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

• Date: 01 August 2022
• 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...