Week 7 - Developmental States in Comparative Perspective Flashcards
What is the mainstream explanation of the early neoclassical assessment of Taiwan and South Korea?
ISI abandoned for realistic exchange rate, free trade, free market (underplays key state actions in the Northeast Asan “developmental states”
growth “despite industrial policies”
supported sectors (chemicals, non-metallic minerals) grew less well than non supported-sectors (textiles)
manufactured exports based on comparative advantage
What did the World-Bank attribution of the “developmental states” stay within?
stayed within the bounds of neoclassical economics’ prescriptions
What did the World-Bank attribute the “developmental states” success to?
private investment + human capital = drivers of growth
private investment sustained by savings
rapid agricultural growth + productivity improvement
population growth declined
strong macroeconomic management and stability
price distortions were minimised
investment in primary and secondary education
What did the “developmental states” do to develop? (6)
industrial policy
agricultural policy
management of finance
macroeconomic management
incomes policy
social policy
One of things the “developmental states” did was industrial policy, what did this involve?
state maintained ISI while supporting development of export-oriented industries (protects from competition in domestic market (tariffs, quotas))
prioritised use of scarce foreign exchange
promoted technology acquisition
One of things the “developmental states” did was industrial policy, what did this involve for South Korea and Taiwan?
South Korea (cement, steel, shipbuilding, machinery)
Taiwan state corporations (petrochemicals, metals and power generation)
both willing to take risks
One of things the “developmental states” did was agriculture policy, what did this involve?
protected and subsidised (built on previous land reforms to promote small farming, provided credit and ensured rural infrastructure)
ensured growth (extracted surplus while gradual improvement in rural incomes (allowed expansion of household investment in education, market for ISI goals, steady flow of labour to new industries))
One of things the “developmental states” did was state control of finance, what did this involve?
leverages over private sector
firms with high debt to equity ratios (Taiwan 1:1, Korea 3:1, Western firms <1:1)
small businesses took informal credit
One of things the “developmental states” did was state control of finance, what did this involve for Korea and Taiwan?
South Korea nationalised banks and reliance on chaebols, state controlled borrowing abroad
Taiwan state-owned commercial banks and SOEs, domestic savings (like Japan) (postal savings systems), lack of social security gave incentive to save
One of things the “developmental states” did was macroeconomic stability, what did this involve?
to foster long-term investment
stability of exchange rates (often undervalued), interest rates and prices
maintained fiscal integrity (public sector deficits in Korea and surpluses in Taiwan)
public spending concentrates on investment over social services
corporate taxation was low but enforced plus indirect taxation (repressed consumption)
state managed inflation
One of things the “developmental states” did was income policy, what did this involve?
raised living standards while social organisations were suppressed
equitable income distribution during formative years
repressive labour regimes + steady growth in workers’ standard of living
low wages made manufacturing competitive
delayed gender equity
One of things the “developmental states” did was social policy, what did this involve?
household income for education (route to advancement)
incremental health insurance (1977 workers in large enterprises, 1989 self-employed in rural and urban areas, 2000 National Health Insurance)
incremental improvement in social security (promoted household savings)
What is a summary of what the “developmental states” did to succeed?
prioritise growth
private property/market allocation
elite economic bureaucracy
institutions/organisations
bureaucrats rule while politicians reign
What did the state do in the “developmental states” to succeed?
ensured high levels od productive investment and fast technological transfer
ensured key industries
ensured competition
What is a corporatist authoritarian regime?
market guidance through supply of investable resources, socialising risks of long-term investment and steering the allocation of investments
What were possible causes of the “developmental states” success? (4)
colonial legacy
US foreign aid
historical point
cultural explanations
One of the possible causes of the “developmental states” success is colonial legacy, what did this involve?
Japanese colonialism transformed South Korea and Taiwan laying the foundations for a “cohesive capitalist state”
(counterpart is that both countries had rent-seeking regime and land reform was not part of the developmental project (in Korea preceded it, in Taiwan due to threat in China and preceded accelerated growth)
One of the possible causes of the “developmental states” success is US foreign aid, what did this involve?
geopolitics led the US to tolerate a departure from orthodoxy
(counterpart is that aid was important, but does not explain developmental coalition (e.g. Philippines has massive US but no developmental state emerged)
One of the possible causes of the “developmental states” success is historical point, what did this involve?
when ISI was accepteable
(counterpart is that confucian mentality earlier seen as barrier and ethnic composition did not change)
One of the possible causes of the “developmental states” success is cultural expectations, what did this involve?
confucianism and ethnic homogeneity
(counterpart is that confucian mentality earlier seen as barrier and ethnic composition did not change)
What was “systematic vulnerability” in the developmental states?
political elites were staring down the “barrels of three guns”
What are the “barrels of three guns” that were the “systematic vulnerability” in the developmental states?
(internal and external threat to survival)
deterioration of living standards threatened mass unrest of heavily mobilised rural population
need for foreign exchange and war material
hard budget constraint
What is the politics as alternative explanation for the developmental states success?
internal and external threats to the survival of elites
civil society and labour repressed
political competition suppressed
Was land reform under Rhee an act of a developmental state?
No, but helped establish the conditions for a developmental state to emerge