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Productivity Decline in the Java Sugar Industry from an Olsonian Perspective

Published online by Cambridge University Press:  03 June 2009

J. A. C. Mackie  and
W. J. O'Malley
J. A. C. Mackie
Affiliation:
Australian National University
W. J. O'Malley
Affiliation:
Australian National University
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Extract

Mancur Olson's The Rise and Decline of Nations raises intriguing questions about the ways in which various countries' economic fates have been affected by the activities of what he calls distributional coalitions and vested interests. According to Olson, the development of such strategically placed groups has often enabled relatively small segments of society to impede the workings of a country's productive and distributive processes by distorting their functions to serve essentially their own interests more than the broader community interest. This ensures the perpetuation of a beneficial position for themselves, but at the cost of creating rigidities in the economic system that, in the long run, bring about in-built resistance to change, loss of competitiveness, and ultimate stagnation (Olson 1982:74–81). In itself this is not an especially remarkable proposition, but Olson has developed it into an unusually rigorous and at the same time illuminating theoretical edifice. His data have been drawn mainly from studies of the developed nations, the theory being used to explain macro-level economic performance rather than the workings of microlevel institutions, firms, or industries. But there is no compelling reason why his theory cannot be used just as fruitfully to illuminate the situation in developing countries. It may also be applicable to the micro-level analysis of institutions or industries there as well as the macro-level of national economies. Here we propose essentially to apply it to both, using Olson's basic theory as an explanatory guideline in an investigation into the causes of declining productivity in a single industry-the sugar industry-in one developing country-Indonesia.

Type
The Persistence of Local Interests
Information
Comparative Studies in Society and History , Volume 30 , Issue 4 , October 1988 , pp. 725 - 749
Copyright
Copyright © Society for the Comparative Study of Society and History 1988

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