South Korea has become the only country to make the transition from a developing to a developed country after the Second World War; however, its development process has been a tortuous one. This book first explains how Korea failed earlier in history to become a colony and how its economy changed during the colonial period. The book then describes the provision of the conditions for future growth in 1945–1960 and explains the launching of the high economic growth in the 1960s. The book next discusses the development process after the high economic growth began until the 1997 crisis, examining the three conditions for sustaining growth: macroeconomic management, structural transformation, and social conflict management. After discussing the 1997 crisis and the ensuing reform, the book explains how economic development proceeded subsequently until today, again by examining those three conditions for sustaining growth. Finally, it briefly discusses questions for the future.

Despite rather satisfactory overall GDP growth rates (6 per cent), development has been slowed down by vigorous population growth (2.8 per cent) and made uncertain by the absence of a true growth engine. Recent growth performances result more from the effects of favourable terms of trade and foreign financing flows on domestic demand than from autonomous supply-driven growth. The issue of growth sustainability also arises in connection with high investment rates over the last few years. It is not clear whether the economy can maintain such a high rate of accumulation without heavily relying on foreign financing. Dependence on this is excessive. A third challenge is to be found on the social side. Poverty is declining only slowly, and social spending is limited. That growth has not trickled down more systematically to all segments of the population is a problem because it weakens the transformative role of development. Offshore natural gas reserves could soon provide more resources for Tanzania’s public sector. Yet natural resource windfalls are difficult to manage and may be a source of economic and institutional instability.

This is the first chapter of the synthesis of the various institutional diagnostics undertaken in IDP, including those of South Korea and Taiwan. It compares the main economic development challenges, or advantages faced by the various countries, and the major institutional causes behind them. Development is seen as the structural transformation of the economy through the absorption of traditional low-productivity activities by the modern high-productivity sectors of the economy, rather than merely GDP growth rates. The comparative analysis is conducted with systematic reference to the well-known framework proposed by Arthur Lewis to represent this progressive diminution of ‘dualism’. If South Korea and Taiwan fit this framework rather well, the structural transformation is shown not to rely on growth engines sufficiently strong and labour-intensive to proceed satisfactorily in the IDP countries, except maybe in Bangladesh where the domestic engine is supplemented by massive outmigration of workers. It turns out that the cause for such a situation most often lies in the political economy context of the design, decision, and implementation of the appropriate development strategies.

This chapter lays out the book’s contributions to the literatures on state-led development and authoritarian durability. The book provides a detailed examination of the case of Ethiopia in which the EPRDF regime sought to maintain power through rapid development and the structural transformation of the economy. In particular, rapid development was intended to create mass industrial employment in order to gradually replace access to land as the main tool for mass distribution, and thereby maintain political order. The failings of industrial policy amidst rapid population growth resulted in extreme shortages of land and employment for younger generations, an important factor fuelling the mass anti-government protests that eventually forced regime change. The Ethiopian case therefore suggests that the contemporary global economy and the delayed demographic transition present major challenges to state-led development; and that analyses of authoritarian durability need to consider the dynamic challenges of mass incorporation, as well as elite politics.

This final chapter reflects on the implications of the rise and fall of the EPRDF. The discussion considers, first, the EPRDF’s legacy for Ethiopian politics and development, and, second, the relevance of Ethiopia for debates about late-late development and authoritarian durability. While the beginning of the twenty-first century has seen resurgent interest in state-led development and industrial policy, there has been insufficient attention to the political economy drivers that might realise structural transformation in a context of late-late development. For many East Asian late developers, authoritarian leaders pursued development as a means of maintaining political order. While somewhat comparable processes underpinned rapid growth in Ethiopia, the EPRDF’s failings raise doubts regarding the potential for authoritarian state-led development in Africa. The realisation of hopes for structural transformation in Africa will require new political configurations that provide rulers with the incentives to pursue political survival through economic transformation within the constraints of late-late development.

Chapter 2 sets out the book’s theoretical approach. The first half argues that state-led development requires the formation of states with the capacity and autonomy required for effective intervention. However, it is only where state-led development aligns with elite threat perceptions that leaders make politically difficult choices to promote structural transformation. For many authoritarian regimes, it is when ruling elites face mass distributive pressures alongside resource constraints that they pursue development to expand the resources available to secure mass acquiescence. The second half of the chapter examines the specific challenges facing ‘late-late’ developing authoritarian regimes. First, the changing global economy, which is fragmented into global value chains with manufacturing driven by foreign investment, rather than domestic capitalists. Second, the delayed demographic transition that gives rise to large-scale population growth and urbanisation, enhancing mass distributive pressures. As such, regimes face severe distributive pressures at the same time as the state’s ability to address these is constrained by the global economy.

Aggregate demand problems can jeopardize the existence of a steady growth path in mature capitalist economies: fiscal policy may be needed to maintain full employment and avoid secular stagnation. This functional finance approach to economic policy endogenizes the movements in public debt. The debt ratio will converge towards a long-run value that depends (i) inversely on the rate of growth, (ii) inversely on government consumption, and (iii) directly on the degree of inequality. The analysis implies that policies and policy debates on the dangers of public debt have been misguided and that the incipient theoretical redirection following the rediscovery of secular stagnation by Summers and others does not go far enough. Unlike in mature economies, functional finance cannot target full employment in developing economies with high rates of underemployment. Instead, high investment rates are desirable, and functional finance should aim to stabilize the level and composition of demand at values that are consistent with a target growth rate of the modern sector; excessive aggregate demand stimulus can squeeze the modern sector and lead to premature deindustrialization.

Chapter 2 gives an extensive overview of the Fourth Industrial Revolution and how it will significantly change the way the world works. It is defined as a bridge for digital transformation and an innovative combination of “cyber-physical” systems. To better understand the 4IR, the previous three are broken down to give contextual background. The chapter highlights the exact technologies that will shape the broad themes and implications of the 4IR. These technologies include 3D printing, advanced material science, artificial intelligence, big data, blockchain, cloud computing, drones and automation, high-speed internet (5G technology), the Internet of Things, nanotechnology, and quantum computers. The technologies are explained and applied to how they are already being used in Africa or how they might be used. The chapter concludes with several themes based on the analysis of technologies and their characteristics. The four themes are productivity and sustainability, disruption and structural transformation, cooperation and inclusivity, security, privacy, and data integrity.

The introduction offers a brief overview of the Fourth Industrial Revolution (4IR) and its implications on different sectors. It then discusses the opportunities and risks of structural transformation that will be brought on by technological innovation. Following this, the 4IR is framed as an inevitable acceleration of digitalization, resulting in market disruptions that the African continent cannot escape. After this, questions about the implications, advantages, key players, and leaders of the 4IR are discussed. This concludes with the final question of Africa’s ability to grow and develop in the 4IR. The research questions are followed by an explanation of 4IR technologies and the methodology of the book, in addition to an overview of the remaining chapters.

In Chapter 7 I move onto the case study of Botswana, which in contrast to Somalia and Uganda has experienced structural transformation due in large part to its diamond industry. Industrialization in Botswana has led to a sectoral shift out of agriculture as workers have left rural areas to move to cities and join the modern workforce, thereby leading to a decline in the relative value of rural land. I employ both qualitative and quantitative evidence to show that ethnic fractionalization has declined in Botswana since the mid-twentieth-century and examine parliamentary debates around ethnic identity. Moreover, I show that this shift has happened not because of but largely despite efforts of the Botswanan state, which has both discouraged rural-urban migration and failed to alleviate institutional ethnic inequalities that persist to the present day. Finally, I consider alternative explanations for ethnic homogenization in Botswana and find them all wanting.

I begin the book by providing an overview of recent political economy literature on ethnicity, which largely assumes that ethnicity is fixed and unchanging despite decades of evidence to the contrary. I then introduce my argument as an attempt to explain ethnic change. I first argue that people hold multiple ethnic identities simultaneously, and that individuals emphasize the one that brings them the most benefits. I then build upon earlier theories from Marx and Gellner to claim that industrialization is the most powerful factor that leads people to re-identify with larger ethnic groups, and that this process of assimilation is induced by the decline in the relative value of land. Inasmuch as the process of industrialization is inherently uneven, however, I suggest that assimliation should proceed unevenly as well. Finally I claim that the major role played by states in my theory is in their ability to promote or inhibit industrialization, not through assimilationist policies. I then go on to establish the scope conditions of my argument, namely the way I focus on ethnic change in non-violent contexts while also limiting myself to non-immigrant communities.

This chapter traces three grand transformations of the North American economy. The first process – the shift from a rural agricultural economy to an urban industrial economy and the emergence of ‘modern economic growth’ – began before 1870. The second process – the shift from growth based on increasing factors of production per person to growth based on enhancing the productivity of the factors – began at the turn of the twentieth century. It was tied to the emergence of the United States as a global economic leader. The third process – the shift from an internally focused industrial economy to a globally integrated, information-based economy – began after 1970. Focusing on these transformations complicates the story of balanced growth common in macro-growth accounts, but is crucial for our understanding of the growth of the North American economy.

A special economic zone (SEZ) is considered as a successful policy instrument in China’s own reform. Not only Chinese government and enterprises, but also African governments want to borrow this model to stimulate development in Africa. A handful of Chinese economic cooperation zones have been constructed in Africa since early 2000s, but the outcome was not satisfactory. By tracking the progress of six major cooperation zones, the author argues that there is no so-called “Chinese Model” of SEZ development. The key to SEZs’ success is to build synergism between the zones and the host countries’ structural transformation. Situated in very different political-economic contexts, the Sino-African cooperation zones struggle to build their connection with the development of host countries in terms of infrastructure harmonization, skill spillover, business linkage, and strategy coordination. However, after decade-long experiments, the zones have generated incremental policy impacts. Ethiopia, Egypt, and Zambia launched new industrial zone programs with Chinese participation, while other countries gave different degrees of support for building zones. Coupled with a large amount of inflowing manufacturing investments from China, the renewed initiative of zonal development is poised to impact Africa’s industrial landscape.

In the same way that dual citizenship signifies a central topic of twenty-first century public discourse, Liberia’s official seal is subject to constant scrutiny because it reflects the exclusion that permeated the first 100 years of the country’s existence as a nation-state. Having never been formally colonised and more recently emerging from a protracted armed conflict, Liberia represents a stark case study in African citizenship construction because of its idiosyncratic history of black settler state formation and historical trajectory as a country of both immigration and emigration. In outlining the book’s rationale, unique contributions, scope, and organisation, this introductory chapter establishes how Liberian citizenship—and, by extension, the political economy of belonging to Liberia—has evolved since the founding of the nation-state in 1847 because of qualitative factors such as conflict, migration, and post-war recovery, with proposed dual citizenship legislation in 2008 serving as a contemporary manifestation of that reconfiguration across space and time.