1 00:00:00,000 --> 00:00:03,570 The following is part of Cornell Contemporary China Initiative Lecture 2 00:00:03,570 --> 00:00:07,919 Series under the Cornell East Asia Program. The arguments and viewpoints of 3 00:00:07,919 --> 00:00:13,920 this talk belongs solely to the speaker. We hope you enjoy. This evening we are here to hear 4 00:00:13,920 --> 00:00:20,640 from Roselyn Hsueh, our guest who comes to us as - she's now an associate professor 5 00:00:20,640 --> 00:00:24,689 at Temple University, where she's been since 2009, yes. 6 00:00:24,689 --> 00:00:30,510 But prior to that did her PhD and her MA and her BA, everything in political 7 00:00:30,510 --> 00:00:38,399 science, at UC Berkeley. And she has written, recently has a book out from 8 00:00:38,399 --> 00:00:42,930 Cornell University Press, "China's Regulatory State: A New Strategy 9 00:00:42,930 --> 00:00:49,219 for Globalization," is also currently working on a new book in progress, 10 00:00:49,219 --> 00:00:54,660 currently titled "Micro-Institutional Foundations of Capitalism," looking at 11 00:00:54,660 --> 00:01:06,640 China, India, and Russia, and so will be speaking to us about some of this new research tonight. 12 00:01:06,640 --> 00:01:09,659 It is my great pleasure to be here at Cornell 13 00:01:09,659 --> 00:01:13,770 for many reasons, in part because it's such a beautiful campus, but also 14 00:01:13,770 --> 00:01:18,570 because one of my mentors, Andy Martha, sitting here in the audience from the 15 00:01:18,570 --> 00:01:25,860 Government Department is here, and also as Robin mentioned, my book, my first 16 00:01:25,860 --> 00:01:30,780 book, was published by Cornell University Press. So in many ways I feel like I'm 17 00:01:30,780 --> 00:01:36,570 paying respects by coming here to Ithaca, so thank you for having me. So one of the 18 00:01:36,570 --> 00:01:40,049 things I would like to do first is - well first of all tell you a little bit about 19 00:01:40,049 --> 00:01:45,630 the title. It's "Globalization and Market Governance: Chinese Capitalism in 20 00:01:45,630 --> 00:01:50,340 Comparative Perspective." So indeed this will be a comparative talk in that I 21 00:01:50,340 --> 00:01:56,909 will systematically compare China, India, and Russia. And I'm going to begin the talk 22 00:01:56,909 --> 00:02:00,689 with the overarching puzzle, going to talk a little bit about the 23 00:02:00,689 --> 00:02:06,180 motivation behind the talk, and then I will dive into my arguments and the 24 00:02:06,180 --> 00:02:13,170 empirical data that will be comparative in scope. And I also like to introduce a 25 00:02:13,170 --> 00:02:17,360 little bit kind of the cover. I feel like 26 00:02:17,360 --> 00:02:22,010 they were absolutely two different images that I put together, and these two 27 00:02:22,010 --> 00:02:27,920 different images I feel encapsulates my second book project, this research, 28 00:02:27,920 --> 00:02:34,640 comparative research quite well in that here on the left side we have several 29 00:02:34,640 --> 00:02:38,510 books stacked that I actually found in a bookstore in Wangfujing in Beijing, 30 00:02:38,510 --> 00:02:44,239 and then here is when I was doing fieldwork in Russia in Moscow these were, 31 00:02:44,239 --> 00:02:50,000 this is like a bookshelf that I saw in a bookstore in Moscow. And I feel like it 32 00:02:50,000 --> 00:02:56,000 encapsulates my research in that in both countries in both places they're 33 00:02:56,000 --> 00:03:02,329 interested in how the country itself is compared to other large developing 34 00:03:02,329 --> 00:03:07,909 countries, and obviously they're thinking about leaders. About leaders 35 00:03:07,909 --> 00:03:11,870 whether it's governmental leaders or leaders in civil society. In political 36 00:03:11,870 --> 00:03:15,709 economy when we think about civil society we think about firms and we 37 00:03:15,709 --> 00:03:19,669 think about interest groups, we think about business associations and so 38 00:03:19,669 --> 00:03:24,250 forth. And so here we have world leaders like Gandhi of the past 39 00:03:24,250 --> 00:03:28,370 India, but then we have Xi Jinping encapsulates what people's 40 00:03:28,370 --> 00:03:36,500 imagination of Chinese capitalism. Of course I hope to do today is to 41 00:03:36,500 --> 00:03:41,329 demystify some of these kind of more general perspectives of what defines 42 00:03:41,329 --> 00:03:46,310 Chinese capitalism what defines Russia capitalism or Indian capitalism. 43 00:03:46,310 --> 00:03:50,959 On one hand we have Xi Jinping and then we have Jack Ma, 44 00:03:50,959 --> 00:03:55,669 have come to symbolize what we think represents Chinese capitalism. 45 00:03:55,669 --> 00:04:00,379 And then of course Putin here, and then let's not forget the 46 00:04:00,379 --> 00:04:04,760 Washington Consensus and American liberalism and so forth. 47 00:04:04,760 --> 00:04:09,430 So anyway that's just an image of what I feel 48 00:04:09,430 --> 00:04:13,540 encapsulate my research really well. So now I'm gonna start with the 49 00:04:13,540 --> 00:04:20,510 research puzzle. As we all know, in the 1980s and 1990s we have these three 50 00:04:20,510 --> 00:04:25,849 large developing countries integrating or beginning to open their doors to the 51 00:04:25,849 --> 00:04:28,240 outside world and integrate into the international economy. 52 00:04:28,240 --> 00:04:34,270 We have the 1978 open-door policy in China after the Cultural Revolution and 53 00:04:34,270 --> 00:04:42,100 in death Mao the rise of Deng Xiaoping. And then in Russia we had 54 00:04:42,100 --> 00:04:47,500 Gorbachev coming to the fore, and as we all know probably from world 55 00:04:47,500 --> 00:04:53,470 history in in high school actually, the introduction of perestroika and 56 00:04:53,470 --> 00:04:59,920 glass nose. And then in India in the 1980s there was some of these payment - 57 00:04:59,920 --> 00:05:05,440 a balance of payment crises, and leading to the Big Bang liberalization 58 00:05:05,440 --> 00:05:10,330 in the 1990s. In the context of all of this in the kind of the global context 59 00:05:10,330 --> 00:05:16,510 was a rise of neoliberalism. What has come to in some circles kind of like 60 00:05:16,510 --> 00:05:21,760 the dirty word associated with Washington Consensus, the IMS, and the 61 00:05:21,760 --> 00:05:25,570 World Bank pushing countries in the world to open their markets and 62 00:05:25,570 --> 00:05:30,610 globalize. These large developing countries due to some domestic 63 00:05:30,610 --> 00:05:36,099 conditions but also this global context began to do so as well starting in the 64 00:05:36,099 --> 00:05:41,979 80s into the 90s and now several decades later. But in these 65 00:05:41,979 --> 00:05:46,990 countries' globalization we saw that they actually departed from earlier 66 00:05:46,990 --> 00:05:53,199 development trajectories or earlier economic globalization, and for 67 00:05:53,199 --> 00:05:57,370 those of us who study East Asia we know about the developmental states of East 68 00:05:57,370 --> 00:06:02,310 Asia, the state led development model of East Asia. But what was also well known 69 00:06:02,310 --> 00:06:06,789 about this state led development model of East Asia was that actually they 70 00:06:06,789 --> 00:06:12,280 were quite careful in how they restricted and regulated foreign direct 71 00:06:12,280 --> 00:06:17,110 investment. It was about indigenous development, it was about 72 00:06:17,110 --> 00:06:22,060 ISI, import substitution strategy at one stage and then moving on to 73 00:06:22,060 --> 00:06:27,190 export-oriented industrialization but all the while protecting the domestic 74 00:06:27,190 --> 00:06:31,810 sector, developing the domestic industry but protecting the domestic sector from 75 00:06:31,810 --> 00:06:35,889 foreign influence. But countries that integrated into the international 76 00:06:35,889 --> 00:06:40,380 economy in the '80s and beyond during that neoliberal era 77 00:06:40,380 --> 00:06:47,780 didn't necessarily have the luxury of doing so, and because of because of these 78 00:06:47,780 --> 00:06:52,680 ideas that were being pushed around the world and pressures to open up their 79 00:06:52,680 --> 00:06:59,220 economy. And so we see that China, Russia, and India, these large developing 80 00:06:59,220 --> 00:07:04,080 countries and kind of regional juggernauts of their own really 81 00:07:04,080 --> 00:07:09,690 having a separate trajectory from the East Asian NICs. But classically the East 82 00:07:09,690 --> 00:07:14,280 Asian developmental states were also compared to the Latin America newly 83 00:07:14,280 --> 00:07:20,670 industrialized countries, that in the divergent picture there was that, in 84 00:07:20,670 --> 00:07:23,940 the conventional wisdom anyway, was that Latin America didn't do a very good job 85 00:07:23,940 --> 00:07:28,740 restricting foreign direct investment. In fact they allow global industry to come 86 00:07:28,740 --> 00:07:33,360 in, take over, and that's why Latin America did not do as well. So this kind 87 00:07:33,360 --> 00:07:37,560 of like diverging picture between East Asia and Latin America in this earlier 88 00:07:37,560 --> 00:07:44,430 era of globalization. Now we have China, Russia, and India, large developing 89 00:07:44,430 --> 00:07:49,320 countries globalizing. So the question is well if China, India, and Russia are 90 00:07:49,320 --> 00:07:53,490 globalizing in a different global context and they appear to have done 91 00:07:53,490 --> 00:07:58,920 something quite different from the East Asia NICs And as you may also recall 92 00:07:58,920 --> 00:08:04,380 not too long ago we had Xi Jinping at the World Economic Forum being seen 93 00:08:04,380 --> 00:08:09,060 talking about China as the symbol of globalization. He's 94 00:08:09,060 --> 00:08:12,510 up there saying China globalized and we've done it right, 95 00:08:12,510 --> 00:08:17,160 we've done it right and we've done it our own way. And so in my first book "China's 96 00:08:17,160 --> 00:08:22,680 Regulatory State: A New Strategy Toward Globalization" I talk about 97 00:08:22,680 --> 00:08:28,410 China's unique way of globalizing and what China actually did that was 98 00:08:28,410 --> 00:08:32,580 different from other countries. And it's interesting because I don't think I 99 00:08:32,580 --> 00:08:38,010 would have necessarily predicted that today China would be seen as 100 00:08:38,010 --> 00:08:44,099 the number one globalizer of the world. At the same time China 101 00:08:44,099 --> 00:08:50,040 did truly globalize in a way that the East Asian NICs did not. China on the 102 00:08:50,040 --> 00:08:55,990 aggregate level actually did open up its economy to foreign direct 103 00:08:55,990 --> 00:09:01,090 investment and what I'd say though, what I argue in my first book is that 104 00:09:01,090 --> 00:09:07,330 you actually have to really open the economy. For those political 105 00:09:07,330 --> 00:09:11,110 scientists out there probably have heard this idea that we have to open the 106 00:09:11,110 --> 00:09:16,420 black box. We have to disaggregate the economy, the macroeconomy, we have to go 107 00:09:16,420 --> 00:09:20,710 to the micro level, we have to open up and disaggregate and see what actually 108 00:09:20,710 --> 00:09:26,920 happened. Macro liberalization but micro level sectoral regulation 109 00:09:26,920 --> 00:09:32,430 is what I argued in my first book. And so you might have seen the poster 110 00:09:32,430 --> 00:09:38,080 advertising my talk today. The poster has a flag of red 111 00:09:38,080 --> 00:09:45,070 with the symbol of China, and then this maze. And as I became 112 00:09:45,070 --> 00:09:48,220 interested in comparing China to other global juggernauts 113 00:09:48,220 --> 00:09:54,430 I realized it's not just opening up the black box in China but in fact you have 114 00:09:54,430 --> 00:10:00,010 to open up the black box in India and Russia as well, in that actually the 115 00:10:00,010 --> 00:10:03,790 framework, the strategic value framework that I came up with in my 116 00:10:03,790 --> 00:10:10,300 first book could be a value to looking at these large complicated economies 117 00:10:10,300 --> 00:10:14,830 that we all have stereotypes about. And so today I'm gonna tell you a little bit 118 00:10:14,830 --> 00:10:21,120 about the complication, the different national level but also within country level 119 00:10:21,120 --> 00:10:25,690 sectoral development trajectories in these countries and how we could look 120 00:10:25,690 --> 00:10:32,740 at them across each other. What I want to do though is show you some statistics 121 00:10:32,740 --> 00:10:38,950 first. So foreign direct investment as a percentage of GDP in 1980 was indeed 122 00:10:38,950 --> 00:10:43,240 quite low in these three large developing countries. We don't have data 123 00:10:43,240 --> 00:10:47,770 on Russia because it was still the Soviet Union, at least you know the UNDP 124 00:10:47,770 --> 00:10:52,150 and these international organizations don't have that data. But we do for China 125 00:10:52,150 --> 00:10:56,560 and India and if you compare it to other developing countries even NICs, 126 00:10:56,560 --> 00:11:02,740 we thought the NICs were very restrictive of FDI, but in 1980 China, 127 00:11:02,740 --> 00:11:05,880 India, even more so. 128 00:11:06,230 --> 00:11:13,790 But fast-forward in 2005, and this is capturing one point in history, 129 00:11:13,790 --> 00:11:18,260 is that we're beginning to see that actually now China, and both China 130 00:11:18,260 --> 00:11:23,960 excluding Hong Kong but also China including Hong Kong data, now is one of 131 00:11:23,960 --> 00:11:29,000 the global leaders in FDI inflows as percentage of GDP. And in fact China is 132 00:11:29,000 --> 00:11:35,780 the largest recipient of FDI, well number one and two with the United States. 133 00:11:35,780 --> 00:11:41,780 And we see that India and Russia have now also been much more open, and so 134 00:11:41,780 --> 00:11:45,640 completing this picture that I told you about these countries really 135 00:11:45,640 --> 00:11:50,870 globalizing into the international economy. Then we have kind of 136 00:11:50,870 --> 00:11:55,610 longitudinal data here. So I showed you a picture of the snaps from 137 00:11:55,610 --> 00:12:03,860 1980 and in 2005 certainly China come on top. But looking at the 138 00:12:03,860 --> 00:12:09,460 long view it's also important because, and especially if we're gonna have Xi Jinping 139 00:12:09,460 --> 00:12:13,360 in 2016 claiming China being like the globalizer, then 140 00:12:13,370 --> 00:12:19,160 what's interesting to point out is that actually come 2013, FDI as percentage of 141 00:12:19,160 --> 00:12:25,580 GDP, China is actually not on top anymore. Sure China has globalized but really we 142 00:12:25,580 --> 00:12:30,380 see that India and Russia are actually quite open as well. So this data 143 00:12:30,380 --> 00:12:36,740 both shows the globalization of three countries but also demystifies, if 144 00:12:36,740 --> 00:12:42,760 we just pull the longitudinal data out and see it cross-nationally. 145 00:12:42,760 --> 00:12:47,720 And this is true for exports of goods and services as percentage of GDP. There are 146 00:12:47,720 --> 00:12:53,120 many indicators to how globalized a country is, and exports as we 147 00:12:53,120 --> 00:12:58,550 all know is also one of them. And so here once again China is not the global 148 00:12:58,550 --> 00:13:04,880 leader as we might have expected among the three countries, but yes all 149 00:13:04,880 --> 00:13:10,460 three countries are quite extensive in globalization, yes. And 150 00:13:10,460 --> 00:13:14,750 here is just another indicator of globalization, membership in IO. 151 00:13:14,750 --> 00:13:21,160 And again not so surprising, open-door policy in 1978 and so then we 152 00:13:21,160 --> 00:13:26,050 have China suddenly becoming a member of many many 153 00:13:26,050 --> 00:13:30,310 international organizations in 1980, and Russia, the numbers for Russia 154 00:13:30,310 --> 00:13:35,860 becomes quite high in '92 because why, the collapse of the Soviet Union, and with 155 00:13:35,860 --> 00:13:42,550 India more steady numbers because India has been part of the global 156 00:13:42,550 --> 00:13:46,300 community and also international economy a lot longer than these three countries, 157 00:13:46,300 --> 00:13:52,870 but yet another indicator of globalization. And we have India 158 00:13:52,870 --> 00:13:58,300 as a founding member of WTO from the GATT. China didn't enter the 159 00:13:58,300 --> 00:14:04,570 WTO until 2001 and ten years later when everyone's kind of looking 160 00:14:04,570 --> 00:14:09,310 back and thinking about has China actually open its economy since 161 00:14:09,310 --> 00:14:14,290 its membership, that's when actually Russia after some fits and 162 00:14:14,290 --> 00:14:19,570 starts actually entered the WTO in 2011. So we did see at least on this indicator 163 00:14:19,570 --> 00:14:26,230 a little different in terms of countries' membership as part of the WTO. But as I 164 00:14:26,230 --> 00:14:32,230 show in my first book just because China became a member of the WTO 165 00:14:32,230 --> 00:14:38,710 in 2001 doesn't mean necessarily that all of its sectors are indeed that 166 00:14:38,710 --> 00:14:44,020 globalized, or that its economy actually opened up to global forces like China 167 00:14:44,020 --> 00:14:51,760 committed to do so in WTO entry. Anyway so all three countries have 168 00:14:51,760 --> 00:14:57,580 development outcomes that vary from each other despite kind of these macro 169 00:14:57,580 --> 00:15:02,260 level globalization. And so I'm interested in, well, what is a 170 00:15:02,260 --> 00:15:06,010 relationship between globalization and development outcomes. What happens in the 171 00:15:06,010 --> 00:15:11,830 middle? What are the causal mechanisms mediating globalization on 172 00:15:11,830 --> 00:15:16,720 one hand and development outcomes on the other. And our stereotypical 173 00:15:16,720 --> 00:15:22,360 views of China being unprecedented development in the last 30, 174 00:15:22,360 --> 00:15:28,900 40 years, Russia being a basket case since the collapse of the Soviet 175 00:15:28,900 --> 00:15:31,120 Union and the dismantling of state institutions. 176 00:15:31,120 --> 00:15:38,990 Strong state versus weak state, shock therapy versus gradualism. 177 00:15:38,990 --> 00:15:43,670 What's actually explaining what's inside? What are the causal mechanisms linking 178 00:15:43,670 --> 00:15:49,009 these development outcomes and why are these kind of pre-existing 179 00:15:49,009 --> 00:15:57,430 conventional wisdoms and arguments not enough, or limited in helping us 180 00:15:57,430 --> 00:16:05,240 understand this relationship. And because when we open the black box we do see 181 00:16:05,240 --> 00:16:09,410 cross-national differences and importantly intracountry sectoral 182 00:16:09,410 --> 00:16:15,649 differences in pathways to development. It requires mobilization of research and 183 00:16:15,649 --> 00:16:22,550 development, resources and funding. Whether it comes from civil society or 184 00:16:22,550 --> 00:16:27,230 the state or a combination of both there are some technological properties are 185 00:16:27,230 --> 00:16:33,350 just there that all countries will have to confront. But we also have existing 186 00:16:33,350 --> 00:16:38,449 organization of institutions that will have path dependent effects that will 187 00:16:38,449 --> 00:16:45,800 explain why certain resources cannot be mobilized by the state or by civil 188 00:16:45,800 --> 00:16:51,790 society at any given moment in time. And then most importantly, and what I say 189 00:16:51,790 --> 00:16:57,709 actually explains these dominate structures, is that ideas matter and that 190 00:16:57,709 --> 00:17:03,680 perceived strategic value matter. We may think that - especially for 191 00:17:03,680 --> 00:17:09,230 those of us who are China specialists and who have been looking and following 192 00:17:09,230 --> 00:17:13,520 what China has done in terms of sectors and protecting sectors that have 193 00:17:13,520 --> 00:17:18,169 application for the national security, for a contribution to the 194 00:17:18,169 --> 00:17:22,640 national technology base, and the competitiveness of the economy - we might 195 00:17:22,640 --> 00:17:28,760 think that all countries will closely protect telecommunications, 196 00:17:28,760 --> 00:17:33,679 especially countries might want to have some management of the 197 00:17:33,679 --> 00:17:40,710 dissemination of information. But curiously because ideas differ and 198 00:17:40,710 --> 00:17:46,169 the perception of strategic value differ we see that actually in fact in 1980 or 199 00:17:46,169 --> 00:17:51,690 in 1990 these different critical junctures we see countries like India 200 00:17:51,690 --> 00:17:56,640 and Russia, because of their different perception of what is considered 201 00:17:56,640 --> 00:18:03,809 strategic, retaining control of certain sectors and opening others that look 202 00:18:03,809 --> 00:18:09,419 very different from the other country despite these common forces of 203 00:18:09,419 --> 00:18:14,610 globalization. So I don't want to spend too much time talking about my 204 00:18:14,610 --> 00:18:19,770 motivation but as I've already mentioned some of it has to do with the findings 205 00:18:19,770 --> 00:18:25,049 of my first book, and also this idea that everyone assumes that there is a 206 00:18:25,049 --> 00:18:31,710 model to explain transition outcomes kind of post communist transition 207 00:18:31,710 --> 00:18:36,240 outcomes - gradualism versus shock therapy - or the developing 208 00:18:36,240 --> 00:18:40,649 countries have yet another trajectory. And I think the argument that actually 209 00:18:40,649 --> 00:18:45,600 this strategic value framework doesn't just limit us to post-communist 210 00:18:45,600 --> 00:18:51,899 transitioning countries or just limit us to the developing countries' 211 00:18:51,899 --> 00:18:57,240 trajectories. Now obviously in my collect selection of cases and my application of 212 00:18:57,240 --> 00:19:02,669 my strategic value framework I'm looking at large developing countries that 213 00:19:02,669 --> 00:19:06,960 all had market transitions, even if, you know obviously, India didn't necessarily 214 00:19:06,960 --> 00:19:10,740 transition from the communist context to something else but it did have a 215 00:19:10,740 --> 00:19:15,659 socialist economy. But I argue that actually the strategic value framework 216 00:19:15,659 --> 00:19:21,929 is a good analytical framework that will let us compare these countries and 217 00:19:21,929 --> 00:19:24,900 understand that market governance mediation. 218 00:19:24,900 --> 00:19:32,380 And then importantly, and this is something that will be of interest 219 00:19:32,380 --> 00:19:40,720 to some of those of us who are knee-deep in a more area studies focus, 220 00:19:40,720 --> 00:19:46,320 which is we, actually one of my dissertation advisors at Berkeley questioned, 221 00:19:46,320 --> 00:19:51,809 I think I put critiques but I really mean questioned, the value of even 222 00:19:51,809 --> 00:19:55,880 comparing China or looking at China only as a case. 223 00:19:55,880 --> 00:20:02,280 China is very unique in itself and unpacking China is already really quite important 224 00:20:02,280 --> 00:20:07,980 and I certainly agree with that as well, but of course obviously 225 00:20:07,980 --> 00:20:13,260 my research agenda here I'm going to argue that there are actually findings 226 00:20:13,260 --> 00:20:19,180 in China that allows us to then look at other countries in a way that would be 227 00:20:19,180 --> 00:20:22,570 actually very helpful and move us forward theoretically and empirically. 228 00:20:22,570 --> 00:20:28,840 And then most recently we have Lily Tsai over at MIT making the argument in 229 00:20:28,840 --> 00:20:33,160 comparative political studies that actually research done in China, and 230 00:20:33,160 --> 00:20:38,560 actually specifically research done in China sub-nationally and internally to 231 00:20:38,560 --> 00:20:42,820 China, so in some sense following what Kevin O'Brien says is important 232 00:20:42,820 --> 00:20:46,630 which is China in itself is interesting. But Lily Tsai is saying 233 00:20:46,630 --> 00:20:50,980 true, and there are contributions there, but actually we can build comparative 234 00:20:50,980 --> 00:20:56,350 politics theory as well by looking at China as a case, in the findings of 235 00:20:56,350 --> 00:21:01,840 China we could generalize across and develop comparative politics theory. And 236 00:21:01,840 --> 00:21:08,560 then we have here actually Peter Katzenstein and Rudra Sil 237 00:21:08,560 --> 00:21:13,870 and also China scholars Scott Kennedy and Mary Gallagher making the 238 00:21:13,870 --> 00:21:18,820 argument that there is something to be said about comparing 239 00:21:18,820 --> 00:21:25,450 across cases and that actually by doing so we retain the thick description, we 240 00:21:25,450 --> 00:21:31,360 retain the grounded explanations but we can also establish some 241 00:21:31,360 --> 00:21:37,870 generalizability. Some generalizability about how countries grapple with the 242 00:21:37,870 --> 00:21:47,350 forces of globalization, whether to have stronger state or 243 00:21:47,350 --> 00:21:52,300 fall under the victim of globalization. And obviously it's a mixed picture 244 00:21:52,300 --> 00:21:58,240 it's not such a zero-sum game. But in fact though we do see variation and it's 245 00:21:58,240 --> 00:22:03,610 important, and you don't really see that, you don't see that China isn't just 246 00:22:03,610 --> 00:22:06,290 the symbol of globalization that Xi Jinping claims 247 00:22:06,290 --> 00:22:12,190 China is until you compare China and China's experience to other countries. 248 00:22:12,190 --> 00:22:17,420 So quickly what's the research design? The research design is a 249 00:22:17,420 --> 00:22:20,990 comparative case research, I combined Mills methods of agreement and 250 00:22:20,990 --> 00:22:26,630 difference, it's both longitudinal and cross-sectoral, 251 00:22:26,630 --> 00:22:32,240 I do examine 1980 and beyond data but specifically the 252 00:22:32,240 --> 00:22:37,550 systematic comparison begins in 1990. And the reason I do that is because you do 253 00:22:37,550 --> 00:22:43,700 see kind of subsequent or consecutive decades of openness, after 254 00:22:43,700 --> 00:22:48,920 post Tiananmen in China, the class of Soviet Union, and then also Big Bang 255 00:22:48,920 --> 00:22:54,200 globalization in India so that's why I begin similar point of departure. The 256 00:22:54,200 --> 00:22:59,300 data is based on semi structured interviews and also on site visits to 257 00:22:59,300 --> 00:23:05,540 China, India, and Russia, and also these kind of global cities - New York, 258 00:23:05,540 --> 00:23:09,170 Silicon Valley, and Washington D.C. - interviews with key government of 259 00:23:09,170 --> 00:23:14,420 different stakeholders from different levels, industry, company, and then also 260 00:23:14,420 --> 00:23:20,390 civil society actors and as I said in political economy we also meet 261 00:23:20,390 --> 00:23:25,190 interest groups, business associations, sector associations, foreign delegations, 262 00:23:25,190 --> 00:23:31,510 and so forth, consultants, and so forth. And published and unpublished 263 00:23:31,510 --> 00:23:37,250 documentary evidence, descriptive statistics, IO surveys, and 264 00:23:37,250 --> 00:23:42,650 so forth. What I'm gonna show you is how I apply the strategic value 265 00:23:42,650 --> 00:23:48,050 framework to understand the national level and sectoral level pathways to 266 00:23:48,050 --> 00:23:53,090 development. So again focus on market governance structures and mediation. Well 267 00:23:53,090 --> 00:23:56,810 what do I actually mean by market governance structures? I mean it's in a 268 00:23:56,810 --> 00:24:03,290 way it's - there's so much in market governance and in fact different 269 00:24:03,290 --> 00:24:10,040 disciplines, different subfields, different works 270 00:24:10,040 --> 00:24:16,200 have defined market governance differently, and so here I build on 271 00:24:16,210 --> 00:24:22,029 Janos Kornai, a development economist, in identifying different dimensions that 272 00:24:22,029 --> 00:24:26,980 are important when we think about institutional foundations. And one 273 00:24:26,980 --> 00:24:31,480 dimension we have coordination mechanisms. And here I don't just mean 274 00:24:31,480 --> 00:24:35,500 coordination mechanisms by the state. It could be many different types. 275 00:24:35,500 --> 00:24:39,760 It could be state coordination but it could also be market level coordination 276 00:24:39,760 --> 00:24:44,049 or it could be a combination of both, but I say that 277 00:24:44,049 --> 00:24:48,159 coordination mechanisms will matter because they will shape behavior. And 278 00:24:48,159 --> 00:24:52,269 also distribution of property rights will matter because they will shape 279 00:24:52,269 --> 00:25:00,120 behavior. But it's not one or the other. So what I mean by that is you can have 280 00:25:00,120 --> 00:25:05,980 an industry within a country that is mainly dominated by state-owned 281 00:25:05,980 --> 00:25:10,659 enterprises but at the same time be very competitive and quite well integrated 282 00:25:10,659 --> 00:25:17,200 into the international economy. Similarly, on the flip side you could have a 283 00:25:17,200 --> 00:25:23,710 distribution of property rights where it's mainly non-state market actors but 284 00:25:23,710 --> 00:25:27,669 not much competition. It could be non-state market actors that 285 00:25:27,669 --> 00:25:33,460 dominates a particular industry - monopolies. So that's why you can't 286 00:25:33,460 --> 00:25:39,010 just look at property rights alone to define in a market state relations or to 287 00:25:39,010 --> 00:25:44,230 define a country's capitalism. But you can't look at coordination alone. That's why 288 00:25:44,230 --> 00:25:48,880 you have to look at both dimensions, and so my definition of market governance 289 00:25:48,880 --> 00:25:53,559 incorporate both. Market coordinations matter because it delineates who 290 00:25:53,559 --> 00:25:58,630 possesses economic and political authority in which issue areas, and so 291 00:25:58,630 --> 00:26:02,350 here we have kind of more centralized, fragmented, or decentralized 292 00:26:02,350 --> 00:26:07,389 and dispersed types, centralized meaning centralized interstate, fragmented could 293 00:26:07,389 --> 00:26:11,350 be different levels of the state interacting as authority, and 294 00:26:11,350 --> 00:26:16,389 decentralized market actors but it could be decentralized state actors 295 00:26:16,389 --> 00:26:21,519 as well. And dispersed it could be dispersed across all different actors. We 296 00:26:21,519 --> 00:26:25,080 have regulatory, independent regulators, but then the 297 00:26:25,080 --> 00:26:28,889 state, certain ministries in certain issue areas come in as being 298 00:26:28,889 --> 00:26:33,389 quite important. And so I differentiate these different types of market 299 00:26:33,389 --> 00:26:39,779 coordination mechanisms. And then by dominant distribution of property rights 300 00:26:39,779 --> 00:26:44,399 I'm talking about the different types of actors that may dominate and as we know, 301 00:26:44,399 --> 00:26:49,889 especially in market transitioning countries, it's all types. Although the 302 00:26:49,889 --> 00:26:54,989 truth is even in liberal economic environments, like the United States for 303 00:26:54,989 --> 00:27:02,669 example, we do see a diversity and variety of property rights. We have 304 00:27:02,669 --> 00:27:06,419 in these large developing countries who have government shareholders, market 305 00:27:06,419 --> 00:27:11,220 stakeholders, mixed ownership types, joint venture partners in stakeholder 306 00:27:11,220 --> 00:27:17,580 arrangements, state-owned state sponsored enterprises, and figuring out how they're 307 00:27:17,580 --> 00:27:22,980 different is actually quite key. And what we find is that what is a state 308 00:27:22,980 --> 00:27:28,049 sponsor enterprise in the Chinese context is different from a state 309 00:27:28,049 --> 00:27:32,249 sponsored enterprise in the Indian context for example. And some of that has 310 00:27:32,249 --> 00:27:36,059 to do with institutional structures and reaching type by democracy versus 311 00:27:36,059 --> 00:27:40,859 authoritarianism, but I argue that actually some of it is beyond 312 00:27:40,859 --> 00:27:48,570 just regime type. And so here dizzying sectoral and national 313 00:27:48,570 --> 00:27:55,200 paths, but the reason I even want to show you this is to say that the 314 00:27:55,200 --> 00:28:01,369 complexity - can we, I mean, it's important to open the black box and 315 00:28:01,369 --> 00:28:06,059 demystify our kind of stereotypical views about certain global paths that 316 00:28:06,059 --> 00:28:11,580 these countries have taken because in reality we see a mix. We have telecoms, 317 00:28:11,580 --> 00:28:15,749 kind of the stereotypical Chinese state capitalism in telecoms. The 318 00:28:15,749 --> 00:28:21,149 state owns all the carriers - China Mobile, China telecoms, any of you who've 319 00:28:21,149 --> 00:28:27,539 been to China like you know no private players. At the same time in value-added 320 00:28:27,539 --> 00:28:35,609 services, centralized regulation, the Ministry of Industry and Information 321 00:28:35,609 --> 00:28:41,020 Technology regulates value-added services, but we see variety of property 322 00:28:41,020 --> 00:28:45,820 rights. Who do we see, we see Alibaba, we see 323 00:28:45,820 --> 00:28:51,780 Baidu, and so forth. And so even within one industry this 324 00:28:51,780 --> 00:28:59,650 sub-sector variation, and this is true. And then we have the picture of 325 00:28:59,650 --> 00:29:05,110 textiles, a less value-added more labor-intensive industry in China where 326 00:29:05,110 --> 00:29:09,340 it's actually quite decentralized. There's really not that much state - 327 00:29:09,340 --> 00:29:15,420 there's definitely local state for sure. Local state actors are an important 328 00:29:15,420 --> 00:29:20,260 stakeholder and we want to recognize the local state actors but we also want to 329 00:29:20,260 --> 00:29:26,080 recognize other stakeholders including state ones as well as market 330 00:29:26,080 --> 00:29:30,460 stakeholders. And when we map this out we see that this is actually 331 00:29:30,460 --> 00:29:36,720 the similar pattern, for different reasons, in India and in Russia. And 332 00:29:36,720 --> 00:29:42,250 obviously I'm gonna talk about what those reasons are later in more detail. 333 00:29:42,250 --> 00:29:49,000 I do want to say that I acknowledge there're existing studies out there in all 334 00:29:49,000 --> 00:29:54,300 three countries and also dominant perspectives what actually explains 335 00:29:54,300 --> 00:30:00,970 these countries market opening and their globalization. I call them common 336 00:30:00,970 --> 00:30:06,010 forces of change and because I acknowledge that there are sectoral 337 00:30:06,010 --> 00:30:09,450 economic preferences and the international economy matters. I 338 00:30:09,450 --> 00:30:18,250 acknowledge that global rules matter. Aseema Sinha in a recent book looks at 339 00:30:18,250 --> 00:30:22,960 the globalization of textiles in India and she makes the argument that global 340 00:30:22,960 --> 00:30:27,340 norms and markets in international institutions play a very important role 341 00:30:27,340 --> 00:30:34,360 in explaining textiles on globalization for India. I make the argument that my 342 00:30:34,360 --> 00:30:38,050 research design and my strategic value framework allows me to understand why we 343 00:30:38,050 --> 00:30:43,060 see variation, not just across countries but within countries. And once you 344 00:30:43,060 --> 00:30:47,680 compare within countries then we're gonna see relative differences in the 345 00:30:47,680 --> 00:30:53,499 importance of these common forces of change. But indeed these are common 346 00:30:53,499 --> 00:30:58,210 forces of change. There has been devolution of economic decision power in 347 00:30:58,210 --> 00:31:05,679 China, in India, and in Russia, and indeed bureaucratic politics matter. And in fact 348 00:31:05,679 --> 00:31:11,710 one of the reasons why I look across time, I do a longitudinal study as well 349 00:31:11,710 --> 00:31:16,139 across these sectors is because there are moments, they're key moments, and 350 00:31:16,139 --> 00:31:20,590 episodes where bureaucratic politics actually play very important role in 351 00:31:20,590 --> 00:31:26,950 explaining governments' response to global financial economic 352 00:31:26,950 --> 00:31:34,179 reverberations and so forth. So I call them common forces of change. Yet I argue 353 00:31:34,179 --> 00:31:39,340 there's still a strategic value logic in these common dominant patterns that 354 00:31:39,340 --> 00:31:46,899 we see. And here I make the argument that the perceived strategic value of a 355 00:31:46,899 --> 00:31:52,359 sector to the most important economic decision makers will shape the market 356 00:31:52,359 --> 00:31:59,080 governance structures that will come about, and at the moment of reform, 357 00:31:59,080 --> 00:32:06,460 at the moment of market liberalization how sectors are perceived 358 00:32:06,460 --> 00:32:11,139 to the government and the most important economic decision makers will explain 359 00:32:11,139 --> 00:32:17,409 the direction that they will go. And I'm going to, I'm not going to show all 360 00:32:17,409 --> 00:32:21,519 the data for my other - the institutional arrangement and the 361 00:32:21,519 --> 00:32:25,570 sectoral structures although I will talk a little bit of them - what I'm gonna show 362 00:32:25,570 --> 00:32:32,289 is that how this factor of strategic value logic really indeed explain why 363 00:32:32,289 --> 00:32:38,259 India let go of telecoms, but the one sector and one group of sectors - 364 00:32:38,259 --> 00:32:43,179 small-scale labor intensive sectors, retail oriented sectors - that India has 365 00:32:43,179 --> 00:32:49,570 retained would be textiles. Why is it that it's textiles that most countries 366 00:32:49,570 --> 00:32:52,899 around the world have let go because it's not value-added, there's no 367 00:32:52,899 --> 00:32:59,200 technological applications, at least as a whole industry, but why to 368 00:32:59,200 --> 00:33:03,530 India is such an important industry to retain while 369 00:33:03,530 --> 00:33:07,190 you know let's welcome the foreign direct investors, let's welcome global 370 00:33:07,190 --> 00:33:13,940 market forces and telecoms. And there are gonna be objective 371 00:33:13,940 --> 00:33:17,810 factors in understanding strategic value - application for national 372 00:33:17,810 --> 00:33:21,860 security, contribution to the national technology base, contribution to the 373 00:33:21,860 --> 00:33:26,750 competitiveness of the rest of the economy to indigenous industry, but most 374 00:33:26,750 --> 00:33:34,010 importantly, and this is the dimension that is key, is that these objective 375 00:33:34,010 --> 00:33:40,190 indicators are subjectively understood. And they're subjectively understood and 376 00:33:40,190 --> 00:33:47,270 we see them play out differently across these economies. And across these 377 00:33:47,270 --> 00:33:53,390 economies that explained a sub-national level sectoral variance. But what I do 378 00:33:53,390 --> 00:33:58,010 want to point out is that the reason, some case selection rationale here, the 379 00:33:58,010 --> 00:34:03,470 reason I look at, I apply my argument to telecoms and textiles, is because 380 00:34:03,470 --> 00:34:11,179 sectoral attributes do matter and I want to show that, despite these 381 00:34:11,179 --> 00:34:15,889 technological properties that don't change across 382 00:34:15,889 --> 00:34:21,649 different countries, why the subjective understanding of strategic value at the 383 00:34:21,649 --> 00:34:26,000 end of the day still explains the dominant patterns. Because we have, I look 384 00:34:26,000 --> 00:34:29,450 at telecoms in all three countries, I look at textiles in all three 385 00:34:29,450 --> 00:34:35,600 countries. Telecoms - capital intensive, complex interactive technology, producer 386 00:34:35,600 --> 00:34:41,600 driven commodity chain - you would think if we care about 387 00:34:41,600 --> 00:34:46,790 development all countries would want a telecoms industry, an ICT industry - 388 00:34:46,790 --> 00:34:53,330 information communications technology. And textiles is important because 389 00:34:53,330 --> 00:34:56,270 for large developing countries such as China and India, large 390 00:34:56,270 --> 00:35:00,950 labor force. So you look at these labor intensive, linear technology 391 00:35:00,950 --> 00:35:09,860 by a driven commodity chains. And so I control for sectoral continuities and 392 00:35:09,860 --> 00:35:19,290 also differences. And for telecoms I look across sectors of telecoms in that I look at consumer 393 00:35:19,290 --> 00:35:24,870 equipment but also terminal equipment, so more value-added equipment but also more 394 00:35:24,870 --> 00:35:30,060 consumer-oriented. So really you see more capital 395 00:35:30,060 --> 00:35:34,290 intensive sectors in telecoms and less. And that's true for textiles too because 396 00:35:34,290 --> 00:35:38,370 on one hand we have clothing and apparel but we also have technical and industrial 397 00:35:38,370 --> 00:35:44,600 textiles and that involves actually quite high-tech nanotechnology 398 00:35:44,600 --> 00:35:49,410 understandings and so forth. So really you see both capital intensive 399 00:35:49,410 --> 00:35:53,840 and less capital intensive in both industries. But these industries 400 00:35:53,840 --> 00:36:00,340 allow me to have some controls across these economies. 401 00:36:00,340 --> 00:36:09,680 So here, explain a little bit on how the strategic value argument then 402 00:36:09,690 --> 00:36:16,980 applies to these economies. So we have China on one hand valuing 403 00:36:16,980 --> 00:36:21,300 sectors that have contribution to the national technology base, to national 404 00:36:21,300 --> 00:36:26,700 security, and competitiveness of domestic industry, in part because we want to make 405 00:36:26,700 --> 00:36:30,920 China grade and powerful in development 406 00:36:30,920 --> 00:36:37,260 outcomes, but really also for the political legitimacy of the Chinese Communist 407 00:36:37,260 --> 00:36:41,430 Party and these are fixations that we see after the Cultural Revolution and 408 00:36:41,430 --> 00:36:46,860 also in the post Tiananmen period. And yes we have Jiang Zemin and Xi 409 00:36:46,860 --> 00:36:50,730 Jinping and Wen Jiabao and Xi Jinping and Hu Jintao all having kind 410 00:36:50,730 --> 00:36:55,890 of their own brand of policy-making whether it's Three 411 00:36:55,890 --> 00:37:00,270 Represents for the Harmonious Society or the China Dream and so forth, 412 00:37:00,270 --> 00:37:06,630 but one continuity is this idea that despite perhaps different measures of 413 00:37:06,630 --> 00:37:11,490 getting at party legitimacy and political stability, 414 00:37:11,490 --> 00:37:16,580 that's one continuity that all these different leaders have had towards 415 00:37:16,580 --> 00:37:23,670 Industrial Development. And so we have in China perceived these sectors as being 416 00:37:23,670 --> 00:37:29,130 key to the economy. And so these are going to be the sectors that tend to 417 00:37:29,130 --> 00:37:31,680 have more state regulation more centralization 418 00:37:31,680 --> 00:37:38,680 while the government then lets go and devolve economic decision-making, and I 419 00:37:38,680 --> 00:37:43,030 mean really let go to a point where we actually hope that there's more market 420 00:37:43,030 --> 00:37:48,180 regulation, more regulation of chemical runoffs and 421 00:37:48,180 --> 00:37:53,410 the production of textiles and so forth, but really let go of 422 00:37:53,410 --> 00:37:59,680 sectors that are just not viewed strategic for these ultimate 423 00:37:59,680 --> 00:38:08,200 goals about political stability and party legitimacy. And we see 424 00:38:08,200 --> 00:38:16,660 this in across sub-sectors and telecoms. We have state-owned carriers. Why? Well 425 00:38:16,660 --> 00:38:22,240 let's control state infrastructure so that we can control information dissemination. 426 00:38:22,240 --> 00:38:25,400 This is actually quite important for political stability. 427 00:38:25,400 --> 00:38:32,760 If the Chinese government can and needs to, and does actually, shut down the telecom 428 00:38:32,770 --> 00:38:38,200 infrastructure in Tibet and Xinjiang it will and it has and it doesn't have to 429 00:38:38,200 --> 00:38:43,809 go and negotiate with private players. That's why it's important to retain the 430 00:38:43,809 --> 00:38:48,520 carriers in the hands of the Chinese government. On the other hand we have 431 00:38:48,520 --> 00:38:54,069 value-added service providers that actually is - you see a more of a mixed 432 00:38:54,069 --> 00:39:00,780 property rights distribution. Now you may question, well, but value-added 433 00:39:00,780 --> 00:39:03,940 service providers that the Alibabas and the Baidus and 434 00:39:03,940 --> 00:39:08,200 so forth, I mean they also disseminate information right. Well don't 435 00:39:08,200 --> 00:39:13,809 forget that value-added service provision runs on top of backbone 436 00:39:13,809 --> 00:39:18,849 infrastructure and if the government has control of backbone infrastructure you 437 00:39:18,849 --> 00:39:25,230 can let go of business scope and market entry in value-added 438 00:39:25,230 --> 00:39:29,650 services because once you shut off backbone infrastructure, or at least you 439 00:39:29,650 --> 00:39:33,940 have management and control a backbone infrastructure, then these other players 440 00:39:33,940 --> 00:39:40,000 can't really run their businesses. At the same time though after this 441 00:39:40,000 --> 00:39:42,150 market opening a foreign direct investment 442 00:39:42,150 --> 00:39:46,849 you see the government reregulating, and that's the topic of my first book, where 443 00:39:46,849 --> 00:39:52,079 the reregulation is about creating national champions. And what's 444 00:39:52,079 --> 00:39:56,940 interesting, and I think my dimension of market governance of property rights 445 00:39:56,940 --> 00:40:03,750 comes into play here, is that in the past national champions tended to mean 446 00:40:03,750 --> 00:40:10,710 state-owned enterprises but in fact national champions today is not just 447 00:40:10,710 --> 00:40:16,400 about state-owned enterprises. It's also about favor domestic private players. And 448 00:40:16,400 --> 00:40:23,940 the government could recalibrate market entry and business scope for private 449 00:40:23,940 --> 00:40:27,660 domestic actors and foreign direct investors to ensure that national 450 00:40:27,660 --> 00:40:35,700 champions are still promoted and prioritized even at the same time 451 00:40:35,700 --> 00:40:40,740 being open to globalization, being open to value-added service 452 00:40:40,740 --> 00:40:45,630 providers in foreign ones or domestic ones, private ones 453 00:40:45,630 --> 00:40:51,990 entering the economy. And so these different goals right, we have 454 00:40:51,990 --> 00:40:56,099 goals of national security but national development, these different goals also 455 00:40:56,099 --> 00:41:02,220 explain why we see differences across sub sectors even within 456 00:41:02,220 --> 00:41:07,680 strategic industries. Here we have, you know, this is a picture of 457 00:41:07,680 --> 00:41:12,150 Huawei and terminal equipment that actually even runs some of the equipment 458 00:41:12,150 --> 00:41:17,339 in the United States. Texas has, T-Mobile actually uses Huawei equipment. 459 00:41:17,339 --> 00:41:23,250 And of course we have China Telecom that is dominant in China but 460 00:41:23,250 --> 00:41:26,430 also in some developing countries that China, the Chinese government, has 461 00:41:26,430 --> 00:41:30,299 relationships with. I've done some research and have a "World 462 00:41:30,299 --> 00:41:33,809 Development" article coming out on China and Africa and of course, being 463 00:41:33,809 --> 00:41:39,119 an expert on telecoms, I look at telecom equipment makers and service providers 464 00:41:39,119 --> 00:41:44,099 in Africa and China telecoms actually has teamed with African service 465 00:41:44,099 --> 00:41:49,859 providers in Africa, in part because the government owns the carriers. 466 00:41:49,859 --> 00:41:56,960 They could negotiate these bargains with governments in Africa to trade infrastructure for 467 00:41:56,960 --> 00:42:02,240 market development, market development of Chinese players. So this market 468 00:42:02,240 --> 00:42:06,710 governance thing, it has a lot of implications not just for the 469 00:42:06,710 --> 00:42:11,120 development of indigenous industry within country but also their 470 00:42:11,120 --> 00:42:16,100 globalization outside of country. Now this is the China picture we have 471 00:42:16,100 --> 00:42:20,060 in textiles. I just want to quickly run through the different countries and 472 00:42:20,060 --> 00:42:27,050 sectors. We have on one hand no central bureaucracy at all. Decentralization, 473 00:42:27,050 --> 00:42:33,490 openness towards FDI, I mean you cannot have a more open sector in textiles. 474 00:42:33,490 --> 00:42:38,030 Overproduction, overexpansion, I mean all the craziness of no regulation happens 475 00:42:38,030 --> 00:42:42,410 in textiles in different sub-sectors of textiles because the state has decided 476 00:42:42,410 --> 00:42:46,610 it's not strategic enough. Yet this is where the strategic value argument still 477 00:42:46,610 --> 00:42:51,290 is important because in technical textiles and industrial textiles there 478 00:42:51,290 --> 00:42:59,150 is state funding that's still available. Why? Nonwoven fiber - synthetic 479 00:42:59,150 --> 00:43:03,890 fiber - took China to the moon, take China to outer space. 480 00:43:03,890 --> 00:43:08,720 These are all really high tech material that the government deems still quite 481 00:43:08,720 --> 00:43:12,830 important in these 5-year plans, in fact it continues every year, 482 00:43:12,830 --> 00:43:16,580 you see some of these kind of idiosyncratic sectors and textiles that 483 00:43:16,580 --> 00:43:21,860 still get listed. At the same time because of decentralization we do see 484 00:43:21,860 --> 00:43:27,440 path dependence. In technical textiles, it's not state-owned 485 00:43:27,440 --> 00:43:33,050 technical textile enterprises. A lot of market actors. And as a result government 486 00:43:33,050 --> 00:43:38,870 does need to interact with these market actors even to bring 487 00:43:38,870 --> 00:43:46,100 Chinese astronauts to the moon. And in fact all the textile 488 00:43:46,100 --> 00:43:50,660 bureaucracies have been dismantled except the technical textiles 489 00:43:50,660 --> 00:43:56,120 association. That's a national level sector association with national level 490 00:43:56,120 --> 00:44:00,530 designation. All the other sector associations, they're business organizations. 491 00:44:00,530 --> 00:44:04,070 They're civil society actors, just like in the United States, they 492 00:44:04,070 --> 00:44:08,079 don't have any policy influence. Technical textile associations 493 00:44:08,079 --> 00:44:13,209 are still national - designated national level actors. But get this, because of 494 00:44:13,209 --> 00:44:18,279 path dependency, because the ministry was dismantled in '93 and completely just 495 00:44:18,279 --> 00:44:23,769 gone on the central level by WTO accession, even the technical textiles 496 00:44:23,769 --> 00:44:28,479 association really doesn't have that much policy influence. 497 00:44:28,479 --> 00:44:34,539 Now during WTO negotiations, during agreements and so forth, 498 00:44:34,539 --> 00:44:40,180 China always says oh we're beholden to the textile, to these 499 00:44:40,180 --> 00:44:45,880 associations, because they are market actors. But in reality they don't really 500 00:44:45,880 --> 00:44:50,049 have any decision-making authority. Now I know I don't have much time so I just 501 00:44:50,049 --> 00:44:55,809 want to quickly talk about and run through these India and Russia. So we 502 00:44:55,809 --> 00:44:59,910 have infrastructural sectors being quite important because under the Nehru 503 00:44:59,910 --> 00:45:06,190 period, infrastructural sectors like telecoms and so forth 504 00:45:06,190 --> 00:45:10,150 under kind of state socialism, there were some technological sectors that were 505 00:45:10,150 --> 00:45:14,949 considered important. And what we see in the post-1990 Big Bang liberalization is 506 00:45:14,949 --> 00:45:20,380 that conventional wisdom tells us the entire economy was let go. Wait actually 507 00:45:20,380 --> 00:45:25,809 not true. In telecom services, yes, there's no India telecoms. There's no India 508 00:45:25,809 --> 00:45:32,890 mobile. Yet telecoms equipment completely regulated by the state. They're not 509 00:45:32,890 --> 00:45:37,239 competitive, they're not major global actors, and in fact that's probably one 510 00:45:37,239 --> 00:45:42,640 area where India probably should have let go. 'Cause the bureaucracies is 511 00:45:42,640 --> 00:45:47,469 kind of bubbling along and not doing quite well. But they have retained India 512 00:45:47,469 --> 00:45:52,930 telecoms equipment because rules infrastructure in the post-independence 513 00:45:52,930 --> 00:45:58,150 period was considered strategic and important. Especially because they've fit 514 00:45:58,150 --> 00:46:04,809 into this nationalist imagination of rural development for India. And 515 00:46:04,809 --> 00:46:09,759 then, speaking of a nationalist imagination, we have small-scale industry 516 00:46:09,760 --> 00:46:18,380 being still considered strategic and important because so much of 517 00:46:18,380 --> 00:46:24,099 what rationalized India independence from Great Britain, for 518 00:46:24,099 --> 00:46:29,410 example, was about cotton independence, textiles independence from 519 00:46:29,410 --> 00:46:34,810 a you know a big bad colonial power taking 520 00:46:34,810 --> 00:46:38,170 production in India and then selling it abroad and not remitting 521 00:46:38,170 --> 00:46:43,240 anything back to India. So much of the rationalization for independence was 522 00:46:43,240 --> 00:46:47,380 because of the importance of continent textiles to the nationalist imagination. 523 00:46:47,380 --> 00:46:52,750 We have textiles today being managed by the Ministry of Textiles. How many 524 00:46:52,750 --> 00:46:55,150 countries in the world still has a Ministry of Textiles? 525 00:46:55,150 --> 00:46:59,800 Not really. And you would think that the Ministry of Textiles would be an 526 00:46:59,800 --> 00:47:07,089 important sector for India to globalize because it should be, there 527 00:47:07,089 --> 00:47:12,010 should be some global comparative advantage in artisan fabric, artisan 528 00:47:12,010 --> 00:47:19,630 textiles, in the labor, the large labor that India has. Yet India is not, I mean 529 00:47:19,630 --> 00:47:24,849 it's not a world failure in textiles, but certainly not the global leader that you would 530 00:47:24,849 --> 00:47:30,940 expect India to be because of this chokehold on the textile sectors. Now there 531 00:47:30,940 --> 00:47:35,710 are variation across sectors but I just want to really quickly show you that 532 00:47:35,710 --> 00:47:40,510 India telecoms completely open. Anyone who's been to India have seen just 533 00:47:40,510 --> 00:47:45,220 the dizzying number of players, and they're both foreign players and 534 00:47:45,220 --> 00:47:52,450 domestic players because India has let go. It's not considered a strategic for 535 00:47:52,450 --> 00:47:57,550 national imagination of what India stands for. It's not 536 00:47:57,550 --> 00:48:02,710 entirely strategic except the equipment sector for the infrastructural aspect 537 00:48:02,710 --> 00:48:11,530 of Nehruvian socialism. Because of the chokehold we see handlooms and 538 00:48:11,530 --> 00:48:17,470 power looms, small-scale industry dominant in clothing in apparel. Not that 539 00:48:17,470 --> 00:48:23,710 many mills. Now part of that does have to do with the industrial labor structure. 540 00:48:23,710 --> 00:48:29,380 Unions are quite important in India and so there're a lot of 541 00:48:29,380 --> 00:48:34,370 kind of strikes and union conflicts so that does explain some of the 542 00:48:34,370 --> 00:48:39,170 inability to consolidate these small-scale actors. But a big part of 543 00:48:39,170 --> 00:48:44,510 it is because these small-scale actors still have Ministry of Textiles as a 544 00:48:44,510 --> 00:48:50,090 promoter, supporter, and also sometimes just they're not really doing that much, 545 00:48:50,090 --> 00:48:56,870 they're just unwilling to to move. On the other hand we do have, because of 546 00:48:56,870 --> 00:49:00,650 Indian entrepreneurism, and there's a whole scholarship on that, 547 00:49:00,650 --> 00:49:07,790 we do have some global players in more technical sectors, and Arvind is 548 00:49:07,790 --> 00:49:13,580 one of them in advanced materials. This is where the government actually has 549 00:49:13,580 --> 00:49:20,180 benefited from some market forces entering these sectors, but again the 550 00:49:20,180 --> 00:49:23,900 Ministry of Textiles is actually quite an important player even in technical 551 00:49:23,900 --> 00:49:28,700 textiles. So India could actually probably be even more of a global leader 552 00:49:28,700 --> 00:49:34,970 in these technical sectors but isn't because, again, because of the Ministry of 553 00:49:34,970 --> 00:49:42,940 Textiles. We have Russia where the dominant conventional thinking is 554 00:49:42,940 --> 00:49:47,420 collapse of Soviet Union. They let go of everything - dismantling of state 555 00:49:47,420 --> 00:49:52,040 enterprises, dismantling of state institution, overnight privatization. In 556 00:49:52,040 --> 00:49:57,230 fact what we, once you uncover and disaggregate and open the black 557 00:49:57,230 --> 00:50:02,720 box is that in fact that is actually not true, because of telecommunications, and 558 00:50:02,720 --> 00:50:07,040 especially the fixed line telecommunications importance to the 559 00:50:07,040 --> 00:50:14,330 military-industrial complex in Russia, and because civilian and 560 00:50:14,330 --> 00:50:19,670 military networks were seen as one and the same. Even the new leaders under the 561 00:50:19,670 --> 00:50:24,200 Russian Federation didn't quite know what to do with telecoms and 562 00:50:24,200 --> 00:50:29,600 so actually retained a fixed line infrastructure. To this day Russia 563 00:50:29,600 --> 00:50:34,300 telecoms runs fixed line networks. They're trying to modernize, 564 00:50:34,300 --> 00:50:40,940 they're working to consolidate and bring in technology, but huge 565 00:50:40,940 --> 00:50:45,240 state-owned player in fixed line telecoms. Mobile telecoms - 566 00:50:45,240 --> 00:50:48,690 no existing stakeholders, no existing stakeholders in the military-industrial 567 00:50:48,690 --> 00:50:53,460 complex, not perceived necessarily as that strategic to the military-industrial 568 00:50:53,460 --> 00:50:59,190 complex, so yeah we indeed did see introduction of competition. Not even 569 00:50:59,190 --> 00:51:06,450 privatization because in the '80s and before that mobile technology wasn't 570 00:51:06,450 --> 00:51:11,880 in any country, wasn't that important and hadn't actually in 571 00:51:11,880 --> 00:51:18,840 fact developed. And so it's not privatization that runs Russia mobile 572 00:51:18,840 --> 00:51:27,600 sector, it's an introduction of competition at the dismantling of state 573 00:51:27,600 --> 00:51:33,510 institutions after the class. Now we have textiles. We would think that 574 00:51:33,510 --> 00:51:39,000 Russia would be a global leader in textiles if we go with kind of liberal 575 00:51:39,000 --> 00:51:42,690 understandings of what introduction of competition and privatization would tell 576 00:51:42,690 --> 00:51:46,530 us, all these kind of fruits to development, only if you 577 00:51:46,530 --> 00:51:54,180 privatize and liberalize. Textiles was literally the first industry to be privatized and 578 00:51:54,180 --> 00:51:59,220 also to introduce competition even prior to the collapse. As early as the late 579 00:51:59,220 --> 00:52:03,650 '70s and the early 1980s we have perestroika and glasnost 580 00:52:03,650 --> 00:52:11,420 designating textiles as the industry to liberalize and to privatize. Today 581 00:52:11,420 --> 00:52:15,869 textiles, because it was never really that well integrated into the military 582 00:52:15,869 --> 00:52:20,850 industrial complex, so it didn't really have the high-technology roots. It's not 583 00:52:20,850 --> 00:52:25,740 high-tech at all it's almost a basket case, I mean exports and imports from 584 00:52:25,740 --> 00:52:32,130 other countries, a lot of black markets that run retail sectors such as 585 00:52:32,130 --> 00:52:38,860 textiles, even though it was one of the earliest sectors to be let go. And so 586 00:52:38,860 --> 00:52:43,140 Russia telecom - central ministry, state-owned fixed-line, but lots of 587 00:52:43,140 --> 00:52:46,650 openness in mobile equipment. And actually some of these value-added 588 00:52:46,650 --> 00:52:51,780 service providers and carriers dominated CIS, so not just Russia but CIS 589 00:52:51,780 --> 00:52:57,089 and also some European markets. Textiles definitely decentralized 590 00:52:57,089 --> 00:53:02,459 diverse dominant quasi-state but unfortunately not well-managed at all. 591 00:53:02,459 --> 00:53:07,589 The state hasn't really put in much money but there's 592 00:53:07,589 --> 00:53:12,359 no private investment in Russia textiles either. So quickly I just want 593 00:53:12,359 --> 00:53:16,440 to summarize and just kind of a reminder of what I've talked about 594 00:53:16,440 --> 00:53:22,349 already upfront is that globalization and impact varies; institutional 595 00:53:22,349 --> 00:53:28,499 foundations of market governmence matter; and that ideas, institutions, and both 596 00:53:28,499 --> 00:53:33,269 countries' specific and structural sectoral characteristics will shape 597 00:53:33,269 --> 00:53:37,799 these market governance structures; market governance structures mediate the 598 00:53:37,799 --> 00:53:42,029 relationship between globalization and development and that's why we see cross 599 00:53:42,029 --> 00:53:49,349 national but also sub-sector or within country variation; and that these 600 00:53:49,349 --> 00:53:56,009 path dependent effects of these dominant patterns that we witness is why we see 601 00:53:56,009 --> 00:54:00,690 these varieties of capitalism in developing countries. At 602 00:54:00,690 --> 00:54:04,619 least in political science there's a very very rich literature on varieties 603 00:54:04,619 --> 00:54:07,949 of capitalism for the advanced industrialized countries and I hope that 604 00:54:07,949 --> 00:54:13,049 with my study, which was motivated by my work as a China specialist and first 605 00:54:13,049 --> 00:54:18,029 found its grounding in China, now as I apply the strategic value framework to 606 00:54:18,029 --> 00:54:23,219 the Russia and India context, that I could contribute to kind of new ways of 607 00:54:23,219 --> 00:54:29,569 thinking about varieties of capitalism in the developing world. So, thank you.