Dueling Development Models

Abstract

In the early 1990s, at the height of the Washington Consensus, its hegemonic model of neoliberal development was strongly challenged by Japan, the U.S.’s greatest ally. The key event characterizing this challenge occurred when Japan’s Overseas Economic Cooperation Fund (OECF) began criticizing the World Bank’s famous Structural Adjustment Loans (SALs). This subsequently led to the publication of the “East Asian Miracle Report” by the World Bank financed by the Japanese government. This poses a great puzzle considering Japan’s historically submissive and politically deferential relationship with the U.S. since the end of World War II. I address two questions in my thesis to solve the above puzzle: (1) why did the Japanese state choose to oppose American ideological hegemony in the 1990s? (2) how did the ideas involved in this challenge develop within and beyond the institution of Japanese policy bureaucracy? The theory and methods used in this paper are inspired by the historical institutionalist tradition in sociology and political science. I argue that the shift in Japan’s foreign aid strategy in the late 1980s was driven by a mixture of economic, institutional and political factors. This along with the escalating influence of the Washington Consensus and its interference with Japanese aid policy, drove Japan to oppose American ideological hegemony in the 1990s. Furthermore, tracing the policy discourses of the OECF during this period revealed that not only economic and political factors, but also the developmentalist idea that valued the central role of the state in its economic development was essential in instigating Japan’s construction and promotion of its own development model. I conclude that Japan’s challenge was both a local and a global social construct, developed in the processes of transnational interaction with other states and their actors, and drawing on internationally available economic ideas.