The Political Economy of Performance Standards: Automotive Industrial Policy in Comparative Historical Perspective

Andrew Schrank

Journal of Development Studies, 2017, vol. 53, issue 12, 2029-2049

Abstract: A substantial body of literature holds that industrial policies work best when their beneficiaries are subject to demanding performance standards. By conditioning access to their low-cost loans and lucrative markets on foreign sales and local content, for example, East Asian officials forced their manufacturers to improve quality, cut costs, and develop linkages to allied industries – that generated jobs and foreign exchange revenues of their own – in the so-called miracle years. But the politics of performance standards are themselves unclear. Why are they more common in some countries than others? Are they more likely to be imposed by autocratic than democratic regimes? And, if so, why? I address these questions by examining cross-national data on export and local content requirements in the auto industry in 1980; find that they all but presupposed autocracy in labour-surplus – but not labour-scarce – countries; explore the interactions of political regimes, productive assets, and performance standards in South Korea in particular; and discuss their theoretical and methodological implications. The results not only imply that efforts to build new comparative advantages over the long run by means of performance standards that put existing comparative advantages at risk in the short run are unlikely to succeed in labour-surplus democracies but, in so doing, speak to the merits of ‘middle-N’ methods and typologies that try to reconcile the at times competing goals of generality and historical detail in cross-national research.

Date: 2017
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DOI: 10.1080/00220388.2016.1228879

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