How did development actually happen? An excerpt from how china escaped the poverty trap.

EXCERPT FROM INTRODUCTION: HOW DID DEVELOPMENT ACTUALLY HAPPEN?, PAGES 3-5

This is a study about how development actually happens. Is it really the institutions of good governance so keenly proffered to developing countries today that launch markets? Or is it growth that enables good governance? Or is history destiny?

My answer begins with a simple observation: development is a coevolutionary process. States and markets interact and adapt to each other, changing mutually over time. Neither economic growth nor good governance comes first in development. China’s experience provides an especially rich illustration of the coevolutionary process of development, but this process is not unique to China. As we shall see by the end of this book, the rise of Western societies, too, actually followed a coevolutionary pattern, as did the astonishing boom of the movie industry in contemporary Nigeria.

Although development as a coevolutionary process is intuitively observed, analyzing mutual changes among many moving parts is far from easy. To this end, I lay out a framework for systematically mapping the coevolution of states and markets. This approach reveals surprising insights into the causal sequence of development and raises new questions about the sources of societal adaptation.

My answers to how China—and poor and weak societies in general—escaped the poverty trap are twofold. The first: build markets with weak institutions. My analysis reveals that the institutions, strategies, and state capacities that promote growth vary over the course of development, among countries and even among localities within countries. Even more surprisingly, I show that the practices and features that defy norms of good governance—normally viewed as “weak” institutions—are paradoxically the raw materials for building markets when none exist. By contrast, the “good” or “strong” institutions found in wealthy economies are institutions that preserve existing markets.

In other words, normatively weak institutions can be functionally strong. Perhaps the one thing poor countries possess in abundance are institutions perceived as weak or wrong by first-world standards. Examples of weak institutions featured in this study include the fusion of public and private interests (vs. bureaucratic professionalism), partial (vs. impartial) regulation, campaign- style (vs. routine) policy implementation, indiscriminate and uncoordinated (vs. selective) industrial promotion policies, incentives for petty fee extractions (vs. eradicating corruption), to name some.

Normally, we believe that the way out of poverty traps is to “quickly” replace such weak institutions with strong institutions that define advanced industrialized economies. This book points to a different path. It illuminates the development potential that may lie hidden within apparently institutions and local knowledge that people in developing countries already possess.

The second answer: create the right conditions for adaptation. History is not destiny. Although past encounters determine starting points, any given legacy may be reshaped for destructive or constructive ends. Instead of attributing national successes and failures only to history or geography, I emphasize instead the efforts of reformers to foster improvisation among ground- level agents, such that they may effectively utilize existing resources to tackle the problems of the poor, and thereby turn the typical problems of underdevelopment into the solutions to development.

Yet while improvisation is essential to the development process, improvisation does not occur automatically and indeed often fails. Instead of dispensing obvious advice like “avoid mimicry,” “promote innovation,” and “embrace experimentation,” fashionable among some development pundits who invoke adaptive language, I underscore the inherent challenges of achieving these goals. By studying how China tackled these challenges, we’ll learn about some actions that may be taken to spur the coevolution of states and markets as well as the effects of particular measures deployed. Also, by unpacking the processes through which China escaped the poverty trap, we will also understand how China arrived at the particular problems that it faces today.

EXCERPT FROM PAGES 16-17

Authors are often asked to give a one-line summary of their argument. Here is mine: Poor and weak countries can escape the poverty trap by first building markets with normatively weak institutions and, more fundamentally, by crafting environments that facilitate improvisation among the relevant players.

It is tempting to search for a single “model”—a package of particular institutions and policies—that can be replicated across all contexts and believed to produce equal success. If such a model were to exist, it would be delightfully convenient. But this is a search for a mirage. In fact, whether in the capitalist- democratic West, the East Asian developmental states, or China at different periods of reform, no particular solution is universally effective or ideal. Particular solutions work only when they fit the needs and resources of particular contexts and the success criteria of the players involved.

Instead of aspiring to copy the exact actions taken by others, what is fundamentally needed for development are conditions that spur a productive and sustained search for solutions that fit different and evolving environments. Stated in North’s terms, such conditions are “the necessary artifactual structure” that enables economic and political agents to “confront novel problems successfully.” And as Axelrod and Cohen emphasize, this process of confronting novel problems may produce endless possible solutions, “even without knowing in advance just what will change, or just what will be learned.”

China escaped the poverty trap by constructing a set of underlying conditions that fostered an adaptive, bottom-up search within the state for localized solutions. As China is a late- developing, single-party authoritarian regime, the state plays an oversized role in shaping adaptive processes and outcomes.

Condensing various elements of its adaptive approach into a pithy maxim, I call it directed improvisation. Central reformers direct; local state agents improvise. The center does not direct by precisely dictating what local agents must do. Instead, it directs by tackling the problems of adaptation earlier outlined: authorizing yet delimiting the boundaries of localization (variation), clearly defining and rewarding bureaucratic success (selection), and encouraging mutual exchanges between highly unequal regions (niche creation). Within these centrally drawn parameters, local authorities improvise a variety of solutions to locally specific and ever-changing problems. It is this paradoxical mixture of top- down direction and bottom-up improvisation that lays the foundation for coevolutionary processes of radical change.

In other words, generalizable from China’s market reforms are insights into the process of building markets with weak institutions and the strategies of directing improvisation, not the particular solutions that were improvised to solve particular problems at various times and places. Furthermore, such lessons need not apply only narrowly to other countries. Numerous organizations and groups share similar challenges of improvising with existing resources and making adaptation work.

This book will focus on the processes of state-and-market coevolution and the conditions that enabled adaptive efficiency in the first thirty-five years of reform, starting from 1978. By the time the new leadership under Xi Jinping took office in 2013, China had ascended to middle-income status. Domestically and inter- nationally, China also inhabits a different political environment. By exploring the adaptive processes that have taken China this far, we can better understand the origins of the particular challenges it faces today and assess whether its leadership can continue to tackle them in years to come.

EXCERPT FROM PAGE 19

The concluding chapter addresses the comparative question: Are coevolutionary processes of development unique to China? They are not.

Extending my empirical approach, I retell accounts from late medieval Europe, America following independence, and Nigeria since the early 1990s from a coevolutionary perspective. These snippets provide further evidence that development is a coevolutionary process, not only in contemporary China but also in other national and temporal settings. Drawing on the cases analyzed, I summarize six lessons for constructing an adaptive environment. I also discuss some core obstacles that China must overcome in order to stay adaptive in the twenty-first century.

Through this book, I hope to show that we can study political economies as complex systems in coherent and constructive ways. Confronting the basic question of how development actually happens compels us to revise the theories we build, the analytic methods we use, and the actions we take to improve human lives.

Acknowledgement: Selected passages from How China Escaped the Poverty Trap, by Yuen Yuen Ang. ©2016 by Cornell University Press, reprinted here with permission.

LEARN MORE

• Book hub for How China Escaped the Poverty Trap (2016) 

• Essay—theoretical synthesis: AIM: Adaptive, Inclusive & Moral Political Economy (2026)  

• Read Duncan Green’s review at LSE: “This book is a triumph… that takes as its starting point systems and complexity. Its lessons apply far beyond China’s borders.”