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Middle Classes and Development:
Is South Korea a Model for Latin
America?
DIANE E. DAVIS
HARVARD UNIVERSITY
MAY 13, 2014
SOUTH KOREA: DEVELOPMENT DARLING OF
THE LATE INDUSTRIALIZING WORLD
 Rapid economic and industrial catch-up
◦ Transition from agriculture to industry
◦ Matched by investments in human and social
capital
◦ Based on early shift to export-led
industrialization
 Produced a large middle class
◦ New priorities and production processes
◦ Greater demand for skills, technology,
management

Virtuous cycle (middle class-growth nexus)
through consumption and production
FROM STATE TO MIDDLE CLASSES
IN ACCOUNTING FOR SUCCESS
States that discipline capital are
best able to foster and guide
economic development
States that are embedded with
middle classes are best able to
discipline capital in the serve of
national development.
Among middle classes, rural
middle classes endow the state
with greatest disciplinary capacity.
WHAT THIS MEANT FOR DEVELOPMENT
THEORY AND PRACTICE
Middle classes enabled the state to pursue heterodox
development strategies
• Getting the prices “wrong” (Amsden)
• Empowering the state vis-à-vis industrial capitalists
Economic successes can be produced by middle
classes, they are not merely its product
• Raising questions about causal links between middle classes & development
Countryside was as important as the city in this story
(thus challenging urban bias in standard development
theory)
IS THIS MODEL TRANSFERABLE?
How much owes to “accidents” of history?
Are the advantages of backwardness evenly
spread across regions (i.e. Gerschenkron)?
Does timing and prior history matter?
 “early-late” developers vs. “late-late
developers”
What about geography and space?
 smaller versus larger nations
 national resources, nearness to markets, etc.
EAST ASIA AND DISCIPLINARY
DEVELOPMENT
 Agricultural context
 Small farmer cultures of austerity (&
national identity)
 Rural middle class isolated (in
consumption & spatial terms)
 Territorial Patterns
 Limited urban industrialization
 Small (and homogeneous) urban middle
class
 Forward-backward linkages between rural
and urban small producers (seasonal labor)
 Political Legacies
 Tension between ISI industrialists and
developmental state
 Rural sensibilities embedded in
national state
Middle Classes and Development:
Bringing “Location” Back In
Middle class political orientations and
alliances depend on the spatial context
in which these social groups produce
or consume “modernity”
Rural vs. urban locations produce
divergent attitudes towards economic
progress, class cooperation, and
national investment priorities
Cities are critical sites for
understanding the state’s
unwillingness and incapacity to
discipline capital
Latin America and
“Accommodating” Development

Agricultural Context
 Small rural middle class vis-à-vis
agrarian oligarchs (& peasants)
 Industry main engine of growth

Urbanization Patterns
 Large middle class (old and new)
 Strong industrial sector embedded
w/state

Political Legacies
 Middle classes-capital-labor political
connections in politics and space
 State bureaucracy allied with urban
sectors
Dealing with the Legacies of
“Accommodating” Development in post1980s Latin America
 Structural Economic Weakness
 trade imbalances, debt crisis, etc.
 Limited Rural Productivity
 little political support from or for rural middle classes
 Tardy Pursuit of Export-Oriented Industrialization
 race to the bottom in a global economy (low wages)
 Abrupt and Late Embrace of Liberalization
 In a context of rural poverty, debt crisis, and
diminishing urban middle class employment
 Just when East Asia began moving beyond EOI
OVER-URBANIZATION AS KEY:
MIGRATION, HOUSING SCARCITIES, LIMITED
EMPLOYMENT, URBAN SERVICE DEMANDS, URBAN
FISCAL CRISIS
FROM INDUSTRIALIZATION TO
URBANIZATION AS A GROWTH MODEL
 National economic growth fueled
by global city functions, shifting
economic resources and political
power to cities
 Industry vulnerable to global shocks
 De-industrialization transforms
national opportunities and
priorities for urban space
 Services and ICT replace
industrialization as the source of
employment
 Growing the urban middle class
 But creating high and low end service
jobs
URBAN MIDDLE CLASSES:
TRANSFORMING
THE DEVELOPING WORLD
Countryside is “disappearing”
 Agricultural devolution reduces rural
middle class employment, shifting
balance to urban employment
Middle class growth in the
developing world estimated to
jump from 430 million in 2000 to
1.15 billion in 2030
•
•
In 2000, 56% of the world’s middle
classes lived in the developing world;
in 2030 93% will live in the
developing world
China & India will account for twothirds)
(World Bank, 2008)
IS DISCIPLINARY
DEVELOPMENT DEAD?
Korea, Rep.: GDP Composition Breakdown for 2013
Rapid urbanization brings new middle
classes with new consumption priorities


Undermining social and spatial
underpinnings of previous national
development coalitions
State-capital partnerships are building
these new city spaces

Urban middle classes less likely to call
for disciplining of capital – even in East
Asia

Decentralization/democratization pits
urban developmental aims against
national
Data Source: Worldbank: World Development Indicators
THE CHALLENGE FOR LATIN AMERICA:
CATCHING UP BY FOLLOWING OTHERS

Embraced EOI after East Asia had
moved beyond the basic contours
of disciplinary development

Pursuing urbanization-led GDP
(again seeking same model
applied elsewhere), but in
unfavorable conditions
 Old & new middle classes coexist
 Greater wealth amidst
persistent urban poverty
Can LAC succeed by embracing
imported models?
 Or must it innovate from
within, based on what is
possible