The logic of the developmental state. Wooyoung Kim Jihoon Kim Leroy Overman

Table of content Introduction The theory of East Asian development Institutional and political bases of the developmental state The historical origins and specificity of the East Asian developmental state The developmental state and corporatism Is the developmental state transferable? Conclusion and questions

Introduction After WW2 : The economic situations in East Asian Countries In the perspective of the government and market system The ups and downs of the East Asian Countries

The theory of East Asian Development Neoclassic versus structuralist viewpoint of the economic development Neoclassic insists on a free market and minimized government role Structuralist focused on market failure, stands for government intervention

The theory of East Asian Development The concept of the institutionalist Goes further than neoclassical and structuralist Cooperation formed by the government and market The key is the governments and market cooperating's system

The theory of East Asian Development Capitalists development state Economic growth is the goal, no welfare for the civilians The market is guided by elite bureaucrats Close links between private businesses and bureaucrats

The theory of East Asian Development The government market theory High government investments After reorganization the companies enter th e international market

The theory of East Asian Development South korea development (explanation by Amsden’s) Government selective subsidizing and directi ng market procedure The government secures the chosen market Technology companies were chosen by the g overnment, especially heavy industries

Institutional and political bases of the developmental state The basis for the developmental state: The political part tries to make the country economically strong Institutional state intervenes with the companies

Institutional and political bases of the developmental state The reason for East Asia’s economical growth Companies with market potential were nurtured by the government The top of the companies were strategically ruled by state officials Because of state intervention national goals were made more easily Large numbers of public private sectors occur in East Asia

Institutional and political bases of the developmental state The control of the bureaucrats Small elite group Keeping control via the elite group, external agencies for quality control The politicians reign while the bureaucrat’s rule The public private companies would not survive the private sector because of the sophisticated governments rules

Institutional and political bases of the developmental state Taiwan’s growth Lack of resources Threaten by China, got helped by the East Asian States Long term orientation, economy on front, people were poor No distribution of income and no social welfare

Institutional and political bases of the developmental state Japan’s growth Population was poor due war Price problems were destructed during the war, they started from the beginning Heavy industrialization and good geographical location raised the economy

The developmental state and corporatism What is corporatism? Organizing society into “corporations” subordinate to the state Corporations serve as organs of political representation

The developmental state and corporatism Corporatist nature of the East Asian states Institutionalized public-private cooperation in the process of policy formulation and implementation Institutional and political arrangements facilitated highly effective forms of integration into the international economy

The developmental state and corporatism The distinguishing characteristic of the East Asian states Authoritarian corporatism Labor has been excluded form the policy process The state elites have been the senior partner in their relations with business groups

The developmental state and corporatism Difference among “authoritarian” corporatist states Mexico Prototype case of authoritarian corporatism Different set of strategic choices compared with the Korean and Taiwanese models

The developmental state and corporatism Limitations of corporatism-viewpoint explanation for the East Asian states’ development Why the East Asian state have elected pursue strategic industrial policies? Why such polices have proved to be so effective in practice? A gap of objective between corporatism and the East Asian developmental state

Is the developmental state model transferable? The developmental state is not transferable It’s a cultural characteristic Long term unstable The world trade declined, the markets changed, their current market model did not work any longer

Is the developmental state model transferable? The developmental state is transferable Bureaucratic capability and public private cooperation can be built up over time through a process of institutional reform

Conclusion Due to historical background, the East Asian states become strong by willingness. This by government long term strategic orientation.

Questions What do you think the most important thing in economic development? Why do some countries fail if they copy a business model from another country? What kind of role should states play in market?