The Political Economy of Automotive Industrialization in East Asia, by Richard F. Doner, Gregory W. Noble and John Ravenhill.

• Author: Yean, Tham Siew

The Political Economy of Automotive Industrialization in East Asia, by Richard F. Doner, Gregory W. Noble and John Ravenhill. New York: Oxford University Press, 2021. Pp. 405.

The idea that institutions are important to economic development can be traced back to Adam Smith's book titled The Wealth of Nations, which discusses in detail the importance of private property rights and the rule of law. The discourse on development continues to raise the importance of institutions time and again, be it at the theoretical or at the empirical level. For example, in the seminal work by Rodrik, Subramaniam, and Trebbi (2004), institutional factors are found to be far more important than geography and integration (trade) in determining the differences in income across countries--developed and developing alike. It should also be noted that the definition and concept of institutions can range from the formal rules of "playing of the game", as seen in the quality of a country's governance.

Empirical investigations that try to ascertain the impact of different proxies for institutions on economic performance continue to proliferate, at both the macro- and micro-level. However, these empirical verifications are not without criticisms, especially those related to the modelling and measurement of institutions, as succinctly summarised in the literature review by Lloyd and Lee (2018). Without robust empirical verification, Lloyd and Lee are led to conclude that the importance of institutions as a determinant of the long-run economic performance of nations relative to policy reforms and other factors remains an open question.

Doner, Noble and Ravenhill's book on the political economy of automotive industrialization employs a new take on institutions based on detailed country studies to investigate whether and how upgrading has occurred in the automobile industry in seven East Asian economies: China, Indonesia, Korea, Malaysia, the Philippines, Taiwan and Thailand. Totalling ten chapters, the book is the outcome of three decades of automotive research by the three notable authors, and its specific focus lies in examining the role of institutions in the automotive development in these seven countries. Most critically, the authors address a crucial research question: what are the key conditions that can motivate political leaders to expend their time and energy to build institutions that can support automotive development? Since automotive development plays an...