1. Climbing out the Ditch Managing the Politics of Change: Leadership and the Role of Institutions in East Asia ‘s Rapid Growth

2. Underdeveloped Country low per capita GDP crushing poverty high illiteracy high mortality rates high unemployment political instability inept government wide rural-urban disparities weak capacity poor governance

3. High per capita GDP low poverty high literacy low mortality rates Intermittent bouts with unemployment long term political stability well functioning government manageable regional disparities well endowed capacity good governance Developed Country

4. The Real Challenge of Development status quo (underdeveloped) DesiredState (Developed) Managing the Politics of Change

5. East Asia’s High Performers Taking the bull by the horns... managing the politics of change... managing the politics of change

6. Requisites of Change Management establishing a sense of urgency creating a guiding coalition developing a vision and strategy communicating the change vision empowering broad based action generating short term wins consolidating gains & producing more change embedding change in the culture John Kotter, 1996 CHANGE

7. Requisites of Change Management establishing a sense of urgency creating a guiding coalition developing a vision and strategy communicating the change vision empowering broad based action generating short term wins consolidating gains & producing more change embedding change in the culture John Kotter, 1996 Threat of communist takeover

8. Requisites of Change Management establishing a sense of urgency creating a guiding coalition developing a vision and strategy communicating the change vision empowering broad based action generating short term wins consolidating gains & producing more change embedding change in the culture John Kotter, 1996 Shared growth

9. The Principle ofShared Growth The Principle of Shared Growth The Wealth Pie

10. All share in increments to the pie The Principle ofShared Growth The Principle of Shared Growth

11. The Shared Growth Phenomenon

12. RegionGNP per capita growth (per year) 1965- 1990 Income share of bottom 20 percent of households Income of highest 20 percent of households Ratio of top 20 percent to bottom 20 percent East Asia, Fast Growers 6.16.743.37.0 East Asia Slow Growers 3.66.147.58.3 Latin America1.43.655.116.4 Africa0.34.354.015.0 South Asia2.28.043.55.5 Ratio(unweighted average) of Top to Bottom Quintile and per Capita Growth Rate, Selected Years: 1976-1988

13. The Shared Growth Phenomenon RegionAverage Poverty Index HPAEs0.25 Other Asia0.53 Latin America0.42 Sub-Saharan Africa0.52 Integrated Poverty Index, 1988

14. Requisites of Change Management establishing a sense of urgency creating a guiding coalition developing a vision and strategy communicating the change vision empowering broad based action generating short term wins consolidating gains & producing more change embedding change in the culture John Kotter, 1996 Vision 2020 Annual awards for export performance

15. But Why Shared Growth? History and path dependence Thrust of Leadership

16. The Role of Institutions status quo (underdeveloped) DesiredState (Developed) Managing the Politics of Change democratic institutions The Western World East Asia post WWII ? ? ?

17. The Predicament of Leadership Paradox of autocracy Time inconsistency of economic policies

18. The Paradox of Autocracy Property rights ???

19. Time Inconsistency Costs “today” Benefits “tomorrow”

20. The Predicament of Leadership Paradox of autocracy Time inconsistency of economic policies credible commitment

21. Institutional Foundations of Shared Growth Deliberation councils Wealth sharing mechanisms Competent/functional bureaucracy

22. Requisites of Change Management establishing a sense of urgency creating a guiding coalition developing a vision and strategy communicating the change vision empowering broad based action generating short term wins consolidating gains & producing more change embedding change in the culture John Kotter, 1996 government - business deliberation councils

23. Institutionalizing Consultative Processes : the Deliberation Council Coordination and information “leveling” Rent allocation Credible commitment

24. Wealth Sharing Mechanisms land reform developing rural infrastructure investing in basic education promoting SMEs/labor intensive manufacturing allocating corporate equity worker cooperatives public housing programs

25. Land reform Percent Distribution of owner- cultivated households Size of Holding (chia)19391960 Less than 0.543.220.7 Between 0.5 and 120.945.9 Between 1 and 324.630.1 Greater than 311.33.3 Total100.0 Distribution of Land and Owner-Cultivated Households in Taiwan, by size of Holding, 1039 vs. 1960

26. Land reform/rural infrastructure Overall Effectiveness of Simulated Experimental Programs in South Korea, 1978 Simulated Program Land Reform-4.6 Public works and small scale industry -4.7 All Programs-10.7 All Programs but land reform -9.6 28.7 30.4 77.6 63.5 Rural Income of Bottom decile Rural Households in Poverty (percent)

27. (insert table 3-1 in Campos, p.32) Basic education PrimarySecondary Region/ Country 1965198719651987 Indonesia721181246 Thailand78951428 Malaysia901022859 Korea101 3588 Singapore105n.a.45n.a. Hong Kong1031062974 Primary and Secondary Enrollment Rates in the High-Performing East Asian Economies

28. Labor intensive SMEs CategoriesValue of exports Export value of small and medium businesses Percent of small and medium businesses Manufacturing436.89264.2660.49 Trade Business235.25120.9651.42 Total672.14385.2257.31 Exports of Small and Medium Enterprises in Taiwan (Hundreds of millions of U.S. Dollars)

29. Malaysia NEP YearBumiputraOther Malaysian residents Foreign residents 19691.559.662.1 19702.434.363.4 19714.333.961.7 19759.237.553.3 198012.544.642.9 198215.649.734.7 198318.747.733.6 198519.154.926.0 198819.456.024.6 199019.246.825.4 Malaysian Ownership of Share Capital of Limited Companies (at par value 1969-1990)

30. Requisites of Change Management establishing a sense of urgency creating a guiding coalition developing a vision and strategy communicating the change vision empowering broad based action generating short term wins consolidating gains & producing more change embedding change in the culture John Kotter, 1996 well functioning bureaucracy

31. Merit based recruitment and career advancement Adequate compensation Implementation Capacity: the Bureaucracy

32. Country/RegionGDP/CapitaSenior Level (%) AB Singapore14,920114 South Korea7,19069.3 Taiwan, China7,95465.2 Malaysia5,90040 Thailand4,61047.1 Philippines2,32027.7 Chile6,19070.36 Trinidad and Tobago 8,51063.53 Venezuela6,74029.54 Uruguay6,000n.a. Argentina4,68024.11 Estimates of per Capita GDP and Ratio of Public to Private Sector Salaries, Developing Countries

33. Index of bureaucratic capability 0.0 0.5 1.0 PhilippinesKorea 0.2 0.6 Depth of political appointments Political appointees Philippines Korea Secretary Bureau Director Service Director Level 2 Assistant secretary Regional Director Under secretary Minister Division chief Level 4 Level 3 Division chief Ratio of public to private wages 0 20 40 60 80 100 Philippines Korea 66 26 Percent Source: WDR 1997

34. Merit based recruitment and career advancement Adequate compensation Accountability Implementation Capacity: the Bureaucracy

35. Economic growth and bureaucratic performance