Customer Reviews

Kicking Away the Ladder: Development Strategy in Historical Perspective

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According to Michael Lind's book review in Prospect (Jan 2002), this book is "the most important book about the world economy to be published in years." And the author received the 2003 Myrdal Award for this book, which is awarded annually to a great academic achievement in the field of development/institutional economics following the late Swedish economist's name Gunar Myrdal who was a Nobel Prize laureate.

Prof. Ha-Joon Chang of Cambridge argues in this book that developed countries used some measures for promoting their economy in their earlier days of development, which they are now blaming for making the economies of developing country worse and the world economic order unfree.

The author reverses this logic. According to his arguments, policy-suggestions from such arguments of developed countries are in fact making the economy in developing countries lag behind and its development impossible, and such a rule of game in the world economy now can be rather unfair to them because developing countries even are often punished due to their using of the very same methods which developed ones used in the past.

As a critique of neo-liberal market fundamentalism, this book is very iconoclastic because it gives readers a sophisticated understanding of the real history of industrial development as well as pleasure of reading an academically original and creative work. This book is above all analytical in terms of using the method of historical comparisons. Some comparisons may be too bold. But its creativity and integrity in organizing the research overcome the limits of bold comparison.

Written more for an academic/professional/specialist audience than the general reader, Chang's short book is still accessible and full of information that is vital to our understanding of how the ideology of free trade has been created in order to reward developed nations at the expense of those trying to develop. The United States, Great Britain, Germany--essentially every country that has successfully industrialized--used tariffs, protections of infant industries, control of capital markets and other policies that poor countries are told they must not try or abandon if they are implementing them. The hammer has been the threat of losing funding from IMF or World Bank although the conditionalities of Structural Adjustment may be as harmful as the economic imbalances they are meant to address.

The ladder image is simple and brilliant. It was coined by Frederich List, a nineteenth century Germany economist, to describe how the already successful United Kingdom tried to impose free trade policies on nations that hadn't yet become industrial powers and is no less true today than it was in 1834.

Chang historical approach is devastating to free trade apologists and propagandists who serve the dominant development ideology which keeps poor countries poor. His more popular book "Bad Samaritans" is based some of the research evident here.

This is a book I intend to reread a year from now. I believe it has changed my perspective regarding international politics and developmental issues, so from now on I'll try and interpret facts through the perspective Chang provided. Meanwhile, I'll try and follow some of the bibliography he suggests to see if I can mitigate some of my doubts.

If you believe you're a neoliberal, this book is for you. It will challenge some of your most basic beliefs - and what could be better? You might be able to disagree with him entirely, but I'm sure that reading this book will sophisticate your thoughts in the matter and throw some doubts where there was none. Too bad this is not the best-seller it could have been.

As an MBA student at a top 20 US program, I came across Chang's "Kicking Away the Ladder" by accident a year ago when looking for a fresh, unorthodox perspective to supplement what I was learning in my international economics course. After all, one cannot let schooling get in the way of one's education! This book did not disappoint. It made earning top marks (a solid "A") easier and more interesting in what is normally a dry, esoteric subject.

By "Kicking away the ladder," what Chang is arguing is that today's wealthy countries, like the US and UK, recommend and enforce a standard set of economic policies (like deregulation, free trade, patent/copyright protections) onto many poorer countries (in South America, sub-Sahara Africa) under the mistaken belief that these free market and free trade policies were how they (the US, UK, etc...) eventually matured into economic powerhouses. In other words, rich countries, through the IMF and World Bank, tell poorer countries "do as we preach, not as we actually did ourselves." Unfortunately, since the 1980s, these policies, often adopted as a precondition for trade agreements and aid during financial crises (i.e. 1997 East Asia) from wealthy nations, has brought about more social inequality and macroeconomic instability instead of the promised goal of sustained growth. Yet despite the failures, these policies are still preached and prescribed just the same, as an article of economic faith.

This book offers a refreshing antidote to this textbook orthodoxy by highlighting and analyzing the historical evidence of many wealthy and poorer countries in light of effects of current economic policy prescriptions (at least as of 2003). Chang's argument is fairly easy to follow, carefully nuanced in that it addresses various subtle counter-arguments to his perspectives, and is well researched--nearly a fourth of his book is devoted to bibliography and detailed footnote references.

My only criticism of this work is really a petty complaint: it could have been written for an even wider, more general audience. International development economics is Chang's specialty but sometimes as an expert, it's difficult to remember what it was like to not intimately know the material. His work is still more readable than a typical textbook or academic article on the subject. He offers a great unorthodox perspective to an important issue, but it needs to be made more accessible to an audience that may not have taken prior graduate economics courses. For example, throughout it's taken for granted that the reader will know what "trade liberalization" means. That being said, I still highly recommend this book and give it five stars in the hope that Chang will continue to offer his fresh insights and analysis with a wider audience in mind.

Among heterodox economists, Ha-Joon Chang is a heavyweight. His winning of the Leontief Prize (awarded by the Global Development and Environment Institute) and the Gunnar Myrdal Prize (awarded by European Association for Evolutionary Political Economy) reflects well his impact. This book has attracted a lot of attention and has been referenced by figures such as Joseph Stiglitz, Noam Chomsky, and Robert Pollin. By now it is a classic and everyone interested in the debate about development should read it.

Whereas Chang's later book "Bad Samaritans" was consciously aimed at a wider lay audience, this book is more focused on detailed case studies. The arguments are essentially the same. All industrialized countries developed using various mixes of activist government (industrial, trade, and technology) policies and the fact that some policies (e.g. very open trade regimes and absence of industrial policy) are appropriate for mature industrial economies at the technological frontier does not mean that those policies led to their development or should be used in the developing countries now. Chang argues, very reasonably, that development experts and policy makers should pay more attention to the historical record and its implications rather than abstract ahistorical models. He covers in great detail the different kinds of policies that were used by the currently rich countries to catch up and reach economic maturity. Furthermore, he describes their long and arduous institutional development. The meticulousness of his research is very impressive and gives a good picture of the change with regard to issues such as the social safety net, banking and finance, labour regulations, democratic participation, legal systems, etc.

This book may not seem as radical now because some mainstream economists have moved in a similar direction and made similar arguments. Dani Rodrik of Harvard and Joseph Stiglitz of Columbia are good examples. The repeated failures of the Washington Consensus policies made it extremely hard to defend and its mainstream critics could no longer be ignored. However, one cannot dismiss the possibility that this book (among others) has also contributed to the shift in mainstream discourse. If it is certainly worth reading. If it ends up sparking your interest in arguments informed by the German Historical School, consider reading Erik Reinert's "How Rich Countries Got Rich...", too (in fact, his name appears in Chang's acknowledgments before any other).

In this pioneering book, Ha-Joon Chang, Assistant Director of Development Studies at Cambridge University, explores development strategies in theory and practice. First, he studies how the developed countries became developed using active industrial, trade and technological (ITT) policies. Then he looks at the role that social institutions play in economic development. Finally, he proposes some lessons for the present.

He shows how Britain was the first country to perfect the art of infant industry promotion. Then he looks at the USA, which still has subsidies for its farmers, quotas for textiles, huge state spending on military R&D, trade sanctions against many other nations, and state funding for R&D in the pharmaceutical and biotechnology industries - all protectionist measures.

All the developed economies used active ITT policies, yet they now promote free trade for all, claiming that it will benefit all. Renato Ruggiero, the first Director of the World Trade Organisation [WTO], said in 1998 that this world order has `the potential for eradicating global poverty in the early part of the next century'.

But free trade policies have failed: they haven't delivered the promised growth. Free trade harms the less developed countries' national manufacturers and thus their prosperity in the long run.

A study of 116 countries showed that their GDP per head grew 3.1% a year with 1960-80's interventionist policies, but only 1.4% with the post-1979 Thatcherite policies. This study also proved that the quality of a society's institutions is not the key to growth; so does the similar slowdown in the developed countries since 1979. The World Bank and the IMF impose conditions that they say will ensure that `good governance' aids economic growth, but good institutions are the result, not the cause, of economic development.

Chang shows how the developed countries' states have vested interests in keeping poor countries as providers of cheap raw material and labour, in preventing them from emerging as rivals. The WTO restricts developing countries' ability to pursue active ITT policies. The WTO is a modern version of the unequal treaties that Britain and others imposed on China and other semi-independent countries in the 19th century.

The developed countries' states are indeed kicking away the ladder to stop others climbing up after them. They say, `Do as I say, not do as I did'. But today we too need active ITT policies to get us out of the slump.

This book demonstrates in detail how rich, industrialized nations did not develop in accordance with the prescriptions the World Bank and other international financial institutions currently foist upon poor nations. Instead many, including the U.S., employed protectionist policies that permitted their infant industries to become strong enough to compete internationally. It does raise questions regarding how any nation in the contemporary world could possibly modernize following these policies. Should note, that I have written long articles critical of development discourse and thus may be sympathetic - although it should also be noted that the book is largely factual - the author just documents what actually took place, even if it is a history that is rarely recounted in this context.

The author does an excellent job in showing that ,historically, the role of government spending(on infrastructure,public goods,public works,education and public health),import restrictions,tariffs,quotas,etc., has played a major role in the economic development of every single first world country over the last two hundred years.This fact directly refutes the claims of many,if not all,economists,especially those making policy decisions at the World Bank,International Monetary Fund,and World Trade Organization, who claim that free trade is the way a country reaches prosperity.Free Trade is interpreted in a neoliberal(libertarian anarchist)manner to mean that there is minimal government spending and no tariffs whatsoever.The author demonstrates that the historical record provides zero support for this approach.The author is certainly correct.
My major criticism of the book is the author's apparent belief that Adam Smith supported the ideas of Laissez faire and free markets.This is simply incorrect.Adam Smith was a major SUPPORTER of both revenue tariffs and retaliatory tariffs if there was any chance greater than 0 that the retaliatory tariff would lead to the repeal of the original protective tariff that had been instituted by the offending country.This is all covered on pp.434-439 of the Modern Library(Cannan)edition of Smith's Wealth of Nations(1776).

This book is a must read for all Ministers of finance and economic development in the third world. Policy makers in the third world should read this book over and over. Also all libraries in the research department of central banks in third world countries should have this book. Third world policy makers can definitely use this book as the starting antidote for the `developmental advice' that emanates form teams of economists who descend from the IFIs.

This book would be required reading for my students (at New College of Florida) in development economics.

[NOTE: There is another review of this book here that I wrote a few years ago with an old account that I can't manage to log into. Please disregard that earlier review, and any Amazon staff should delete it]

In this book, Ha-Joon Chang points out that practically all currently industrialized nations used pervasive state intervention in their periods of industrialization. Chang provides short, but information packed summaries of the interventions that nations used. He also contests some popular beliefs, such as Britain being less protectionist than France. There are problems. Chang's book is quite short and their is a wealth of information he must skip. One does not get a feeling of the extent to which the U.S. state has intervened to promote growth, which was much greater than commonly believed, even maong industrial policy advocates like Chang. Also, while I believe Chang's perspective is generally correct, he doesn't deal with some (superficially) detailed, influential studies that free marketeers have used.

Also, he seems to assert that correlation implies causation. He mounts a bad defense of the German Historical school, and implies that they defended the reasoning he uses. However, this is the same caricature of the historical school that its opponents have! If they indeed argued that we should merely look for correlations, then we should all be their opponents. Of course, the historical school was more nuanced than this. For an actual good defense of them (which of course fails to support Chang's methodology) see Geoff Hodgson's "How Economics Forgot History."

On the other hand, this book is a sound refutation of those who commit the Post Hoc Ergo Propter Hoc fallacy in the other direction "free trade and free markets are good because they were dominant during the industrial revolution."