Development Success: Historical Accounts from More Advanced Countries

Comparing the historical trajectories of several advanced nations creates an original synthesis and alternative perspectives on growth strategies. Contributors identify pivotal institutions and policies as well as the historical, social and other contextual factors that can explain the successes of advanced nations. The cases of Finland, Norway, Sweden and Denmark are discussed in Part I; Part II examines Japan, Ireland and Switzerland; and Part III closes by considering Hungary, Poland and the Czech Republic. The Introduction provides an overview, while research findings from the Nordic, Transition and other nations’ experiences are reviewed separately (Chapters 6, 10 and 14).

Key findings include the importance of public financing and social welfare institutions; developing human capital and upgrading skills; and the need for economic openness, macroeconomic stability and natural resource management. However, as various authors note, advanced nations’ divergent pathways defy a simple “recipe for success”. The discussion of the Nordic countries is particularly interesting, with lengthy historical scope and sensitivity to differences. Finland developed later than its neighbours and underwent a civil war in 1918. The development state in the 1950s−1970s relied upon a corporatist model, high levels of public savings and a range of interventionist strategies (Chapter 2). By contrast, Norwegian growth was founded largely upon careful natural resource management of hydropower, forests and later, oil (Chapter 3). Ådne Cappelen and Lars Mjøset analyze Norway’s well-managed public oil company and buffer fund, which ensures petroleum earnings are invested in foreign assets and kept separate from domestic spending – and this is said to explain how valuable natural resources can avoid being a curse. Further contrasts are suggested by Sweden’s increasingly knowledge-based industries (Chapter 4), while Denmark achieved success in “lower-technology” activities such as food, textiles and furniture production by continuously engaging in a “learning economy” (Chapter 5).

Additional cases underscore the diversity of economic strategies and policy interventions as well as recent challenges, including the downturn in Ireland where economic openness proved a “double-edged sword” (page 184) and the halting transformations in former Soviet bloc nations (Part III). The authors do not focus upon urban areas, but the discussion of Ireland’s property bubble (Chapter 8) and the Swiss federation’s decentralized system of direct democracy (Chapter 9) may have resonances for local governance and urban areas more generally.

While aiming to uncover relevant lessons for today’s low- and middle-income countries, the authors acknowledge that past models’ transferability may be limited and sensitivity to contemporary contexts will be vital. A review of Transition nations’ experiences (Chapter 14) concludes that optimal policies depend heavily on local context and historical trajectories, while the selected economic or political reforms “…should not result in the destruction of other preconditions for growth” such as key state institutions and capacities (page 324).