What drives developing countries to support productive sectors?
Ruling elites’ strategies for political survival!
We know a lot about what kinds of policies are needed to support the development of productive sectors. We know much less about why governments in developing countries pursue these policies and why some governments achieve better outcomes than others. Project Senior Researcher Lindsay Whitfield and Senior Researcher Ole Therkildsen in the present DIIS Working Paper review the many, but disparate arguments on this topic and build on the most convincing answers to create a new framework for analyzing why and how ruling political elites support productive sector development and with what outcomes.
The authors make the following three propositions, which build on each other:
- Ruling elites support the development of productive sectors when they perceive that this will help them to remain in power.
- Ruling elites choose policies and implementation arrangements as part of their strategies for maintaining ruling coalitions and/or winning elections. Such choices affect the policies that political elites choose, which sectors they support, and how capable they are of implementing them.
- Good economic outcomes depend on
- close relations between the ruling elite and the relevant productive entrepreneurs based on mutual interests between them; and
- the ability of the ruling elite to create bureaucratic capabilities to implement specific policies.
These propositions are elaborated in the paper, and the authors seek to identify factors and causal mechanisms that can help to explain differences in performance across productive sectors within a country and across countries and regions.