The Rise of “The Rest”

Abstract After a century of struggle, a dozen non‐Western countries with pre‐Second World War manufacturing experience succeeded in entering the orbit of modem industry. The rise of ‘the rest’ was historically unprecedented. For the first time, countries without the competitive asset of proprietary, pioneering technology became economic powers. How industrialization among these prime latecomers succeeded, why it followed a novel path, and what some countries did to advance farther than others are the questions this book addresses. The same seed was contained in the rise of all the rest, a seed that had first germinated in Japan and then grew as might plants in clay pots of differing sizes and shapes, spanning Latin America (Argentina, Brazil, Chile, and Mexico), the Middle East (Turkey) and Asia (India, China, South Korea, Taiwan, Malaysia, Indonesia, and Thailand). To industrialize by borrowing already commercialized technology, devoid of the radically new products and processes that had enriched the North Atlantic, the rise of the rest involved intense learning, an extensive role for the government, and the formation of specific types of business enterprise. Indeed, the rest's unique reciprocal control mechanism differed from Adam Smith's invisible hand and served to reduce government failure and firm mismanagement. By the 1990s, two distinct varieties had taken root: all the economies of the rest had become more globalized, but the ‘integrationists’ (epitomized by Mexico's affiliation to the North Atlantic Free Trade Agreement (NAFTA) and Argentina's adoption of a dollar‐based currency board) were characterized by heavy reliance on foreign direct investment and minimal local expenditures on skills (as measured by research and development), while the ‘independents’, led by China, India, South Korea, and Taiwan, were notable for their nationally controlled firms and surging investments in technological capabilities. Which subspecies of the rest would succeed, and which would serve as the model for later industrializers (‘the remainder’), are questions that challenge the twenty‐first century and are analysed in this book, which is arranged in three main parts: sinking behind, 1850–c. 1950; sneaking ahead, c. 1950–; and squaring off, c. 1980–.