Development Path of the Contemporary Non-Western World

By Guanghua Yu

This note argues that the logic underlying the open access order is not the only way of economic and human development in the contemporary non-Western world.

 

Douglass C. North, John Joseph Wallis, and Barry R. Weingast divide countries or regions into natural states and open access orders. Natural states solve the problem of violence by limiting to elite coalition groups any access to political organisations and activities and to economic organisations and activities. In this way, natural states maintain stability and make wide social interaction possible. As natural states have to implement greater rents or privileges to please the dominant coalition, it is less likely for these countries or regions to have a vibrant and dynamic economy, compared with countries or regions with open access orders.

An open access in the political sphere makes it difficult for the government, or any faction, to manipulate the open access order in the economy.

The open access order advocated by North and his colleagues requires that a country have open access to political organisations and activities, and, open access to economic organisations and activities. An open access in the political sphere makes it difficult for the government, or any faction, to manipulate the open access order in the economy. Similarly, open access to economic organisations and activities requires political organisations to consider the broad interest of society in order to gain political power to run a government.

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This note argues that the logic underlying the open access order is not the only way of economic and human development in the contemporary non-Western world. Elsewhere, the author has used the case of India to show that it is mainly the open access in the economic sphere, and the development of the interconnected institutions that have generated considerable economic growth since the beginning of 1980s or particularly the 1990s. Evidence from Japan is to the same effect that it is open access in the economic sphere and institutional building related to the protection of property rights and contract enforcement, financial market, rule of law, and human resource accumulation that determine economic and human development. The case of Singapore similarly supports the claim that open access in the political sphere is not a necessary condition for economic and human development. The successful development story of Singapore is consistent with my position that successful economic and human development requires open access in the economic sphere and the interconnected institutions supporting open access in the economic sphere. Evidence of the past forty years from China similarly indicates that open access in the political sphere or competitive democracy is not a necessary condition for economic development. The case of Brazil from 1985 provides strong evidence that open access in both the political sphere and the economic sphere is not a sufficient condition to successful outcomes. This is true at least in the absence of interconnected institutions supporting the open access in the economic sphere.

Evidence of the past forty years from China similarly indicates that open access in the political sphere or competitive democracy is not a necessary condition for economic development.

If it is true that it is open access in the economic sphere and institutional building related to the protection of property rights and contract enforcement, financial market, rule of law, and human resource accumulation that determine economic and human development in the contemporary non-Western countries and regions, we still need to know why the West led the world in the past several centuries. Put in another way, why did elite democracy promote significant economic development in the West when other countries still possessed an agricultural economy.

Feature Image: Image by Jason Goh from Pixabay

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About the Author

Guanghua Yu is a professor of Law, teaching at the Faculty of Law in the University of Hong Kong. His specialised areas of teaching and research include Corporate Law, Contract Law, Constitutional Law, and Development. He graduated from the School of Law of York University and the University of Toronto.