Take-Off in an Inhospitable Climate

Abstract

The article examines the role of infrastructure, governance, and political stability in the development of export-oriented manufacturing (EOM) in Bangladesh, Cambodia, Laos, Myanmar, and Vietnam, comparing their experiences with Africa’s slower industrial growth. These factors occupy a prominent place in transaction cost economics, and the World Bank’s development programs strongly stressed infrastructure building and good governance. The article concludes that despite the assumptions expressed in the World Bank’s recommendations, neither efficient infrastructure nor good governance nor political stability constituted a prerequisite of EOM in the Asian latecomers. In these spheres, the performance of EOM-reliant Bangladesh and Cambodia was hardly favourable if compared to Vietnam, Laos, and Africa. Still, the contrast between Vietnam’s diversified industrial exports and the narrow export profile of Bangladesh and Cambodia implies that a country cannot evolve from factor-driven development to efficiency-driven and innovation-driven development without overcoming the problems of poor infrastructure, red tape, corruption, and political instability.