Revisiting the South Korean developmental state after the 1997 financial crisis

This study reassesses the conventional wisdom surrounding the developmental state of South Korea (hereafter Korea) since the 1997 Korean financial crisis. The conventional wisdom is that, as a result of the continued structural reforms prompted by the crisis, the Korean developmental state, inherently characterised by active or direct state intervention, strong economic and industrial policies, the chaebol-oriented economic policy, and labour exclusion, has finally begun to dissolve in earnest. In this study, we have considered whether that is really the case and also which theoretical implications can be drawn from this consideration. Analysis of the Korean developmental state following the 1997 crisis has indicated that, quite contrary to conventional wisdom, the developmental state has continued to prevail as a core policy framework of the Korean administrations even after the crisis. There is no doubt that the continued structural and market reform after the crisis certainly undermined the Korean developmental state to a certain degree, but that does not mean the beginning of the end of the Korean developmental state at all. For much evidence strongly indicates that the Korean developmental state still remains intact and strong despite the structural reforms, on account of the successive Korean governments’ assiduous and deliberate efforts to maintain and reinforce it. Even after the crisis, the Kim Dae-Jung and post-Kim regimes have hardly abandoned many of their market interventionist policies. Such market interventionist policies, which were routinely practised under the military regime in the 1960s and 1970s, diametrically contravene the argument that the Korean developmental state has begun to dissolve as a result of structural reform after the 1997 crisis. Contrary to conventional wisdom, the Korean developmental state persists as usual. All this information, then, suggests that path dependence is in action in the case of the Korean developmental state, and this suggests a further hypothesis that the Korean developmental state is very likely to persist in the future as well, despite increasing globalisation pressure, given the strong path dependence.     

Neoliberalism,the Developmental State and Civil Society in Korea

Following the Asian economic crisis of the late 1990s, some scholars predicted that the introduction of neoliberal ideas and policies would result in the definitive passing of the Korean developmental state. Despite these predictions, Korean state elites have retained their influential position as economic managers by, for instance, practicing a revised form of industrial policy. Neoliberal reform has, however, had significant social implications. Rather than neoliberalism acting as a democratising force that curtails the power of the state, this article illustrates that the Korean state has used the reform agenda to justify an expansion of its powers. The state presented itself as an agent capable of resolving long-standing economic problems, and of defending law and order. By doing so, the state reduced the political space available to non-state actors. The article concludes that for some states, neoliberalism is a means of retaining economic and political influence, and that former developmental states may be particularly adept at co-opting elements of civil society into governing alliances.     

China's Economic Policy Today: The New State Activism

A noted American authority and investigator of China's economy outlines the general features of the ongoing reorientation of Chinese economic policymaking toward increased state activism, which has gained momentum in the aftermath of the global financial crisis. An initial section of the paper describes the marketization and privatization initiatives of China's late reform period to provide a baseline against which to measure the subsequent shift toward increased state intervention and guidance in the economy. The author traces the shift in three critical policy arenas (social policy, state-owned enterprises, and industrial and technology policy) and demonstrates how state involvement in each intensified during the global financial crisis. He then proceeds to explore the implications of accelerated state activism in the future, identifying potential rewards as well as large risks. Among the latter are macroeconomic imbalances, a "softening" of budget constraints, difficulties in recognizing and terminating unsuccessful economic programs, and tensions with trading partners.     

Canadian Foreign Policy in an Era of New Constitutionalism

This article historically assesses Canada’s role in developing new constitutional mechanisms in the global economy. Drawing on the literatures of International Political Economy and analyses of Canadian foreign policy, a reassessment of Canada’s position in the international economic order is proposed. As a consequence of the geostrategic advantages afforded Canada between successive global hegemons, Canada’s path-dependent development has situated the country to benefit and insist on disciplinary mechanisms for all states. Canada’s defense of a rules-based order demands the country adopt an increasingly unfamiliar role as crisis threatens the stability of the global economy. Consequently, Canada has become a primary defender of the new constitutional order of global capitalism, a position that seems opposed to traditional cooperative visions of Canadian foreign policy. Moreover, as the Canadian state becomes an active global proponent of neoliberal economic reforms it undermines the intermediary role of the Canadian state in its own markets, potentially undermining one of the historical purposes of Canadian federalism.     

The Regulatory State and Turkish Banking Reforms in the Age of Post‐Washington Consensus

The new era of the Post‐Washington Consensus (PWC), promoted under the auspices of International Financial Institutions such as the International Monetary Fund and the World Bank, centres on the need to develop sound financial regulation and strong regulatory institutions, especially in the realm of banking and finance in post‐financial crisis developing countries. This article uses an examination of the Turkish banking sector experience with the PWC in the aftermath of the 2001 financial crisis to show its considerable strengths and weaknesses. The authors argue that the emergent regulatory state in the bank‐based financial system has a narrow focus on strengthening prudential regulation, whilst ignoring the increased ‘financialization’ of the Turkish economy. They identify the positive features of the new era of the PWC in terms of prudential regulation, which has become much more robust in its ability to withstand external shocks. At the same time, however, the article highlights some of the limitations of the new era which resemble the limitations of the PWC. These include the distributional impact of the regulatory reforms within the banking sector, and notably the emergence of foreign banks as the major beneficiaries of this process; weaknesses in promoting productive bank intermediation that finance the real economy and economic growth, leading to poverty reduction via growth of employment whilst stimulating financialization within the economy; and finally, the exclusive focus on prudential regulation, whilst ignoring regulatory costs, consumer protection and competition regulation.     

The Russian economic puzzle: going forwards,backwards or sideways?

The question addressed in this article is whether the recent strong growth of the Russian economy is sustainable. The main difficulty is assessing the conflicting evidence. Developments since the financial crisis of 1998 are reviewed, including growth performance and macro‐economic management. There is an analysis of the nature and extent of Russian economic dependence on exports of oil and gas and the direction towards state control since 2003 is described. The article reviews the interaction of competitive power politics among the political elite with economic policy and assesses factors favouring and factors working against continued rapid growth over the next five years. One conclusion is that informal rules operating in the economy differ across sectors, and Russian economic development is in part robust; but there are powerful influences working towards a slowdown in growth.     

The Italian welfare state after the financial crisis

The essential characteristics of the Italian welfare state as it developed after the Second World War generated social cleavages and inequities that affected the Italian economy and provided grist for future reforms. At the same time, the welfare state provided political actors with incentives and resources that constrained attempts at reform. With the financial crisis beginning in 2008, serious reform was no longer optional. But austerity politics have generated pressures for changes to the welfare state which are unlikely to moderate most of the underlying inequities generated by the post-war system. Going forward, Italian policymakers must chart a path that is informed by efforts to overcome the pathologies of the past without further undermining the social and economic health of the country.     

Whither the Developmental State in South Korea? Balancing Welfare and Neoliberalism

Abstract

Scholars of political economy have been debating the role of the Korean state in the economic development of the country, as the characteristics of a developmental state, a neoliberal state and/or a welfare state have appeared simultaneously in the various governments’ policies since the 1990s. This paper argues that although the nature, degree and extent of government intervention has varied from administration to administration, the basic stance of a developmental state has been retained while neoliberal and welfare policies have been used concurrently to further economic and social development. This coexistence of contradictory approaches reflecting alternative market economic systems was the product of a combination of government policies that has for the past 20 years provided the Korean government with the ability to deploy flexible policy mixes in response to changes in the political and economic environment and to maximise the outcomes of developmental policies.     

东亚经济危机与东亚发展模式新探

本文从三个方面论述了东亚经济发展模式。首先,从历史的角度分析了东亚经济发展模式的产生、特点及其局限性。然后,进一步指出在经济全球化和信息化加速发展新的历史条件下,东亚发展模式已不能适应时代发展的要求,东亚发展模式与这次东亚经济危机存在着内在的必然的联系。最后,对东亚经济发展模式的发展与变革提出了自己的观点。     

Transforming the Developmental Welfare State in East Asia

This article attempts to explain changes and continuity in the developmental welfare states in Korea and Taiwan within the East Asian context. It first elaborates two strands of welfare developmentalism (selective vs. inclusive), and establishes that the welfare state in both countries fell into the selective category of developmental welfare states before the Asian economic crisis of 1997. The key principles of the selective strand of welfare developmentalism are productivism, selective social investment and authoritarianism; inclusive welfare development is based on productivism, universal social investment and democratic governance. The article then argues that the policy reform toward an inclusive welfare state in Korea and Taiwan was triggered by the need for structural reform in the economy. The need for economic reform, together with democratization, created institutional space in policy‐making for advocacy coalitions, which made successful advances towards greater social rights. Finally, the article argues that the experiences of Korea and Taiwan counter the neo‐liberal assertion that the role of social policy in economic development is minor, and emphasizes that the idea of an inclusive developmental welfare state should be explored in the wider context of economic and social development.     

Interpreting Enterprise,State, and Society: A Critical Review of the Literature in Modern Chinese Business History, 1978–2008

This article offers a critical review of literature in the area of modern Chinese business history from 1978 to 2008. It focuses on four interconnected topics: (1) the evolution of industrial capitalism, (2) the adoption of corporate hierarchies and/or social networks, (3) the change of financial institutions and monetary system, and (4) the development of state-owned industries and the formation of the (central) state enterprise system. The review reveals not only significant growth of the field of modern Chinese business history over the last three decades but also the existence of major gaps. The article concludes by considering the implications of its findings for understanding the political economy of business enterprises and enterprise systems in different national and historical contexts.     

Local Financial Institutions and Income Inequality: Evidence from Brazil's Credit Cooperative Movement

Local financial institutions can play a crucial role in reducing income inequalities at the within-country level by promoting inclusive economic growth and development across time and space. This is against a backdrop of increasing financial and economic fragility, to which emerging economies have also been exposed over more recent decades and years. This article adds emerging economy evidence from Brazil to an empirical literature on the income inequality implications of cooperative financial institutions. Panel-data estimations for 2004‒19 reveal that Brazilian credit cooperatives have gone beyond commercial banks in supporting communities that have traditionally been underserved financially. Additionally, the article provides new evidence and insights on credit cooperatives’ resilience in the context of a relatively recent but severe economic crisis in Brazil. The results indicate that credit cooperatives have helped fill gaps in finance and economic opportunity that tend to arise in an emerging economy setting. Furthermore, the contribution of credit cooperatives in filling these gaps is found to be more significant at lower levels of development. These findings add theoretical and, importantly, empirical support to the relationship channel of financial inclusion, which is in line with the optimistic perspective in this debate.     

Back to BASICs? The Rejuvenation of Non‐traditional Donors’ Development Cooperation with Africa

The world economy is in a state of flux. While most OECD countries struggle to minimize the damage of the global financial crisis, a few countries maintain positive economic growth rates and are thus changing global power configurations. Among the most important emerging economies for international development are the BASIC countries: Brazil, South Africa, India and China. This article analyses why these countries have rejuvenated development cooperation, what they actually do in Africa, and how they do it. It argues that the most important aspect of the rejuvenation of non‐traditional donors’ development cooperation with African economies is not the direct effects on these economies, be they positive or negative, but the potential gains that may accrue to African economies in terms of larger room for manoeuvre due to increased competition and the challenge to traditional donors’ development hegemony.     

Great Leap or Long March to Knowledge Economy: Institutions,Actors and Resources in the Development of Tampere,Finland

Tampere, the second largest city-region in Finland, has been accustomed to continuous change throughout its history. First, it developed from a small village into Finland's leading industrial town. When traditional industry fell into crisis, Tampere once more had to recreate itself and has since risen to a position in which it is among the top cities on the cutting edge of utilizing the possibilities of new knowledge-based technologies. The objective of this article is to recognize the internal and external forces that have had an impact on the development of Tampere, Finland, as well as the dynamics of the relationships between them. The objective is thus to identify those factors and forces that have laid the foundation for economic change and the development of the new knowledge economy. This article first frames the core concepts used in the analysis, and then, describes and analyses the development of Tampere from a small village into the leading industrial town in Finland, and further, into one of the pre-eminent cities of the knowledge economy.     

尺度重组与地域重构:城市与区域重构的政治经济学分析

尺度重组和地域重构理论是当前从政治经济学视角研究全球化时代城市与区域空间重构和治理重构的热点理论。本文运用马克思主义地理学的研究方法,结合对当代资本主义运行方式的分析,对尺度重组和地域重构理论进行了深入的解析,并阐明了它们之间内在的、本质的联系。研究认为,尺度重组和地域重构是一个一体两面的过程,当资本为了克服危机而在地域组织上进行去地域化与再地域化时,地域组织(城市和国家)也同时发生了尺度重组,它们描述的是同一个资本转型的过程。     

Politics,Society and Financial Liberalization: Turkey in the 1990s

This article focuses on the political economy of Turkey in the 1990s to illustrate the importance of analysing economic variables that intersect with the quality of political democracy. In 1989, the debt‐ridden state moved to systematically and completely deregulate Turkey’s financial markets. Together with the ongoing processes of liberalizing commodity markets and integrating with global capital markets, financial liberalization was expected to achieve fiscal and monetary stability, stimulate business confidence to invest in productive sectors, produce stable growth, encourage privatization and control inflation. However, the new hegemony of the capital markets has gone hand‐in‐hand with deteriorating macroeconomic performance, a worsening income distribution, the discrediting of politics and its isolation from society. The authors examine several key dynamics which are helping to legitimate the neoliberal agenda of the 1990s. These include the distribution of state largesse to manipulate electoral capitalism; the rise of an informal sector in the ‘Anatolian Tigers’; promotion of the seductive attractions of the market; and an antipolitical reform populism adopted by political actors to exploit popular disillusionment with the political system.     

Beyond the Washington Consensus? Asia and Latin America in search of more autonomous development

International economic power (the ability to shape rules of global economic conduct) needs to be understood in terms of the interactions between rule‐makers and rule‐takers in the global economy. Attempts to reshape development paradigms through interventions during financial crisis have been highly significant for the domestic political economy of the developing world. In the 1980s and early 1990s, the primary question was how much countries would liberalize in response to financial crisis. Reactions to the crises of the late 1990s in Asia and Latin America were more varied. This article explores domestic political responses to crises in both regions in the 1980s and late 1990s. It argues that countries are finding it increasingly difficult to trump domestic political pressure for change with arguments about technocratic necessity. Popular pressure is pushing governments into new experiments in economic nationalism, not a radical rejection of global economic integration, but a reshaping of relationships in an attempt to secure national interests and, in some cases, to devote more resources to welfare. Experiments to date are modest, but could presage more significant change in the future.     

Capital, State and Space: Contesting the Borderless World

The globalization of economic activities and transnational corporations (TNCs) has led us to think that we are entering a 'borderless' world. Some prophets of globalization argue that it has led to the end of geography. To them, the state has ceased to be an institution capable of exerting influences on the activities of transnational capital, which has also become increasingly 'placeless'. This paper aims to contest the issue of the alleged end-state discourse of a 'borderless' world. It argues that, despite the accelerated processes of globalization, national boundaries still matter in the decision-making and global reach of capital. The notion of a 'borderless' world is more folklore than reality. Based on theoretical and empirical literature in international political economy and business studies, the paper offers a dialectical perspective that examines the changing relationship between capital and the state, and the embedded relationship between capital and space in the organization of the global space-economy. Together, both arguments point to the importance of understanding dynamic transformations of the global economy, before considering its globalization tendencies.     

战略性新兴产业空间演化及区域经济耦合发展研究——以长三角区域为例

本文在分析长三角区域战略性新兴产业空间演化的基础上,运用耦合度模型对该区域战略性新兴产业与区域经济协调发展的整体情况和分空间情况进行研究,得出该产业与区域经济耦合促进作用非常明显、该产业仍然滞后于区域经济发展水平、区域经济各发展要素对该产业的贡献度不均衡、该产业发展资金投入不足等结论。最后,对长三角区域如何有效发展战略性新兴产业提出对策建议。     

Financial order and world politics: crisis, change and continuity

Many insist that the world economy today is in the grip of the most severe financial crisis since 1931. Although the origins of this crisis are in dispute, the extent and scale of the changes prompted by it are becoming clear. Among these changes are a recalibration of the relationship between public and private authority, a reconfiguration of the regulatory responsibilities and capacities of the state with respect to the financial system, and a rebalancing of relations of power among states. While the financial crisis has generated points of stress along all of these axes of change, we should be wary of expecting an entirely new global financial order to emerge from the carnage. The complex links between financial order and world politics suggest that this financial crisis will result in an evolutionary rather than a revolutionary transformation in the world's financial order.