Review of Kicking Away the Ladder: Development Strategy in Historical Perspective by Ha-Joon Chang

1.1. Theme of the Book

From an economic perspective, the world we are living in today is highly divided into developed countries and underdeveloped countries. Furthermore, it is long believed that progressive development is the result of appropriate policies and institutions. Therefore, it seems natural to assume that the now-developed countries (hereafter NDCs) owe their achievements in large part to correct economic policies and institutions, and that they should, in helping underdeveloped countries, share with them such development strategies. Nevertheless, questions have been constantly raised in terms of the compatibility of these recommended and so-called “good” strategies with underdeveloped countries today. In Kicking Away the Ladder: Development Strategy in Historical Perspective, Ha-Joon Chang avoids the ahistorical method of mainstream neoclassical economics and adopts a historical approach that is free of the suspicion of double-standards by studying the policies and institutions applied by the NDCs when they were themselves underdeveloped countries. In other words, Chang poses a crucial question: “How did the rich countries really become rich?” (Chang 2) The shocking yet fairly convincing answer Chang attempts to offer is thus the theme of his book. The “good” policies—such as free trade and laissez-faire industrial policy—and the “good” institutions—such as democracy and an efficient bureaucratic system—that the NDCs currently advocate or even enforce for economic development in underdeveloped countries are not what the former actually used for their own economic development. Instead, “[m]ost of them actively used ‘bad’ trade and industrial policies . . . [, and] they had very few of the institutions deemed essential by developing countries today” (3). Moreover, these so-called “good” policies and institutions are to some extent counterproductive to underdeveloped economies, which suggests that the NDCs are, consciously or unconsciously, “kicking away the ladder,” with which they reach their economic maturities, in order to prevent underdeveloped countries from catching up. Consequently, underdeveloped countries, according to Chang, should caution in blindly following or fearfully compromising to such recommendations or enforcements of policies and institutions coming from the NDCs.

1.2. Author’s Support for the Theme

In Chapter Two and Chapter Three, Chang supports his argument with specific examples.

In terms of policies, Chang argues that the picture of free trade and laissez-faire that the NDCs draw is “powerful but fundamentally misleading” (15). To begin with, “virtually all NDCs actively used interventionist industrial, trade and technology (ITT) policies that are aimed at promoting infant industries during their catch-up periods” (18). Furthermore, “subsidies and duty drawbacks on inputs for exported goods were frequently used to promote exports. Government both provided industrial subsidies and used various public investment programmes, especially in infrastructure but also in manufacturing” (18). As Chang goes on to analyze a range of major NDCs, namely Britain, the USA, Germany, France, Sweden, Belgium, the Netherlands, Switzerland, Japan, Korea, and Taiwan, he manages to show that “the policies that were used are almost the opposite of what the present orthodoxy says they employed” (19), which supports his thesis.

In terms of institutions, Chang, instead of analyzing individual NDCs, analyzes six broad areas: democracy, bureaucracy and judiciary, property rights, corporate governance, private and public financial institutions, and welfare and labor institutions. Again, the analyses show that almost none of the institutions were readily available for the NDCs at the early and middle stages of their development; on the contrary, the emergence and perfection of these institutions are of fairly modern context, which serves to prove Chang’s point that they are “in large part the outcome, rather than the cause, of economic development” (11).

Thus, through his study of both the policies and institutions applied by the NDCs when they were themselves developing countries, Chang supports his theme that the goodness of the advice coming from the NDCs today is not fully justified.

1.3. Implications of the Theme for Economic Development

After laying out his theme and corresponding support, Chang offers his suggestions for underdeveloped countries as follows: first of all, in terms of policies, the “bad” policies that most NDCs used so effectively when they were developing “should at least be allowed, if not actively encouraged, by the developed countries and the IDPE that they control” (141). Secondly, in terms of institutional improvement, there should be “more serious attempts, both at the academic and the practical levels, to explore exactly which institutions are necessary or beneficial for what types of countries, given their stages of development and specific economic, political, social, and even cultural conditions” (141). As such, Chang ends his book.