Abstract

The theory of “embedded autonomy” suggests that a developmental state needs to maintain a balance between autonomy and embeddedness to succeed. This paper argues that such a balance is not stable but contingent on an alignment of local, national, and global factors. With the local developmental state of Dongguan, China, as an example, we see how the global economy's search of low-cost labor and the national government's encouragement of decentralized local growth since the 1980s created a successful, autonomous local state that was benignly embedded in a network of foreign investors and local residents. This balance brought about more than two decades of phenomenal economic growth. However, starting in 2006 both the central and provincial governments shifted their priority from economic growth to industrial upgrading. The central government also adopted a new bureaucratic rotation rule to prevent long tenure of local officials at the same locality. In these new circumstances, Dongguan found itself trapped in the short-sighted vested interests of traditional foreign investors and rentier local residents. The result was stagnation in both economic growth and industrial upgrading. The paper suggests that the reproduction of embedded autonomy cannot be taken for granted, and that embeddedness of the state at one stage of development can become a hindrance to its autonomy at another stage.