, and Economic Development: A Comparative Study of Selected Asian and Latin Countries,” East-West Center, Honolulu, November 30, 1990).

83 Paul D. Hutchcroft, “The Politics of the Philippine Financial System” (Interim paper for the workshop on “Government, Financial Systems, and Economic Development: A Comparative Study of Selected Asian and Latin American Countries,” East-West Center, Honolulu, November 30, 1990).

84 Smitka (fn. 79), 151; interviews with Thai parts firm officials, Bangkok, July and October 1991.

85 Ong Hock Chuan, “Parts Makers at Odds with Proton,” Star (Kuala Lumpur), August 6, 1986, p. 10; Vong Nyam Ming, “Parts Makers Want Change,” Business Times (Kuala Lumpur), June 16, 1986; interviews with parts association members, Kuala Lumpur and Bangkok, July 1991.

86 Samuels, Barbara C. II, Managing Risk in Developing Countries: National Demands Multinational Response (Princeton: Princeton University Press, 1990CrossRefGoogle Scholar). Interviews with officials of Malaysian auto parts manufacturers' association, Kuala Lumpur, July 1991.

87 Interviews with representatives of local parts firms and with U.S. and Japanese assemblers in Kuala Lumpur and Bangkok, July 1991.

88 Amsden (fn. 1), 184–85; and Amsden and Kim (fn. 33).

89 Interview with local parts firms, Bangkok, July 1991. Smitka (fn. 79) analyzes the particularities of Mitsubishi's supplier links in Japan but does not extend the analysis to links with overseas suppliers.

90 EIU (fn. 16), 25, 34.

91 Mueller (fn. 41), 117.

92 UNIDO (fn. 63), 83. See also Amsden (fn. 1), 228, 239.

93 On the Philippines metalworking industry, see Cerefino Follosco, “Developing the Engineering and Metalworking Industries in the Philippines” (Paper presented to the Symposium on Engineering Industries, Manila, April 25, 1985). On technological weaknesses and the failure of state efforts, see UNIDO (fn. 63); and UNIDO, “Manpower and Training,” Medium and Long Term Industrial Master Plan Malaysia 1986–1995 (Kuala Lumpur: UNIDO, August 1985), vol. 3, part 5, 74–89; Rodney Tasker, “Must Try Harder,” Far Eastern Economic Review, March 8, 1990, pp. 28–29; Wit Sathyarakwit, “Results of Technology Diffusion in the Thai Auto Assembly Industry” (in Thai) (Bangkok: National Institute of Development Administration, 1983); and interviews in Bangkok, July and October 1991.

94 See Back (fn. 16), 147; and Amsden (fn. 1), 267.

95 On Malaysia, see “Liability Scheme for Motor Parts Manufacturers,” MACPMA News 1/ 90 (May 1990); Low (fn. 64). On Thai efforts, see Laphli Sentusophon, “Proposals of Mr. Laphli Sentusophon” (in Thai) (Bangkok: Thai Auto Parts Manufacturers' Association, 1984).

96 For a general treatment of upstream-downstream problems in Indonesia, see Robison, Richard, “Authoritarian States, Capital-Owning Classes, and the Politics of Newly Industrializing Countries: The Case of Indonesia,” World Politics 41 (October 1988), 66–67CrossRefGoogle Scholar. On these problems in Thailand and Malaysia, see Industrial Management Co., Tax Systemfor Industrial Restructuring (Industrial Restructuring Study for the National Economic and Social Development Board: Final Report) (Bangkok, 1985); and UNIDO (fn. 63), 15. Other information is drawn from interviews with officials of Thai parts firms, Bangkok, July and October 1991.

97 On the Thai fiscal structure, see Thailand Development Research Institute, “The Impact of High Business Tax Rates on Tax Evasion of Industry,” TDRI Quarterly Newsletter 2 (September 1987), 13—17Google Scholar. On the fiscal system's discouragement of linkages in engine production, see Siriporn Kamjanavirojkul, “A Case Study of Subcontracting System in Motorcycle, Diesel Engine for Agriculture and Refrigerator” [sic] (M.A. thesis, Thammasat University, 1987).

98 Warr, Peter G. and Nijathaworn, Bandid, “Thai Economic Performance: Some Thai Perspectives,” Asian-Pacific Economic Literature 1 (May 1987CrossRefGoogle Scholar).

99 Maclntyre, Andrew J., “The Political Economy of Finance in Indonesia” (Paper presented to conference on “Government, Financial Systems, and Economic Development,” East-West Center, Honolulu, November 1990Google Scholar).

100 Amsden (fn. 1), 301; and Luedde-Neurath (fn. 2).

101 Back (fn. 16), 146–47; Amsden (fn. 1), chap. 12.

102 Amsden (fn. 1), 146.

103 Back (fn. 16), 144–46. On pressures for reform and state responses in the late 1970s, see Moon (fn. 13). For an excellent analysis of coalitions as both cause and consequence of industrial strategy, see Cheng, Tunjen, “Political Regimes and Development Strategies: South Korea and Taiwan,” in Gereffi, Gary and Wyman, Donald, eds., Manufacturing Miracles: Patterns of Industrialization in Latin America and East Asia (Princeton: Princeton University Press, 1990Google Scholar).

104 Interviews with officials of local parts firms and Bangkok Bank, Bangkok, July 1991.

105 This concept of governance is developed in Williamson (fn. 42), esp. 112.

106 Unless local assemblers can exploit low-technology product niches. Astra has done this in Indonesia by producing a basic utility vehicle.

107 McCawley, Peter, “The Economics of Ekonomi Pancasila,” Bulletin of Indonesian Economic Studies 18 (March 1982), 102CrossRefGoogle Scholar–9.

108 On the cement industry's spinoffs in South Korea, see Amsden (fn. 1), chap. 7. A similar link between cement production and heavy manufacturing is seen in the origins of Thailand's largest parts firm. The Thai firm Siam Nawaloha is part of Thailand's largest industrial group, Siam Cement.

109 I am grateful to Nae Young Lee for his thoughts on the origins of Hyundai-Daewoo differences.

110 I am grateful to William Liddle and Don Emmerson for views on Astra and Liem. For background, see Robison (fn. 58); and Asian Wall Street Journal, November 24, 25, 26, 1986

111 Gerschenkron, Alexander, “The Early Phases of Industrialization in Russia and Their Relationship to the Historical Study of Economic Growth,” in Supple, Barry, ed., The Experience of Economic Growth (New York: Random House, 1963Google Scholar); Deyo, Frederic C., “Coalitions, Institutions, and Linkages Sequencing: Toward a Strategic Capacity Model of East Asian Development,” in Deyo, Frederic C., The Political Economy of the New Asian Industrialism (Ithaca, N.Y.: Cornell University Press, 1987Google Scholar), esp. 243–44; Katzenstein, Peter, Small States in World Markets: Industrial Policy in Europe (Ithaca, N.Y.: Cornell University Press, 1983Google Scholar); Haggard (fn. 1), 267; and Nabli, Mustapha K. and Nugent, Jeffrey B., “The New Institutional Economics and Its Applicability to Development,” World Development 17, no. 9 (1990Google Scholar).

112 An eloquent demonstration of the utility of work on private sectors is Encar-nation, Dennis, Dislodging Multinationals: India's Strategy in Comparative Perspective (Ithaca, Cornell University Press, 1989Google Scholar). See also Stephan Haggard, “The Political Economy of Foreign Direct Investment in Latin America,” Latin American Research Review 24, no. 1 On Third World business groups, see Leff, Nathaniel H., “Entrepreneurship and Economic Development: The Problem Revisited,” Journal of Economic Literature 17 (March 1979), 46Google Scholar 64; idem, “Trust, Envy, and the Political Economy of Industrial Development: Economic Groups in Developing Countries” (Unpublished manuscript, Columbia University Graduate School of Business, 1991); and Mody, Ashoka, “Institutions and Dynamic Comparative Advantage: The Electronics Industry in South Korea and Taiwan,” Cambridge Journal of Economics 14 (September 1990Google Scholar); and Becker, David, “Business Associations in Latin America: The Venezuelan Case,” Comparative Political Studies 23 (April 1990CrossRefGoogle Scholar).

113 Two excellent studies of Japan that explicitly adopt collective action frameworks are Noble (fn. 44); and Mark Tilton, “Trade Associations in Japan's Declining Industries: Informal Policy Making and State Strategic Goals” (Ph.D. diss., University of California, Berkeley, 1990). Other studies of Japan include Richard Samuels, The Business of the Japanese Energy Markets in Comparative and Historical Perspective (Ithaca, N.Y.: Cornell Press, 1987Google Scholar); Lynn, Leonard H. and McKeown, Timothy J., Organizing Business: Trade ciations in America and Japan (Washington, D.C.: American Enterprise Institute, 1988Google Scholar); Otsuka, Keijiro, Ranis, Gustav, and Saxonhouse, Gary, Comparative Technology Choice in velopment: The Indian and Japanese Cotton Textile Industries (New York: St. Martin's 1988CrossRefGoogle Scholar), esp. 87—89. On South Korea, see Tun-Jen Cheng, “Business Interest Associations in Export-Oriented Industrializing Economies: Theoretical Observations and a Korean Case Study” (Paper presented at the annual meeting of the American Political Science Association, Washington, D.C., 1988). A useful empirical study of a Southeast Asian case is Wibisono, Makarin, “The Politics of Indonesian Textile Policy: The Interests of Government Agencies and the Private Sector,” Bulletin of Indonesian Economic Studies 25 (April 1989CrossRefGoogle Scholar).

114 Bates, Robert, “Contra Contractarianism: Some Reflections on the New Institutional-ism,” Politics and Society 16 (June—September 1988), 393CrossRefGoogle Scholar. For similar arguments, see Back 16); Samuels (fn. 113); and Haggard (fn. 112), 265.

115 Bates (fn. 114). For a more detailed discussion of supply issues, see David Feeny, “The Demand for and Supply of Institutional Arrangements,” in Ostrom, Vincent, Feeny, David, and Pichit, Hartmut, eds., Rethinking Institutional Analysis and Development (San Francisco: International Center for Economic Growth, 1988Google Scholar). For a discussion of the impact of states on business groups in Taiwan and South Korea, see Fields, Karl J., “Developmental Capitalism and Industrial Organization: Business Groups and the State in Korea and Taiwan” (Ph.D. diss., University of California, Berkeley, 1990Google Scholar). For an argument that sectoral institutions are in part a function of particular technological features, see Kitschelt, Herbert, “Industrial Governance Structures, Innovation Strategies, and the Case of Japan: Sectoral or Cross-National Comparative Analysis?” International Organization 45 (Autumn 1991CrossRefGoogle Scholar).

116 For studies of Japan along these lines, see Samuels (fn. 113); and Friedman, David, The Misunderstood Miracle: Industrial Development and Political Change in Japan (Ithaca, N.Y.: Cornell University Press, 1988Google Scholar).

117 For an illustration of the role of private and public-private institutions in resolving collective action problems in Hong Kong, see Yoffie, David, Power and Protectionism: Strate gies of the Newly Industrializing Countries (New York: Columbia University Press, 1983Google Scholar), 94 95, 118. See also Deyo (fn. Ill), 243–44.

118 Hall, John A. and Ikenberry, G. John, The State (Minneapolis: University of Minnesota Press, 1989Google Scholar), 14; Sabel, Charles F., “Studied Trust: Building New Forms of Cooperation in a Volatile Economy” (Unpublished manuscript, Massachusetts Institute of Technology, September 1990Google Scholar).