Introduction
The statement that Global South countries should adopt China’s state-led model for successful decarbonization raises important questions in development economics, particularly regarding the transferability of economic strategies across diverse political and institutional contexts. China’s rapid decarbonization efforts, embedded in its developmental state framework, have garnered global attention, with the country achieving significant reductions in carbon intensity through state-directed industrial policies and investments in renewable energy (World Bank, 2020). However, this essay critically discusses whether this model is replicable in the Global South, where historical legacies and political settlements often differ markedly. Drawing on concepts from developmental state theory and political settlements analysis, the essay argues that while China’s approach offers valuable lessons, its success is rooted in a unique political configuration that many Global South nations lack. Instead, alternative strategies like market-oriented derisking may be more feasible, though they come with their own challenges. The discussion is structured around two main ideas: the developmental state model exemplified by China and East Asia, and the potential of derisking as an alternative for the rest of the world. This analysis highlights the limitations of direct emulation and underscores the need for context-specific policies.
The Developmental State Model: Lessons from China and East Asia
The developmental state model, as seen in China and other East Asian economies like South Korea and Taiwan, emphasises a strong, interventionist state that guides economic transformation through targeted industrial policies (Amsden, 1989). In the context of decarbonization, China has leveraged this approach to become a global leader in renewable energy production, with state-owned enterprises driving investments in solar and wind power, resulting in a 70% drop in carbon intensity between 2005 and 2020 (IEA, 2021). This success is often attributed to China’s political settlement, characterised by a narrow horizontal distribution of power—where ruling elites face limited challenges from organised groups—and a narrow vertical distribution, minimising dissent from lower-level factions (Khan, 2010). Such a configuration allows for long time horizons in policy-making, enabling the state to discipline capital effectively and allocate rents towards productive ends, such as subsidising green technologies.
Furthermore, this political settlement emerged from historical events, including the 1949 revolution, which reset property rights and concentrated holding power within the Communist Party, fostering a developmental coalition aligned with growth objectives (Evans, 1995). In East Asia more broadly, post-colonial revolutions or reforms similarly enabled states to implement industrial policies with minimal resistance, leading to rapid economic upgrading and, increasingly, sustainable development. For instance, South Korea’s state-led push into heavy industries in the 1970s laid the groundwork for its later transition to green technologies, supported by a cohesive bureaucracy (Amsden, 1989). These examples illustrate the benefits of the developmental state: limited policy challenges, effective capital discipline, and the ability to pursue ambitious goals like decarbonization despite short-term economic costs.
However, the applicability of this model to the Global South is questionable. Many countries in Africa, Latin America, and South Asia exhibit political settlements shaped by colonial legacies that entrenched unequal property rights and fragmented holding power, often resulting in non-developmental ruling coalitions (Khan, 2010). Unlike China’s revolutionary reset, colonial histories in these regions created enduring inequalities, where elite power is distributed broadly horizontally but contested vertically, leading to instability. This makes it difficult to sustain the narrow power distributions necessary for a true developmental state.
Challenges in Adopting China’s Model in the Global South
Global South countries often struggle with political settlements that hinder effective state-led decarbonization. Khan (2010) categorises these into types such as competitive clientelism, authoritarianism, and weak dominant party systems, none of which fully align with developmental goals. In competitive clientelistic systems, like those in parts of sub-Saharan Africa, holding power is misaligned with formal institutions, and ruling coalitions prioritise short-term patronage over growth, weakening implementation capabilities (Khan, 2010). For example, in Nigeria, efforts to decarbonize through state subsidies for renewables have been undermined by corruption and elite capture, reflecting a broad horizontal distribution of power that invites constant challenges (World Bank, 2020).
Authoritarian systems, while potentially strong in implementation, may still lack alignment with sustainable growth if coalitions are not developmentally oriented. Pakistan illustrates this, where strong horizontal checks and vertical exclusions make regimes vulnerable to overthrow, disrupting long-term policies like those needed for decarbonization (Khan, 2010). Similarly, weak dominant party systems, as in some Latin American contexts, show strong growth alignment but weak enforcement, as dissatisfied factions erode state capacity over time.
These configurations stem from colonial origins that preserved pre-existing power structures, unlike the radical resets in China and East Asia. Attempting to impose China’s mechanisms—such as state-directed investments or performance-based rents—could lead to high transaction costs, policy distortions, and transition challenges. For instance, without effective capital discipline, subsidies might foster rent-seeking rather than innovation, as seen in failed industrial policies in India’s state-led era (Rodrik, 2016). Even if a developmental coalition emerges, maintaining it for decades is rare in the Global South due to social unrest and external pressures, making sustained decarbonization improbable.
Arguably, Global South countries should pursue industrial policies aligned with their political settlements, focusing on building organizational capabilities rather than direct state control. This could involve ex-post rewards for private investments in green technologies, encouraging outcomes without heavy upfront state intervention. Such policies create compulsion through horizontal checks among actors, compelling quick results, but they differ from China’s model by avoiding derisking and emphasising pre-existing industry upgrading (Khan, 2010). However, without mechanisms for discipline, these may fall short of China’s transformative impact.
The Alternative: Market-Oriented Derisking and Its Challenges
Given the barriers to adopting a full developmental state, an alternative is market-oriented derisking, where states reduce investment risks for private actors in green sectors, often through guarantees or public-private partnerships (Mazzucato, 2018). This approach, promoted by institutions like the World Bank, aims to catalyse decarbonization in contexts with weaker state capacities. For example, derisking has shown promise in Morocco’s solar projects, where government guarantees attracted private finance, leading to the Noor Ouarzazate complex and a push towards 52% renewable energy by 2030 (World Bank, 2020).
However, derisking has limitations. It assumes functional markets and investor confidence, which many Global South countries lack due to political instability or weak institutions. In practice, it can lead to fiscal burdens if guarantees are overused, as seen in some Latin American energy reforms where derisking inflated public debt without proportional emission reductions (Rodrik, 2016). Moreover, it may not address underlying organizational capacity gaps, resulting in dependency on foreign technology rather than domestic upgrading. Challenges include high upfront costs for governments with limited budgets and the risk of policy capture by private interests, potentially distorting markets further (Mazzucato, 2018). While derisking has worked in select cases, its success is context-dependent and often requires complementary reforms to build state capabilities, which brings us back to the political settlement issues.
Conclusion
In summary, while China’s state-led model has enabled impressive decarbonization through a unique political settlement fostering effective industrial policy, its direct adoption in the Global South is fraught with challenges stemming from divergent historical and institutional contexts. The developmental state’s benefits—such as long-term planning and capital discipline—are hard to replicate amid competitive clientelism or authoritarian fragilities prevalent in many Global South nations. Instead, tailored approaches like political settlement-aligned policies or market-oriented derisking offer alternatives, though the latter faces issues of implementation and equity. Ultimately, Global South countries should critically adapt elements of China’s model to their realities rather than emulate it wholesale, recognising that successful decarbonization requires addressing underlying power dynamics. This implies a need for international support in building institutional capacities, with implications for global climate equity and development economics.
References
- Amsden, A. H. (1989) Asia’s Next Giant: South Korea and Late Industrialization. Oxford University Press.
- Evans, P. (1995) Embedded Autonomy: States and Industrial Transformation. Princeton University Press.
- IEA (2021) China. International Energy Agency.
- Khan, M. H. (2010) Political Settlements and the Governance of Growth-Enhancing Institutions. SOAS, University of London.
- Mazzucato, M. (2018) The Value of Everything: Making and Taking in the Global Economy. Penguin Books.
- Rodrik, D. (2016) ‘An African Growth Miracle?’, Journal of African Economies, 25(Supplement 1), pp. 10-19.
- World Bank (2020) Morocco – Noor Ouarzazate Solar Power Project. World Bank Group.
