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
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: |
|
| Use Licence: |
This item is available under a Creative Commons Attribution Non Commercial Share Alike Licence (CC BY-NC-SA). Details of this licence are available
here |
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