Abstract 

At present, the international situation is complex and volatile, with the global economy facing multiple risks and challenges. The North–South development divide is widening, drawing increasing attention to the “Global South.” Given their distinct historical backgrounds and resource characteristics, countries in the Global South cannot simply replicate the development models of developed nations; rather, they must formulate their own development strategies tailored to their specific national conditions. The development models of these countries vary significantly and warrant further exploration.

This article analyzes and explores development banks as tools of industrial policy, highlighting the unique characteristics of the development models in different countries and deriving lessons for developing nations.

Practical experience shows that the development of late-comer countries does not hinge on liberalism or socialism; instead, statism emerges as a more reliable pathway. Statism posits that during the catching-up phase, latecomer countries must mobilize social resources, coordinate market operations, and guide development through government intervention to optimize their efforts toward economic advancement (Geng & Chen 2019). The more backward an economy is, the greater the likelihood that its industrialization will occur under organized guidance, often led by investment banks or state-sponsored bureaucracies (Gerschenkron 1962).

Chalmers Johnson (1982) provided an in-depth analysis of Japan's postwar economic development, emphasizing how the Ministry of International Trade and Industry acted as a governmental department that protected and supported specific industries through various industrial policies. This proactive approach not only fostered the growth of key sectors but also drove the overall development of the Japanese economy, showcasing the crucial role of government in economic advancement. Similarly, other East Asian economies adopted comparable models and achieved remarkable economic growth rates. The concept of the developmental state gained considerable attention, as governments developed new mechanisms of control to replace the invisible hand of the market. In the postwar era, the developmental state emerged as the primary agent of capital formation, with development banks serving as the primary entity financing such investments.

In its 2012 National Development Plan 2030, the South African government integrated the concept of a developmental state into its national growth strategy, formalizing its aspiration to transform South Africa into a capable and developmental state. This plan envisioned a proactive, interventionist role for the government in promoting growth and development. However, despite undertaking significant political, economic, and social reforms since the dawn of democracy, South Africa has struggled to achieve and sustain the economic growth rates seen in the Asian Tigers. This raises questions and concerns within the academic community regarding South Africa's suitability and capacity to effectively implement a developmental state strategy.

Focusing on development banks as instruments of industrial policy, this article seeks to compare the roles of development banks through case studies and to analyze the primary factors influencing the South African Industrial Development Corporation (IDC) in the context of the country's development banking system.

https://doi.org/10.1017/S1049096524001306