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!

What!does!it!take!to!be!a!tiger?!

Revisiting!the!economic!conditions!for!late!development!'

!!!Andrés!F.!Gómez!

!!!!!1. INTRODUCTION!Recently,' the' Argentinian' government' exerted' a' massive' interventionist' policy.' This' has' implied' a' strong'

devaluation'of' the'national' currency,' stringent' controls' and' restrictions' to'mobilize' resources' abroad,' increased'

corporate'taxes'and'heavy'investment'on'social'welfare.'Early'in'the'beginning'of'this'century,'the'current'Bolivian'

President' implemented' a' thorough' agrarian' reform,' nationalized'most' extractive' industries' and' enacted' a' new'

inclusive'and'widely'participatory'constitution.'In'a'lesser'degree,'Ecuador'overcame'decades'of'political'instability'

and'elected'a'new'President'that'has'applied'structural'reforms'aiming'at'reducing'dependence'from'international'

intervention' and' setting' the' stage' for' an' economic' takeDoff.' In' parallel,' the'Chilean' government' implemented' a'

quintessential'neoliberal'policy'based'on'macroeconomic'stability.'Finally,'the'Colombian'government'is'providing'

an'increasingly'big'welfare'system'and'strong'controls'through'independent'regulatory'agencies'while'deriving'the'

biggest'proportion'of'its'resources'from'the'increasing'returns'that'extractive'international'industries'yield'for'the'

country.''

'

In' every' case,' governments' claim' to' have' ‘good’' developmental' reasons' to' pursue' their' economic' policies.' But'

what' is' contemporary' political' economy' saying' about' the' conditions' for' late' development?'Are' these' countries'

really'getting'their'interventions'right?''

'

There' are' contesting' hypothesis' as' to' what' actually' explains' late' economic' development.' Literature' can' be'

clustered'into'at'least'3'competing'sets'of'causal'explanations.'The'World'Bank'and'some'neoclassical'economists'

provide' the' orthodox' interpretation.' They' claim' that' late' development' is' accomplished' when' a' set' of' market'

friendly'policies'are'put'in'place'and'the'state'refrains'from'intervening'from'affecting'the'invisible'forces'of'supply'

and' demand.' A' second' interpretation' puts' emphasis' on' state' intervention.' According' to' this' line' of' though' the'

state'is'the'only'institution'capable'of'resolving'some'market'failures'that'would'otherwise'impede'economic'takeD

off.'Finally,'a'third'line'of'though'takes'heed'of'the'importance'of'basic'state'capabilities'and'initial'conditions'for'

development.'This'interpretation'defends'that'before'thinking'on'development'a'country'should'reach'to'minimum'

levels' of' tax' income' and' coordinate' their' expenditure' with' the' productive' apparatus.' For' each' of' them,' the'

necessary'and'sufficient'conditions'for' late'economic'development'are'different.'Moreover,'they'do'not'hold'the'

same'idea'of'what'late'economic'development'is.''

'

In'this'context,'the'purpose'of'this'paper'is'to'assess'the'explanatory'capacity'of'the'variables'that'are'claimed'to'

explain'late'economic'development.'This'is'done'using'Qualitative'Comparative'Analysis'(QCA).'

'

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According' to' Ragin' and' Rihoux' (2004,' 3),' there' are' two' analytic' strategies' for' using' QCA.' The' first' one' entails'

searching' for' shared' causal' conditions' in' cases' that' have' the' same'outcome' (i.e.' do'all' consolidated' thirdDwave'

democracies' have' presidential' systems?).' The' second' one' use' cases' that' hold' the' same' causal' conditions' and'

examines'whether'or'not'this'produce'the'same'outcome'(i.e.'do'cases'that'combine'party'fractionalization,'a'weak'

executive'and'a'low'level'of'economic'development'all'suffer'from'democratic'breakdown?)'1.''

'

This'paper'will'provide'a'twoDstep'analysis.'First,' it'scrutinizes'the'actual'presence'of'the'outcome'(i.e.'the'actual'

accomplishment'of' late'development).' Second,' it' searches' for' shared' causal' conditions' (i.e.'what' conditions'are'

present' whenever' development' is' accomplished).' The' explanatory' variables' assessed' are' drawn' from' three'

different'strands'of'literature'that'provide'contesting'explanations'about'what'accounts'for'economic'growth.'The'

cases' analysed' are' drawn' from' three' groups' of' countries' that' are' frequently' treated' as' successful' stories' by'

literature:'High'Performance'Asian'Economies,'BRICS'and'CIVETS2.'

'

Table!1.!Countries!normally!used!as!successful!stories!in!literature!

High!Performance!Asian!Economies! B.R.I.C.S.! C.I.V.E.T.S.!Hong Kong' Brazil' Colombia'Singapore' Russia' Indonesia'Taiwan ' India' Vietnam'

Korea' China' Egypt'Malaysia South Africa' Turkey'

Thailand ' South Africa'

Indonesia ' '

'

This'paper'contains'four'sections.'Following'this'introduction,'a'conceptual'section'will'attempt'to'define'what'late'

development' means' as' an' economic' outcome;' it' will' also' depict' the' methodological' approach' and' justify' the'

sample' selection.' The' next' section' reviews' four' lines' of' thought' that' provide' contesting' explanations' of' what'

blocks'economic'growth'and'what'policy' interventions'are'needed' in'order' to'embark'a'developing'country' in'a'

virtuous'cycle'of'capital'accumulation.'The'final'section'will'draw'the'conclusions'and'limitations'of'this'essay.''

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2. WHAT!IS!LATE!DEVELOPMENT!AND!HOW!TO!GET!THERE?!!What'is'late'development?'Countries'that'are'known'for'being'newly'industrialized'or'late'developers'acquired'this'

condition'after'the'Second'World'War'(Chang,'2002;'Grabowski'et'al.'2007).'This'paper'will'analyse'those'theories'

that'explain'the'economic'takeDoff'of'newcomers.' It' is'not'the'purpose'of'this'essay'to'provide'a'comprehensive'

justification'of'why'WWII'became'a'critical'juncture'for'some'countries.'However,'it'is'necessary'to'establish'what'

does'it'mean'to'be'a'Newly'Industrialized'Country.''

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The' definition' of' late' economic' success' has' evident' validity' problems.' Some' take' the' East' Asian' economies' as'

successful' stories;' others' claim' their' development' was' acquired' in' the' XIX' century.' On' the' other' hand,' some'

authors'take'heed'of'specific'productive'enterprises'to'infer'overall'economic'success.'The'case'of'the'Colombian'

National'Coffee'Federation'is'widely'used,'overDrepresenting'overall'economic'performance'(Thorp,'1991;'Di'John,'

2011;'Ramos,'2012).'Given' the'economic'bias'of' this'paper' (i.e.' it' is'only'examining' the'economic'variables' that'

'''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''1'' Examples are used from Ragin and Rihoux (2004, 3).''''2'' The acronym stands for the name of the countries. See Table 1. '

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lead'to'development),'a'developed'country'is'defined'as'one'that'is'part'of'the'highDincome'country'list'set'up'by'

the' World' Bank' (See' Appendix' 1).' This' threshold' will' provide' a' sort' of' straw& in& the& wind& test& against' other'definitions' of' economic' development.' It' is' weak' test' against' other' definitions' because' there' are' different' and'

probably'more' robust' (i.e.' Human' Development' Index)'measurements' of' organizational' accomplishment' at' the'

state'level'and'the'purpose'of'this'paper'is'not'to'elaborate'on'these'definitions.''

'

On'the'other'hand,'QCA'will'be'used'to'examine'what'conditions'can'be'considered'necessary'and'sufficient' for'

economic'development.' In'order'to'‘make'sense’'of'the'data'available,'a'sense'table'will'be'used''to'decipher'to'

what'extend'are' the'explanatory' variables' suggested'by' literature'actually' relevant' for'explaining' late'economic'

success.''

'

'

3. EXPLAINING!LATE!DEVELOPMENT:!AN!OVERVIEW!OF!CONTESTING!THEORIES!The'economic'boom'experienced'by'some'Asian'economies'in'the'second'half'of'the'twentieth'century'and'the'lag'

it' created' with' Latin' American' and' Sub' Saharan' countries' has' reframed' the' debate' around' the' requisites' for'

economic'development.'Concurring'with'Pempel'(1999,'37D9),'the'rise'of'the'Asian'Tigers'has'belied'World'System'

(Wallenstein,' 1974),' Dependence' (Cardoso,' 1974)' and' Modernization' (Rostow,' 1960)' theories' of' development.'

Today,' new' theories' attempt' to' internalize' the' experience' of' late' developers' in' order' to' deploy' a' systematic'

account'of'economic'success.'This'section'will'analyse'three'competing'theories'that'hold'different'explanations'of'

what' are' the' deadlocks' that' impede' economic' development' and' hat' are' the' policy' interventions' (explanatory'

variables)'that'account'for'recent'experiences'of'economic'success.''

!3.1. The!World!Bank!

Inspired' by' the' rise' of' the' Southeast' Asian' economies,' the' World' Bank' presented' in' the' late' 1980s' its'

interpretation'of'what'accounts'for'late'economic'development.'For'this'organization,'the'main'deadlock'stunting'

the' economic' takeDoff' was' the' unfavourable' investment' climate' for' the' private' sector.' Then,' based' on' the'

experience'of'the'High'Performance'Asian'Economies,'it'pinpoints'the'importance'of'macroeconomic&stability'and'rapid&export&growth.'These'two'are'not'considered'the'only'factors'that'explain'fast'economic'growth,'but'they'are'

thought'to'set'the'basis'for'supplementary'policies'aiming'to'affect'the'supply'side'of'the'economy.'These'policies'

are'explicitly'associated'with'the'implementation'of'economic'Pragmatic&Orthodoxy.'''

Macroeconomic'stability'makes'reference'to'low!inflation,'manageable! internal!and!external!debt'and'efficiency'to'resolve!macroeconomic!stress.'Studies'by'Fisher'(1993)'and'other'orthodox'economists'underpin'the'negative'

impact' of' inflation' above' the' 20%' threshold' (World' Bank,' 1993,' 107D10).' Debt' levels' are' considered' to' be'

appropriate'as'long'gas'they'stay'within'the'‘boundries’.'These'boundaries'are'relative'to'the'paying'capacity'of'a'

country,'so'it'is'difficult'to'define'a'specific'threshold.'Still,'no'East'Asian'country'surpassed'a'deficit'of'more'than'

11%'as'a'percentage'of'GDP'(World'Bank,'1993,'107).'Successful'responsiveness'against'macroeconomic'stress' is'

attributed! to! tight! supervision! on! the! banking! system! and! flexible! labour!markets.' The' former'would'provide'

control'against'fiscal'distresses'and'the' later'would'allow'the'economy'to'react'quickly'to'government' initiatives'

(World'Bank,'1993,'116).''

'

Export'growth'policies'were'meant'to'affect'the'supply'side'of'the'economy.!This'principle'refers'to'a'broader'set'of' policies' that' contain' less' clearly! defined! exportWfriendly!measures' (i.e.' avoiding' appreciated' exchange' rates,'government'run'export'contests,'tax'brakes,'credit'guarantees).''

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3.2. The!guided!economy!approach!Another' interpretation' of' late' development' claims' that' economic' success' is' a' function' of' inward' orientation'

provided'state'guidance'and'support.'According'to'this'line'of'thought,'late'development'requires'the'solution'of'

information' and' coordination' failures'pertaining' to'productive'diversification,' nonDtradable' goods,' economies'of'

scale'and'skilled'labour'(Rodrik,'2007).'This'approach'claims'that'“the'imbalance'between'a'wellDeducated'labour'

force' and' a' low' endowment' of' physical' capital”' makes' the' returns' of' the' government' intervention' really' high'

(Rodrik,'1994,'29).''

''

Together' with' the'World' Bank,' the' guided' economy' approach' acknowledges' the' importance' of' antecedent' or'

initial'conditions3,'mainly'a'highly'educated'labour'force,'low'income'inequality'and'large'savings'(Rodrik,'1994,'18D

20).'However,'it'argues'that'outward'orientation'in'the'form'of'export'policies'have'little'impact'on'the'economy'

(Rodrik,'1994,'13).'Furthermore,'it'belies'the'logic'of'comparative'advantage,'claiming'that'the'pattern'of'sectoral'

concentration' is'UDshaped:'as'poor'countries'get'rich'they'diversify'but'as'they'get'richer'they'specialize'(Rodrik,'

2007,'103D4).''

'

Instead,' it' is' the' capacity'of' the' state' to'get' interventions' rights'what'accounts' the'most' for'highDspeed'growth'

(Rodrik,' 2007,' 100).' Concurring' with' Amsden' and' Sigh' (1994,' 947),' Rodrik' (1994,' 17)' argues' there' is' a' reverse'

causality'from'that'proposed'by'the'World'Bank:'it'is'not'export'orientation'what'drives'growth;'the'casualty'runs'

from'investment'to'imports,'and'from'imports'to'exports.''

'

Concretely,'there'are'4'policy'interventions'that'are'thought'indispensable'for'the'economic'takeDoff'(Rodrik,'1994;'

2007).' First,' improving' the' investment' climate' by' reducing' the' transaction' costs' of' doing' business.' Second,'

implementing' investment' subsidies.' Among' others,' this' can' be' done' by' granting' credits' to' large' businesses' at'

negative'interest'rates'(as'in'Korea)'or'through'tax'incentives'(as'in'Taiwan).'Third,'compel'entrepreneurs'to'take'

investment'decisions'they'would'not'have'taken'otherwise.'These'investments'are'commonly'induced'to'fill'gaps'in'

the'economy'(i.e.'stainless'steel,'nylon,'research'and'development'in'Taiwan)'and'they'rely'on'the'state’s'discovery'

of' new' activities' that' can' be' produced' at' low' cost' (economy’s' cost' structure).' And' fourth,' establish' private'

enterprises' to' provide' key' inputs' for' the' private' sector' (i.e.' linkages,' capital' intensity,' nonDtradable,' import'

substitution).'''

!3.3. State!building!approach!

Both' the' World' Bank' and' the' Guided' Economy' approach' converge' on' the' idea' that' initial' conditions' are'

quintessential'for'economic'development.'However,'they'do'not'explain'how'to'get'to'the'initial'conditions'in'the'

first'place:'how'did'the'labour'force'become'skilled?'How'to'avoid'the'state'from'engaging'in'rent'seeking?'State'

centred'literature'addresses'these'issues'and'tailors'a'distinctive'explanation'of'what'does'it'take'to'be'a'successful'

story.''

'

State'building'literature'puts'emphasis'on'the'importance'of'state'capabilities.'Drawing'from'Weber,'this'literature'

understands'the'state'as'a'hierarchical'organization'that'holds'legitimate'monopoly'over'the'means'of'violence'and'

has' the'capacity' to'extract' rents'within'a' fixed'territory' (Mann,'1988;'Tilly,'1990).' In' terms'of' the'modern'state,'

these'capabilities' translate' into'a)' the'capacity' to'control' the'means'of'violence'and'assure' that' citizens' resolve'

'''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''3'' It is important to note that the guided economy approach deems the initial conditions as a conditional variable that allows for the political

conditions that promote the economic take-off. The purpose of this essay is limited to the exploration of the economic conditions. This approach also talks about the political will of the government to industrialize. '

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conflicts' in'a'peaceful'manner,'b)' institutional'penetration'throughout'most'of'the'territory'and'c)'administrative'

capacity'to'tax'and'spend'resources'(Gutierrez,'2010).'''

'

According'to'this'line'of'thought,'economic'growth'cannot'be'attained'if'the'state'fails'to'deploy'at'least'one'of'its'

capabilities'(Crisis'State'Program,'2006).'Notwithstanding,'once'the'state'manages'to'provide'its'basic'capabilities,'

it'becomes'resilient,'as'opposed'to'failed,'but' it'does'not'propels' into'economic'growth.'Apart' from'the'political'

conditions'regarding'elite'bargaining'patterns'(Putzel'and'Di'John,'2012,'47D51),'in'economic'terms,'this'literature'

contends'that'a'proDgrowth'approach'needs'for'taxation'to'derive'sufficient'resources'from'the'economy4'as'well'

as' for' the' taxation' structure' to'be' linked' to'production' strategies' (Putzel,' 2009;'Di' John,'2010,'4;'Di' John'2011,'

270).''

'

To' resume,' according' to' state' building' literature,' taxation' above' certain' levels' and' coordinated' to' production'

strategies'is'a'key'variable'to'promote'economic'development.''

!!4. EMPIRICAL!ASSESSMENT!In' this' section'we'use'QCA'to'analyse' the'actual'existence'of' late'development'according' to' the' inclusion' in' the'

High'Income'countries'list'put'together'by'the'World'Bank.'Furthermore,'we'parallel'the'explanatory'variables'of'

late' development' suggested' by' literature' against' empirical' data.' Given' some' standards' suggested' from' further'

literature,' a' threshold' is' established' for' each' parameter.' Reaching' that' threshold' signals' the' presence' of' such'

variable'for'a'specific'country'case,'but'if'the'value'fails'to'reach'the'threshold'the'condition'is'deemed'absent.'This'

exercise'is'used'to'make'sense'of'data'and'establish'(preliminarily)'the'necessary'and'sufficient'conditions'for'an'

outcome'to'occur.'''

'

The'next'table'summarizes'the'key'explanatory'variables'that'each'line'of'though'deems'necessary'for'economic'

development,'their'equivalent'empirical'expression,'the'threshold'established'on'each'case'and'the'source'of'the'

data.''

'

Argument! Explanatory!Variable! Data! Threshold! Source!

World!Bank!

Low'inflation,''

Inflation:''

Annual'%'increase'in'

consumer'prices'

20%'World'Bank'

'

Manageable'internal'

and'external'debt'

Central'government'

debt,'total'(%'of'GDP)'40%'

World'Bank'

'

Export'growth'

policies'

Exports:'

Annual'%'growth'of'

exports'

9,9%' World'Bank'

'''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''4'' This intuition is drawn from the fact that the tax burden in all OECD countries is 20% or more of their GDP. See Appendix 2. '

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Guided!Economy!

Improving'the'

investment'climate'

Enforcing'Contracts5'

(Doing'Business)'100' World'Bank'

Implementing'

investment'subsidies'

Subsidies'and'other'

transfers'as'a'%'of'

government'expense'

40%' World'Bank'

Compel'

entrepreneurs'to'

take'investment'

decisions'they'would'

not'have'taken'

otherwise'

Domestic'credit'

provided'by'banking'

sector'(%'of'GDP)'

100%' World'Bank'

State!building!Taxation'to'derive'

sufficient'resources'

from'the'economy'

Tax'revenue'as'a'%'of'

GDP'15%' World'Bank'

!4.1. Threshold!and!time!frames!

'

! The'20%'threshold'in'inflation'is'based'on'a'recommendation'from'the'World'Bank.''

! The'90%'threshold'in'central'government'debt'is'based'on'a'study'by'Reinhart'and'Rogoff'(2009).''

! The'9,9%'threshold'in'the'annual'percentage'of'exports'growth'was'selected'arbitrarily.''

! The'value'of'100'used'as'a'threshold'for'the'transaction'costs'variable'was'selected'arbitrarily.''

! The' 40%' threshold' for' the' subsidies' and' transfers' from' government' apart' from' expenses'was' selected'

arbitrarily.''

! The'1000%'threshold'in'domestic'credit'provided'by'banking'sector'was'selected'arbitrarily.'

! The'15%'threshold'on'taxes'as'a'%'of'GDP'was'based'on'a'previews'empirical'exercise'showing'that'most'

OECD'countries'collect'more'than'20%'of'GDP,'while'all'other'developing'countries'are'way'behind.'See'

Appendix'2.''

! The'selection'of'time'periods'to'establish'the'averages'where'base'on'the'periodization'in'Rada'and'Taylor'(2006).''

!!!!

!

'''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''5'' “The enforcing contracts topic assesses the efficiency of the judicial system by following the evolution of a commercial sale dispute over the

quality of goods and tracking the time, cost and number of procedures involved from the moment the plaintiff files the lawsuit until payment is received.” (Doing Business, 2012).''

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!!'

Country Outcome

High Income Economies

Variables

Inflation, consumer

prices (annual %)

Central government

debt, total (% of GDP)

Exports of goods and services

(annual % growth)

Enforcing Contracts

(Doing Business)

Subsidies and other transfers (% of expense)

Domestic credit provided

by banking sector

(% of GDP)

Tax revenue (% of GDP)

Brazil 0' 484,8' 0' 56,4' 1' 7,6' 0' 116' 1' 47,9' 1' 85,7' 1' 13,8' 0'

China 0' 13,8' 0' 7,1' 1' 12,4' 1' 19' 0' 63,6' 1' 84,0' 1' 6,7' 0'

Colombia 0' 22,0' 0' 55,8' 1' 5,4' 0' 154' 1' 36,3' 0' 36,8' 0' 11,7' 0'

Egypt 0' 10,5' 1' 85,8' 1' 7,3' 0' 152' 1' 23,0' 0' 91,4' 1' 15,7' 1'

Hong Kong 1' 5,3' 1' 31,0' 1' 9,9' 1' 10' 0' 22,7' 0' 140,3' 1' 12,3' 0'

India 0' 7,9' 1' 53,3' 1' 10,9' 1' 184' 1' 41,9' 1' 46,2' 0' 9,4' 0'

Indonesia 0' 13,2' 0' 38,7' 1' 5,6' 0' 144' 1' 50,2' 1' 36,7' 0' 13,5' 0'

Korea 1' 7,2' 1' 9,2' 1' 12,0' 1' 2' 0' 57,1' 1' '57,0' 0' 14,6' 0'

Malaysia 0' 3,1' 1' 50,7' 1' 8,9' 0' 33' 0' 41,3' 1' 117,2' 1' 16,0' 1'

Russia 0' 229,2' 0' 18,6' 1' 2,7' 0' 11' 0' 58,2' 1' 30,4' 0' 14,7' 0'

Singapore 1' 2,0' 1' 90,2' 0' 10,3' 1' 12' 0' 21,4' 0' 66,8' 0' 14,4' 0'

South Africa 0' 12,5' 0' 45,3' 1' 2,8' 0' 82' 0' 58,3' 1' 111,9' 1' 26,0' 1'

Thailand 0' 4,2' 1' 27,2' 1' 10,0' 1' 23' 0' 28,7' 0' 107,2' 1' 16,1' 1'

Taiwan 6' 0' ND'' ND' ' ND' '

90' 0' ND''

ND''

ND''

Turkey 0' 60,9' 0' 48,5' 1' 7,1' 0' 40' 0' 42,6' 1' 30,1' 0' 19,3' 1'

Vietnam 0' 82,5' 0' ND'' 16,0' 1' 44' 0' N.D.'

'23,21' 0' N.D.'

'Time frame 1980&2003! 1980&2003! 1970&2003! 2011! 1990&2011! 1980&2000! 1990&2011!

!!

'''''''''''''''''''''''''''''''''''''''''''''''''''''''''''''6'' The first thing that it is noticeable from the table above is that information about Taiwan and Vietnam is close to inexistent. Therefore, it is not clear how Robert Wade got the information to write

the now classic book ‘Governing the Market’ where he focuses on Taiwan.''

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The'sense'table'shows'that'out'of'all'the'countries'that'have'been'considered'successful'in'terms'of'late'economic'development,' only' three,' Hong' Kong,' Korea' and' Singapore,' have' actually' reached' the' ‘degree’' of' high@income'countries.'In'this'case,'the'outcome'sets'a'huge'puzzle'on'development'studies.'How'many'successful'experiences'make' a' discipline?' Can' we' talk' about' regularities' if' only' three' countries' have' actually' reached' the' economic'frontier'recently?'''The'results'show'that'it'is'impossible'to'say'some'conditions'are'necessary'for'development.'In'the'same'way,'it'is'not'possible'to'identify'sufficient'conditions.'Low'inflation'and'a'sustained'increase'in'exports'are'certainly'relevant'indicators:' they' are' always' present' when' the' outcome' occurs.' However,' they' are' also' present' for' India' and'Thailand,'where'the'outcome'does'not'occur.'Moreover,' there'are'no'other'sufficient'variables'that'may'explain'the'outcome.'In'the'successful'cases'there'is'one'or'two'variables'that'are'not'present'in'the'other'cases.'''A'moderate'central'government'debt'and'high'subsidies'are'almost'prevalent' in'every'country.'Paradoxically' for'the'advocates'of'the'pragmatic'orthodoxy,'the'East'Asian'tigers'do'not'precisely'cherish'the'property'rights'history'as'depicted'by'the'variable'that'measures'enforcing'contracts.'According'to'the'assumptions'of'this'paper'(and'the'methodological'pathways'took),'it'is'possible'to'say'that'clear'property'right'are'not'a'necessity'for'development.'This'is'a'very'controversial'statement.'Another'way'to'interpret'this'result'is'that'despite'seeing'East'Asia'as'a'non@stable'way'to'engage'in'legal'relations,'the'returns'were'so'profitable'that'economic'growth'was'not'halted.'''''Regarding' state' building' literature' and' their' call' to' have' a' tax' revenue' of' around' 20%'of' the'GDP' (a' condition'which'was'reduced'to'15%'on'the'sense' table),'among'the' three'countries' that'have'the'outcome,'non'of' them'have' revenues' near' that' rate.' Therefore,' it' is' possible' to' say' that,' increasing' revenue' in' itself' is' related' to' late'economic'growth.'''!5. CONCLUSION!This' paper' has' sought' to' provide' an' assessment' of' late' economic' development' in' terms' of' its' accomplishment'(outcome)' and' its' explanatory' variables.' It' showed' that' late' economic' development' is' not' a' homogeneous'phenomenon,' in' the' sense' that' economic' success' is' understood' in' a' variety' of' ways.' One' of' the' alternative'measurements'of'success'is'the'World'Bank'list'of'high@income'countries.'According'to'this'list'only'three'countries'among' those'normally' referred' to'as' late'developers,' can'actually'be' considered' to'have' reached' the'economic'frontier.'''On'the'other'hand,' this'paper'has'show'that' literature'also'attributes' late'development' to'different'explanatory'variables:'export'orientations,'state'intervention'or'tax'collection,'among'others.'Therefore,'there'are'contending'interpretations'as'to'what'really'accounts'for'late'economic'success.'''Finally,'it'has'not'been'possible'to'determine'that'there'are'necessary'conditions'for'development,'as'no'single'or'set'of'variables'produce'the'same'outcome'every'time.'In'the'presence'of'low'inflation'and'a'sustained'growth'of'exports'at'around'10%,'development'occurred'in'Hong'Kong,'Korea'and'Singapore,'but'it'did'not'occurred'in'India'and' Thailand.' Furthermore,' among' the' success' cases,' only' in'Hong'Kong' is' the'domestic' credit' provided'by' the'bank'sector'significant.''!!One'possible'way'out'of'this'deadlock' is' to' include'political'variables.'When'addressing'this'paper' I' realized'that'influential' authors' such' as'Ha@Joon'Chang' and'Richard'Grabowski,' and' recently' Robinson' and'Acemoglu,' put' all'their' emphasis' on' the' POLITICAL' conditions' for' economic' development.'Without' neglecting' the' very' interesting'

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findings' provided' by' this' essay,' it' would' be' necessary' to' substantiate' this' exercise' by' also' testing' the' political'variables' that' are' claimed' to' explain' late' economic' success.' Another' way' to' qualify' these' results' would' be' to'embrace' a' more' comprehensive' definition' of' development,' possibly' drawn' from' the' Human' Development'Indicators.'This'would'however'reduce'even'more'the'scope'of'success'to'which'one'should'address'when'talking'about'latecomers.''!!!!!!BIBLIOGRAPHY!'1. Amsden,'A.'H.'(1994).'Why'isn't'the'whole'world'experimenting'with'the'East'Asian'model'to'develop?'Review'of'the'East'

Asian'miracle.'World&Development,'22,'4,'627@633.'

2. Chang,'HJ.'(2002).'Kicking&Away&the&Ladder.&Development&Strategy&in&Historical&Perspective.&London:'Anthem'Press.'

3. Crisis'State'Program,'J.'(2006).'Definitions&of&state&failure.'Available'at:'http://www2.lse.ac.uk/internationalDevelopment/research/crisisStates/download/drc/FailedState.pdf.''

4. Di'John,'J.'(2006).'The&Political&Economy&of&Taxation&and&Tax&Reform&in&Developing&Countries.'Available'at:'http://www.wider.unu.edu/stc/repec/pdfs/rp2006/rp2006@74.pdf'(Accessed:'July'12'2012).''

5. Di'John,'J.'(2010).'Taxation,&Resource&Mobilisation,&And&State&Performance.'Available'at:'http://www2.lse.ac.uk/internationalDevelopment/research/crisisStates/download/Policy%20Directions/Taxation.pdf'(Accessed:'June'2011).''

6. Di'John,'J.'(2011).'Taxation,'developmental'state'capacity'and'poverty'reduction.'In'International&Journal&of&Social&Welfare,'20,'pp.'270@279.''

7. Doing'Business,'2012.'Available'at:''http://www.doingbusiness.org/Data/ExploreTopics/enforcing@contracts/Frontier.''

8. Grabowski,'R.,'Self,'S.'and'Shields,'M.'(2007).'Economic&Development:&A&Regional,&Institutional,&and&Historical&Approach.'M.E.'Sharpe.'

9. Gutiérrez,'F.'(2011).'Measuring&Poor&State&Performance:&Problems,&Perspectives&and&Paths&Ahead.'Available'at:'http://www2.lse.ac.uk/internationalDevelopment/research/crisisStates/download/others/MPSPreport.pdf'(Accessed:'February'2012).''

10. Mann,'M.'(1988).'State'and'society,'1130@1815:'An'analysis'of'English'state'finances.'In'Mann,'M.'ed.'(1988).'States,'War,'and'Capitalism.'New'York:'Basil'Blackwell,'pp.'73@123.''

11. Moore,'M.'(2004).'Revenues,'State'formation'and'the'Quality'of'Governance'in'Developing'Countries.'International&Political&Science&Review,&25,'3,'pp.'297@319.'

12. Putzel,'J.'(2009).'Understanding'Fragile'States.'Video.'Available'at:'http://www.youtube.com/watch?v=l8iS9xikHwg.'(Accessed:'July'2012).''

13. Putzel,'J.'and'Di'John,'J.'(2012).'Meeting&the&Challenges&of&Crisis&States.'Crisis'States'Research'Centre'report,'The'London'School'of'Economics'and'Political'Science,'London,'UK.'ISBN'9780853284772.''

14. Rada,'C.,'&'Taylor,'L.'(2006).'Developing'and'transition'economies'in'the'late'20th'century:'diverging'growth'rates,'economic'structures,'and'sources'of'demand.'New&York:&United&Nations&Department&of&Economic&and&Social&Affairs.'

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15. Ragin,'Charles'C.,'and'Benoît'Rihoux'(2004)'Qualitative&Comparative&Analysis&(QCA):&State&of&the&Art&and&Prospects.'In'Symposium'on'QCA'(2004)'Qualitative&Methods,'Newsletter'of'the'American'Political'Science'Association'Organized'Section'on'Qualitative'Methods'2:2,'3@13.'

16. Ramos,'C.'(2012).'PhD'dissertation'Project:'The'Politics'of'Production:'Colombian'Coffee'and'Philippine'Coconut'in'the'20th'Century.'Available'at:'http://www2.lse.ac.uk/internationalDevelopment/whosWho/phdRamos.aspx.''

17. Reinhart,'C.'M.,'&'Rogoff,'K.'S.'(2009).'This&time&is&different:&Eight&centuries&of&financial&folly.'Princeton'University'Press.'

18. Rodrik,' D.' (1994).'Getting& interventions& right:& how& South& Korea& and& Taiwan& grew& rich'(No.' w4964).' National' Bureau' of'Economic'Research.''

19. Rodrik,'D.'(1997).'The'‘paradoxes’'of'the'successful'state.'European&Economic&Review,'41,'3,'411@442.'

20. Stiglitz,'J.'E.'(1996).'Some'lessons'from'the'East'Asian'miracle.'The&world&Bank&research&observer,'11,'2,'151@177'

21. Thorp,'R.'(1991).'Economic&management&and&economic&development&in&Peru&and&Colombia.'Univ'of'Pittsburgh'Pr.'

22. Tilly,'C.'(1990).'Coercion,&Capital,&and&European&States,&AD990W1990.'New'York:'Basil'Blackwell.''

23. Wade,' R.' (1996).' Japan,' the' World' Bank,' and' the' art' of' paradigm' maintenance:' the' East' Asian' miracle' in' political'perspective.'New&Left&Review,'3@37.'

24. World'Bank'(1987).'World&Development&Report&1987.&Barriers&to&Adjustment&and&Growth&in&the&World&Economy.'New'York:'Oxford'University'Press.'''

25. World'Bank'(1991).'World&Development&Report&1991.&The&Challenges&of&Development.'Washington:'World'Bank.''

26. World'Bank'(1993).'The&East&Asian&Miracle.&Economic&Growth&and&Public&Policy.'New'York:'Oxford'University'Press.'

27. World'Development'Indicators.'Available'at:'http://databank.worldbank.org/ddp/home.do?Step=3&id=4.''

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APPENDIX!1'–'List'of'High&Income'countries'according'to'the'World'Bank'report,'July'2012.'These'countries'have'a'gross'national'income'per'capita'of'US$12,476'or'more.'''

1 Andorra 41 Macao SAR, China 2 Aruba 42 Malta 3 Australia 43 Monaco 4 Austria 44 Netherlands 5 Bahamas 45 New Caledonia 6 Bahrain 46 New Zealand 7 Barbados 47 Northern Mariana Islands 8 Belgium 48 Norway 9 Bermuda 49 Oman

10 Brunei Darussalam 50 Poland 11 Canada 51 Portugal 12 Cayman Islands 52 Puerto Rico 13 Channel Islands 53 Qatar 14 Croatia 54 San Marino 15 Curaçao 55 Saudi Arabia 16 Cyprus 56 Singapore 17 Czech Republic 57 Sint Maarten (Dutch part) 18 Denmark 58 Slovak Republic 19 Equatorial Guinea 59 Slovenia 20 Estonia 60 Spain 21 Faeroe Islands 61 St. Kitts and Nevis 22 Finland 62 St. Martin (French part) 23 France 63 Sweden 24 French Polynesia 64 Switzerland 25 Germany 65 Trinidad and Tobago 26 Greece 66 Turks and Caicos Islands 27 Greenland 67 United Arab Emirates 28 Guam 68 United Kingdom 29 Hong Kong SAR, China 69 United States 30 Hungary 70 Virgin Islands (U.S.) 31 Iceland

32 Ireland 33 Isle of Man 34 Israel 35 Italy 36 Japan 37 Korea, Rep. 38 Kuwait 39 Liechtenstein 40 Luxembourg '

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APPENDIX!2!–!Tables'showing'difference'in'tax'revenue'between'OECD'and'no@OECD'countries.!!''

Tax'Revenue'as'%'of'GDP,'OECD'countries'

! 1990! 1991! 1992! 1993! 1994! 1995! 1996! 1997! 1998! 1999! 2000! Average!

OECD!Countries!

Mexico! 15,8' 15,7' 16,1' 16,1' 15,7' 15,2' 15,3' 15,9' 15,1' 15,8' 16,9' 15,8!

Turkey! 14,9' 15,6' 16,7' 16,9' 16,5' 16,8' 18,9' 20,7' 21,1' 23,1' 24,2' 18,7!

Chile! 17,5' 18,5' 19,2' 19,4' 19,1' 19,0' 20,1' 19,5' 19,3' 18,6' 19,4' 19,1!

Korea! 19,5' 19,1' 19,1' 19,5' 19,8' 20,0' 20,6' 20,3' 20,3' 20,7' 22,6' 20,1!

Japan! 29,0' 28,6' 27,0' 27,0' 26,1' 26,8' 26,8' 27,2' 26,8' 26,3' 27,0' 27,1!

Switzerland! 25,8' 25,6' 26,0' 26,5' 27,0' 27,7' 28,1' 27,6' 28,5' 28,7' 30,0' 27,4!

United!States! 27,4' 27,1' 26,9' 27,1' 27,5' 27,8' 28,2' 28,7' 29,1' 29,1' 29,5' 28,0!

Portugal! 26,9' 27,9' 29,9' 28,4' 29,2' 29,3' 30,0' 29,9' 30,1' 30,8' 30,9' 29,4!

Greece! 26,2' 26,3' 27,1' 27,6' 27,9' 28,9' 35,9' 30,3' 32,0' 32,9' 34,0' 29,9!

Iceland! 30,9' 31,3' 32,1' 31,1' 30,6' 31,2' 32,3' 32,2' 34,5' 36,9' 37,2' 32,8!

Ireland! 33,1' 33,7' 34,0' 34,0' 35,1' 32,5' 32,4' 31,8' 31,3' 31,5' 31,2' 32,8!

Spain! 32,5' 32,8' 33,8' 32,8' 32,9' 32,1' 31,9' 32,9' 33,2' 34,1' 34,2' 33,0!

United!Kingdom! 35,5' 34,3' 33,4' 32,3' 32,9' 34,0' 33,9' 34,2' 35,5' 35,8' 36,3' 34,4!

New!Zealand! 36,9' 35,2' 35,5' 35,6' 36,1' 36,2' 34,4' 34,5' 32,9' 32,9' 33,1' 34,9!

Poland! ..' 34,0' 34,9' 38,8' 36,9' 36,2' 37,4' 36,6' 35,6' 35,1' 32,8' 35,8!

Canada! 35,9' 36,4' 36,0' 35,4' 35,2' 35,6' 35,9' 36,7' 36,7' 36,4' 35,6' 36,0!

Germany! 34,8' 36,0' 36,9' 36,9' 37,1' 37,2' 36,5' 36,2' 36,5' 37,3' 37,5' 36,7!

Italy! 37,8' 38,2' 40,6' 42,3' 40,2' 40,1' 41,8' 43,3' 41,7' 42,5' 42,2' 41,0!

Norway! 41,0' 41,1' 40,3' 39,4' 40,8' 40,9' 40,9' 41,5' 42,4' 42,7' 42,6' 41,2!

Netherlands! 42,9' 45,1' 44,8' 45,0' 43,0' 41,5' 40,9' 40,9' 39,0' 40,1' 39,6' 42,1!

France! 42,0' 42,3' 42,0' 43,2' 43,3' 42,9' 44,2' 44,5' 44,3' 45,2' 44,4' 43,5!

Denmark! 46,5' 45,9' 46,3' 47,7' 48,7' 48,8' 49,2' 49,0' 49,3' 50,1' 49,4' 48,2!

United!States! 52,3' 49,8' 47,3' 46,1' 46,3' 47,5' 49,4' 50,5' 50,7' 51,1' 51,4' 49,3!

Average! ! ! ! ! ! ! ! ! ! ! ! 32,9!Source:'data'extracted'on'02'Sep'2012'13:31'UTC'(GMT)'from'OECD.Stat' ' ' '

''

Tax'Revenue'as'%'of'GDP,'Non@OECD'countries'

! 1990! 1991! 1992! 1993! 1994! 1995! 1996! 1997! 1998! 1999! 2000! Average!

Low!Income!

Myanmar! 6,2' 5,6' 5,0' 4,7' 4,3' 3,7' 4,0' 4,4' 3,5' 2,8' 3,0' 4,3!

Congo,!Dem.!Rep.! 9,3' 4,4' 2,7' 3,4' 2,7' 4,9' 4,8' 4,1' 5,3' 3,5' 3,5' 4,4!

Nepal! 7,0' 6,6' 6,5' 6,7' 7,7' 9,0' 8,7' 8,7' 8,6' 8,4' 8,7' 7,9!

Ethiopia! 8,7' 7,5' 5,6' 6,0' 7,7' 8,5' 9,0' 10,2' 10,9' 10,7' ' 8,5!

Sierra!Leone! 5,3' 7,5' 10,1' 11,8' 12,1' 9,0' 7,7' 9,9' 7,2' 6,3' 10,2' 8,8!

Kyrgyz!Republic! ' ' ' 14,9' 14,7' 15,1' 12,6' 12,5' 14,2' 12,2' 11,7' 13,5!

Kenya! ' 17,6' 18,4' 15,0' 14,9' 20,5' 15,8' 16,1' 15,1' 16,2' 16,8' 16,6!

Zimbabwe! 21,6' 20,0' 22,1' 23,0' 19,8' 23,2' 22,6' 26,1' ' ' ' 22,3!

Average! ' ' ' ' ' ' ' ' ' ' ' 10,8!Low!Middle!Income!

Bhutan! 4,7' 5,1' 5,3' 6,5' 6,3' 7,0' 7,9' 7,0' 8,5' 7,4' 10,3' 6,9!

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India! 10,1' 10,3' 9,9' 8,6' 9,1' 9,3' 9,3' 9,1' 8,2' 8,8' 9,0' 9,3!

Paraguay! 9,2' 9,0' 10,0' 9,1' 11,0' 12,5' 11,5' 11,6' 11,5' 10,5' 10,9' 10,6!

Pakistan! 13,3' 12,2' 13,0' 12,8' 12,8' 13,2' 13,8' 12,7' 12,8' 13,2' 10,1' 12,7!

Indonesia! ' 15,6' 15,8' 14,4' 15,6' 14,0' 14,0' 16,0' 15,0' 15,5' ' 15,1!

Philippines! 14,1' 14,6' 15,4' 15,6' 16,0' 16,3' 16,9' 17,0' 14,1' 13,3' 12,8' 15,1!

Nicaragua! 26,3' 18,2' 19,8' 19,0' 11,7' 12,2' 12,3' 13,7' 14,3' 13,9' 13,8' 15,9!

Sri!Lanka! 19,0' 18,3' 18,0' 17,5' 17,2' 17,8' 17,0' 16,0' 14,5' 15,0' 14,5' 16,8!

Syrian!Arab!Republic! 16,7' 18,1' 19,4' 17,5' 17,5' 18,6' 15,6' 16,3' ' ' ' 17,5!

Papua!New!Guinea! 20,1' 17,7' 18,3' 19,9' 20,6' 19,7' 22,5' 23,7' 20,5' 21,8' 19,0' 20,3!

Lesotho! 39,9' 42,4' 43,6' 47,6' 48,4' 47,9' 45,4' 46,2' 38,2' 39,4' 37,4' 43,3!

Average! ! ! ! ! ! ! ! ! ! ! ! 16,7!Upper!Middle!Income!

Mexico! 11,8' 11,5' 11,6' 11,3' 10,6' 10,6' 10,8' 11,2' 10,2' 10,7' 11,7' 11,1!

Brazil! 12,0' 9,5' 9,7' 10,5' 11,9' ' ' 10,3' 12,2' 13,4' 14,0' 11,5!

Panama! 12,6' 13,5' 13,1' 12,5' 12,4' 13,0' 11,2' 11,5' 10,8' 11,0' 10,2' 12,0!

Peru! 10,8' 11,0' 12,0' 12,2' 13,0' 13,6' 14,0' 14,2' 13,9' 12,7' 12,2' 12,7!

Maldives! 14,0' 14,6' 15,0' 13,7' 13,0' 13,6' 13,5' 14,4' 14,2' 14,1' 13,8' 14,0!

Venezuela,!RB! 18,1' 18,3' 13,6' 13,4' 14,1' 12,9' 14,0' 17,5' 12,7' 13,5' 13,3' 14,7!

Uruguay! 16,2' 16,8' 17,2' 19,4' 19,0' 16,9' 17,4' 16,8' 17,0' 15,3' 14,7' 17,0!

Bulgaria! 23,8' 22,3' 16,9' 15,2' 21,2' 20,1' 19,4' 18,5' 18,1' 17,5' 17,9' 19,2!

Tunisia! 20,0' 20,4' 20,5' 21,0' 20,8' 20,5' 19,8' 18,4' 19,2' 19,1' 19,3' 19,9!

Ecuador! 14,1' 16,2' 25,2' 27,7' 27,2' ' ' ' ' ' ' 22,1!

Botswana! 27,5' 25,6' 27,8' 23,7' 19,5' 16,6' 15,1'' ' ' '

22,3!

St.!Vincent!and!the!Grenadines! 22,1' 23,5' 22,0' 22,4' 23,5' 22,8' 23,5' 24,4' 24,9' 24,4' 20,6' 23,1!

Namibia! 27,3' 32,4' 30,3' 29,8' 27,2' 28,4' 27,4' 30,5' 29,3' 31,9' 27,5' 29,3!

Average! ! ! ! ! ! ! ! ! ! ! ! 17,6!Source:'World'Bank'DataBank'(2012).''

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