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    Credibility and Reputation Building in the Developmental State: A Model with East Asian Applications


    Dewit, Gerda (2001) Credibility and Reputation Building in the Developmental State: A Model with East Asian Applications. World Development, 29 (4). pp. 711-724. ISSN 0305-750X

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    Abstract

    We use a game-theoretic model to analyze the role of credibility, reputation and investment coordination in a developmental state. Our model focuses on why a ``soft'' state serving narrow social groups so often obtains in less-developed countries and under what conditions a ``hard'' or developmental state can emerge. The model highlights the dilemma that although state and private sector alike may want economic growth, both must simultaneously invest to achieve it. But the equilibrium outcome analogous to the prisoner's dilemma is investment by neither. Even when initial conditions are favorable and a state is potentially developmental with the genuine capability to elicit private sector investment, this may not materialize and an equilibrium of low, or no, investment will prevail. To avoid this deadlock and foster growth, the successful developmental state must demonstrate commitment by promoting its ``developmental'' credentials through a process of reputation building. A consequent incentive to act ``tough'' together with seeming advantages of authoritarianism in implementing the developmental state may help to explain why it is often associated with an authoritarian political system.

    Item Type: Article
    Keywords: developmental state; prisoner's dilemma; credibility; reputation; investment co- ordination; East Asia;
    Academic Unit: Faculty of Social Sciences > Economics, Finance and Accounting
    Item ID: 8444
    Depositing User: Gerda Dewit
    Date Deposited: 12 Jul 2017 11:27
    Journal or Publication Title: World Development
    Publisher: Elsevier
    Refereed: Yes
    URI:

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