Ha-Joon Chang
Challenges free-market orthodoxy, advocating strategic industrial policy for development.
Who was Ha-Joon Chang?
Ha-Joon Chang, a South Korean institutional economist, critiques neoclassical economics and free-market policies. He argues that successful rich nations historically used protectionist measures, as detailed in his influential 2002 book *Kicking Away the Ladder*.
“Free market is a political construct, a set of rules about who gets what, by whom.”
— Ha-Joon Chang, 23 Things They Don't Tell You About Capitalism, 2010
Ha-Joon Chang, born in South Korea in 1963, is a prominent institutional economist known for his critiques of free-market capitalism and advocacy for strategic industrial policy. Educated at Seoul National University and Cambridge University, where he now teaches, Chang argues that the economic policies promoted by developed nations and international institutions often contradict the historical strategies those nations themselves employed to achieve wealth.
His influential 2002 book, *Kicking Away the Ladder: Development Strategy in Historical Perspective*, argues that today's rich countries, including the United Kingdom and the United States, used protectionist tariffs, subsidies, and other interventionist policies to foster their own industrial development during their formative periods. For instance, the US maintained high tariff rates, averaging over 40% for much of the 19th century, shielding its nascent industries from British competition. Chang contends that these nations now 'kick away the ladder' by advising developing countries to adopt free-market policies that they themselves did not follow.
Chang champions the role of the state in guiding economic development, drawing heavily on the East Asian experience, particularly South Korea's rapid industrialization from the 1960s to the 1990s. South Korea, with average annual GDP growth rates of around 8% during this period, famously employed export subsidies, targeted credit, and stringent import controls to build globally competitive industries like shipbuilding and electronics, rather than adhering to free-market principles advocated by Western powers.
His work, including *23 Things They Don't Tell You About Capitalism* (2010), consistently questions the universal applicability of neoclassical economic models. Chang highlights how diverse institutions, cultural contexts, and deliberate policy choices, rather than simply free trade and minimal government, determine economic success. He remains a vocal proponent for developing countries to have the policy space to pursue tailored, often interventionist, industrial strategies.
Key Contributions
- Argued in *Kicking Away the Ladder* (2002) that rich nations historically used protectionist and interventionist policies (e.g., US tariffs averaging over 40% in the 19th century) to develop, then deny these tools to developing countries.
- Advocated for strategic industrial policy, drawing lessons from South Korea's average 8% annual GDP growth from the 1960s to the 1990s through state-led development.
- Challenged free-market orthodoxy in *23 Things They Don't Tell You About Capitalism* (2010), offering counter-arguments to common economic assumptions.
- Emphasized the critical role of institutions and historical context in shaping economic outcomes, contrasting with universalist neoclassical models since the early 2000s.
Economic Context
During Ha-Joon Chang's period of influence, the United Kingdom's economy saw substantial growth, with GDP per capita rising from $1,613 in 1963 to over $53,246 by 2024. This expansion, however, coincided with a notable deterioration in its external finances, marked by a shift from a trade surplus of nearly $1.4 billion in 1970 to a deficit exceeding $32 billion by the end of the period.
Legacy
Chang's legacy is his powerful challenge to the consensus of neoliberal development strategies, providing historical evidence that successful development often requires significant state intervention. His work offers a theoretical justification for protectionism and industrial policy, influencing development economists and policymakers seeking alternative paths to growth. He has fostered a more critical and nuanced understanding of economic history and policy choices for emerging economies.