Political Economy of Growth: East Asia and Latin America Compared Bert Gilbert 3/16/2006 Bert Gilbert 3/16/2006.

Slides:



Advertisements
Similar presentations
Development Strategies Evidences from East Asia. Developmental state Paradigm of developmental state in development economics and comparative political.
Advertisements

Section 2 Introduction-1 Emerging Economies Key Terms developing nations, newly developed nations, welfare state, nationalization Find Out How have economic.
Poverty Statistics Half of the world lives on $2/day GDP of poorest 48 countries< wealth of world’s 3 richest people combined Top 1/5 of richest benefit.
Development Theory and Latin American Political Economy
Bellringer Marxism The production of too many useful things results in too many useless people. The rich will do anything for the poor but get off their.
 Globalisation and global shift. Global interdependence - the way in which economies and societies are interlinked.
Development and Institutions Commerce and manufactures can seldom flourish long in any state which does not enjoy a regular administration of justice,
Mexico and Brazil in Comparative Perspective: Two Import-Substituting Trajectories (Haggard)
THE GREAT RECESSION AND THE DEVELOPING WORLD JOSÉ ANTONIO OCAMPO COLUMBIA UNIVERSITY.
Lecture 3: Emerging Markets and Elements of Country Risk Analysis.
Copyright © 2012 Pearson Addison-Wesley. All rights reserved. Chapter 11 Trade Policy in Developing Countries.
JENNIFER MOORE The Chaebol and their Role During the Growth, Crisis, and Restructuring of South Korea.
East and South East Asian NICs: class 2. Alternative perspectives on the East Asian Miracle ( I recommend : John Brohman Postwar development in.
Club Convergence And Imitation in Endogenous Growth Models: The Case of East Asia In the last class we argued that poor countries can grow fast through.
Slides prepared by Thomas Bishop Chapter 10 Trade Policy in Developing Countries.
Mexico, Iran & Nigeria. Mexico & Iran Both countries have experienced rapid economic and political change that has transformed each country into a stable.
Trade and Development.  Introduction  Domestic Interests, International Pressures, And protectionist Coalition  The Structuralism critique  Domestic.
Latin America & East Asia Compared Lecture # 12 Week 6.
“Remains of the Day” (streaming media— instructions on course website)
Liberal Interpretations of Conditions in Developing Countries May 5, 2013.
Chapter 10.  Import substituting industrialization  Trade liberalization since 1985  Export oriented industrialization Copyright © 2009 Pearson Addison-Wesley.
Chapter Nine Local Marketing in New Growth Markets.
“Classifying” Markets “The level of economic development in a country is the single most important environmental element to which the foreign marketer.
1 CASA ASIA Economic Congress 2004 ‘The Recovery of the Japanese Economy and Its Influence in Asia’ November, 2004 Takashi FUKAYA.
AP World History POD #23 – Emerging Asia Asian Economic Giant.
R EGIMES IN LDC S Less stable, more diverse compared to RDs Politics = conflict more likely to be violent Institutions = more fragile Policies = more erratic.
Bureaucratic Authoritarianism, Foreign Investment, and Debt Crisis Hichol Cho.
LOCATIONAL SPECIFIC ADVANTAGES OF ASIAN NEWLY INDUSTRIALIZED ECONOMIES FOREIGN DIRECT INVESTMENT IN THAILAND Santhiti Treetipbut.
Developing Countries and Globalization Lecture 20.
Economics and Politics
Emerging Markets Chapter 9 McGraw-Hill/Irwin© 2005 The McGraw-Hill Companies, Inc. All rights reserved.
1 Global Financial Crisis: Implications For Asia David Burton Director, Asia and Pacific Department International Monetary Fund Presentation to the Government.
Development Economics: An Overview based on Cypher and Dietz The Process of Economic Development Ch. 1.
Newly Industrializing and Less Developed Countries.
October 15, 2015October 15, 2015October 15, 2015Introduction to Political Science1 “Less Developed” and “Newly Industrializing” Countries Frank H. Brooks.
Political Economy of Taiwan and S Korea – East Asian Model East Asian Model The so-called East Asian model of economic development was actually a model.
Japan: Still the Developmental State? By: Craig Marcus.
Development strategies. Inward vs outward-oriented In order to import all the manufactures needed for industrialization, LDCs have two options: 1.Encourage.
Asian business and economics: introduction Professor Ari Kokko Åbo Akademi University.
Latin American Graduate School in Industrial Development and SME Policies Guatemala, 17th - 22th July Universidad Rafael Landivar David Bailey Birmingham.
Lecture # 13 Pakistan Economic Aid & Debt. The Asian Development Bank will provide close to $ 6 billion development assistance to Pakistan during
Globalization, Trade, Investment, and Environment Session Objectives: l Debate risks and opportunities of economic globalization l Identify SD requirements.
© Peter Dicken 2015.
Regional Perspective: Social Protection in East Asia Sarah Cook (IDS) and Huck-ju Kwon (Sung Kyun Kwan University)
Latin America Class 3. Why did Latin America persist with ISI??? Perspective 1: –Political influence of land-based oligarchy and their foreign allies.
Asian Century? Pacific Asia’s pre-1997 high growth.
Fairness and the Washington Consensus Joseph E. Stiglitz Century Foundation April 7, 2000.
Lecture 3: Major Economic Systems THE INTERNATIONAL BUSINESS ENVIRONMENT DR(PROF) M AMBASHANKAR.
Copyright ©2000, South-Western College Publishing International Economics By Robert J. Carbaugh 7th Edition Chapter 8: Trade policies for the developing.
Some Conclusions Fostering Trade through Private-Public Dialogue Expert Meeting on Regional Integration in Asia New Delhi, March 2007.
African Economic Conference 2007, Addis Ababa 1. 2 Presentation Outline What wisdom have we gained so far to explain growth in Africa?  Several explanations.
Economic Systems Chapter 2 Section 4 Modern Economies.
IR306 FOREIGN POLICY ANALYSIS INTERDEPENDENCE IN INTERNATIONAL SYSTEM - LIBERALISM.
Slides prepared by Thomas Bishop Chapter 10 Trade Policy in Developing Countries.
The logic of the developmental state. Wooyoung Kim Jihoon Kim Leroy Overman.
Theoretical attempts to explain disparities in development.
,. Upon completion of this seminar you will be able to:  Understand the diverse, dynamic interaction between political and economic institutions in developing.
FINANCIAL LIBERALIZATION, CRISIS, AND RESCUE: Lessons for China from Latin America and East Asia.
Political and Economic Reform in Egypt Suggestions and Recommendations Professor E.A. BRETT Department of International Development London School of Economics.
Trade Policy in Developing Countries
Chapter 2 Section 4 Modern Economies
NS4540 Winter Term 2016 Reyes and Sawyer, Latin American Economic Development Ch. 1 Federal Reserve Bank of Chicago, Strong Dollar Weak Dollar.
Trade Policy in Developing Countries
Chapter 9 1. The political and economic changes affecting global marketing. 2. The connection between the economic level of a country and the marketing.
The rise, fall and revival of the Swedish welfare state: what are the policy lessons from Sweden? Andreas Bergh, 2011 Abbey Little ECO
Trade Policy in Developing Countries
Trade Policy in Developing Countries
Trade Policy in Developing Countries
Chapter 9 1. The political and economic changes affecting global marketing. 2. The connection between the economic level of a country and the marketing.
“Remains of the Day” (streaming media— instructions on course website)
Presentation transcript:

Political Economy of Growth: East Asia and Latin America Compared Bert Gilbert 3/16/2006 Bert Gilbert 3/16/2006

Haggard: Explaining Developmental Strategies  Developmental Strategies  “Packages of policies aimed at steering economic activity into a particular mixture of ownership and sectors (23)”  Based on more than factor endowments  Developmental Strategies  “Packages of policies aimed at steering economic activity into a particular mixture of ownership and sectors (23)”  Based on more than factor endowments

Comparing East Asian and Latin American NICs  Three Patterns of development  Import-Substitution (ISI)  Mexico, Brazil, several other large LDCs  Export-Led Growth (ELG)  Korea, Taiwan  Entrepôt Growth  Singapore, Hong Kong  Virtually all developing countries begin international trade as exporters of primary products  Three Patterns of development  Import-Substitution (ISI)  Mexico, Brazil, several other large LDCs  Export-Led Growth (ELG)  Korea, Taiwan  Entrepôt Growth  Singapore, Hong Kong  Virtually all developing countries begin international trade as exporters of primary products

Difference Between East Asian and Latin American NICs  Industrialization through exports versus industrialization through import substitution  Haggard uses comparative analysis to:  Weigh competing explanations of policy change  Generate some contingent generalizations  Develop more convincing explanations of particular cases  Four levels of analysis  The International System  Domestic Coalitions  Domestic Institutions  Ideology  Industrialization through exports versus industrialization through import substitution  Haggard uses comparative analysis to:  Weigh competing explanations of policy change  Generate some contingent generalizations  Develop more convincing explanations of particular cases  Four levels of analysis  The International System  Domestic Coalitions  Domestic Institutions  Ideology

Comparing East Asian and Latin American NICs  Haggard uses these analyses in order to explain variation across Korea, Taiwan, Singapore, Hong Kong, Brazil, and Mexico.

The International System  Table 2.2 pg. 33  Constrain state choices in two ways:  Market Pressures  Depression of 1930s hit Latin America but not Korea and Taiwan  External economic shocks likely to influence outward-oriented policies  Political Pressures  Latin America independent for longer, increased freedom to maneuver  U.S. more concerned with East Asia, importance of aid flows on foreign policy  Table 2.2 pg. 33  Constrain state choices in two ways:  Market Pressures  Depression of 1930s hit Latin America but not Korea and Taiwan  External economic shocks likely to influence outward-oriented policies  Political Pressures  Latin America independent for longer, increased freedom to maneuver  U.S. more concerned with East Asia, importance of aid flows on foreign policy

Domestic Coalitions  Weak private sector combines with export-led policies to provide opportunities for national firms.  MNCs and Local Firms coexist without threat of denationalization  Latin America  Role of FDI involved greater potential for political conflict  East Asia, labor controlled for the purpose of pursuing export-led growth  Weak private sector combines with export-led policies to provide opportunities for national firms.  MNCs and Local Firms coexist without threat of denationalization  Latin America  Role of FDI involved greater potential for political conflict  East Asia, labor controlled for the purpose of pursuing export-led growth

Domestic Institutions  Characteristics of the State as an Institution:  Degree of autonomy from social forces  Corporatist structures in democracies have proved successful in extracting restraint from labor and business  Cohesion of the policy-making apparatus  Larger states of Latin America more difficulty than East Asian NICs  Available policy instruments  Hong Kong, few instruments of intervention, relied on market- oriented system of adjustment  Characteristics of the State as an Institution:  Degree of autonomy from social forces  Corporatist structures in democracies have proved successful in extracting restraint from labor and business  Cohesion of the policy-making apparatus  Larger states of Latin America more difficulty than East Asian NICs  Available policy instruments  Hong Kong, few instruments of intervention, relied on market- oriented system of adjustment

Ideology  Table 2.5 pg. 48  Chicago Boys in Chile  Korea and Taiwan  Declining U.S. aid  Various ideas about how to respond  American advisors influenced developmental thinking.  Table 2.5 pg. 48  Chicago Boys in Chile  Korea and Taiwan  Declining U.S. aid  Various ideas about how to respond  American advisors influenced developmental thinking.

Evans: Class, State, and Dependence in East Asia: Lessons for Latin Americanists  Using analysis of East Asia to further the dependency approach  Insights of East Asianists may lead us to a better understanding of dependent capitalist development  East Asia’s different history than Latin America allows us to apply dependency theory elsewhere, test the theory  Using analysis of East Asia to further the dependency approach  Insights of East Asianists may lead us to a better understanding of dependent capitalist development  East Asia’s different history than Latin America allows us to apply dependency theory elsewhere, test the theory

Differences between Dependence of East Asian NICs and Latin American NICs  Most important difference: Role of FDI  Latin American Industrialization maximized the consequences of FDI  Foreign economic domination  East Asian Industrialization occurred during a period of little FDI  Flows of FDI to East Asia still significantly lower than to Latin America  Most important difference: Role of FDI  Latin American Industrialization maximized the consequences of FDI  Foreign economic domination  East Asian Industrialization occurred during a period of little FDI  Flows of FDI to East Asia still significantly lower than to Latin America

Aid & Trade  East Asian countries highly dependent on international trade  Does not seem to have slowed down their economic growth or distribution of benefits  East Asian NICs, aid has little to do with the interests of U.S. transnational corporations  Strengthen ability of states to confront Communist neighbors  Consequences of trade between rich and poor countries depends on the specific social structure in which trade takes place  East Asian countries highly dependent on international trade  Does not seem to have slowed down their economic growth or distribution of benefits  East Asian NICs, aid has little to do with the interests of U.S. transnational corporations  Strengthen ability of states to confront Communist neighbors  Consequences of trade between rich and poor countries depends on the specific social structure in which trade takes place

The State and the Local Bourgeoisie  Japanese colonialism left little space in East Asia for the emergence of even the relatively weak industrial bourgeoisies found in Latin America  Relations between state and local bourgeoisie make it more difficult for the state to smoothly impose such policies as EOI  Absence of rural elite influence from the formation of state policy unites East Asian cases and seperates them from those of Latin America  Japanese colonialism left little space in East Asia for the emergence of even the relatively weak industrial bourgeoisies found in Latin America  Relations between state and local bourgeoisie make it more difficult for the state to smoothly impose such policies as EOI  Absence of rural elite influence from the formation of state policy unites East Asian cases and seperates them from those of Latin America

Inequality in East Asian Dependent Development  Latin America characterized by large scale inequality  East Asian development has been very equal  Long unbroken historical experience of FDI produces a greater likelihood of inequality  Confirms suspicions regarding the negative welfare consequences of transnational dominated industrialization  Latin America characterized by large scale inequality  East Asian development has been very equal  Long unbroken historical experience of FDI produces a greater likelihood of inequality  Confirms suspicions regarding the negative welfare consequences of transnational dominated industrialization

Evans -- Conclusions  Triple Alliance  East Asia: State is dominant partner  Latin America: TNC and Local Private Capital more important  Suggestions  Latin Americanists should be careful not to overemphasize industrial class relations  We don’t really understand the consequences of a relatively more autonomous state machine  Avoid false parallels  Careful analyses of concrete historical situations must precede any expectations about results from policy.  Triple Alliance  East Asia: State is dominant partner  Latin America: TNC and Local Private Capital more important  Suggestions  Latin Americanists should be careful not to overemphasize industrial class relations  We don’t really understand the consequences of a relatively more autonomous state machine  Avoid false parallels  Careful analyses of concrete historical situations must precede any expectations about results from policy.

Silva: State-Business Relations in Latin America  Latin America  Political and Economic calamities culminating in debt crisis of early 1980s  Replace state-led, ISI, populism, and authoritarian regimes with free-market economic reform, fiscal sobriety, and political democracy.  Latin America  Political and Economic calamities culminating in debt crisis of early 1980s  Replace state-led, ISI, populism, and authoritarian regimes with free-market economic reform, fiscal sobriety, and political democracy.

Structural Adjustment and Business-System Change  Common view: Developmentalist state generated weak, state-dependent private sectors  Free-market reforms: fiscal restraint, macroeconomic stability, privatization, financial-sector liberalization, and opening to international competition  Personal and Family Ownership, closed-property firm, interlocking directorships in conglomerates prevail. Banks more than capital markets for financing long-term investment.  Privatization: 1) Adopt Anglo-American business practices 2) Conglomerate expansion too rapid 3) expand in regional economic blocs 4) difficulty in extracting state from some enterprises  Common view: Developmentalist state generated weak, state-dependent private sectors  Free-market reforms: fiscal restraint, macroeconomic stability, privatization, financial-sector liberalization, and opening to international competition  Personal and Family Ownership, closed-property firm, interlocking directorships in conglomerates prevail. Banks more than capital markets for financing long-term investment.  Privatization: 1) Adopt Anglo-American business practices 2) Conglomerate expansion too rapid 3) expand in regional economic blocs 4) difficulty in extracting state from some enterprises

Economic Change and Recasting Business-State Relations  Management of economic change benefits from centralized state that is autonomous from social and political forces  Business-state relations founded on established conglomerate more stable than newly created, competing conglomerates  No “Latin American” model of business-state relations  Management of economic change benefits from centralized state that is autonomous from social and political forces  Business-state relations founded on established conglomerate more stable than newly created, competing conglomerates  No “Latin American” model of business-state relations

Business and Democracy in Latin America  Absence of state control of organized interests creates space for a vibrant civil society which is a crucial feature of democracy  Institutionalized Tripartite negotiating system of societal corporatism provides a meaningful channel for the civil society’s participation in public policy  LA not ripe for societal corporatism  Institutional element underdeveloped  LA closer to U.S. pluralist model  Exclusionary business-state relationships that work now may contribute to economic and political difficulties in the future  Absence of state control of organized interests creates space for a vibrant civil society which is a crucial feature of democracy  Institutionalized Tripartite negotiating system of societal corporatism provides a meaningful channel for the civil society’s participation in public policy  LA not ripe for societal corporatism  Institutional element underdeveloped  LA closer to U.S. pluralist model  Exclusionary business-state relationships that work now may contribute to economic and political difficulties in the future

Questions  How applicable is the developmentalist model to East Asian development?  From what we have seen, what is the most important factor in predicting a country’s development strategy?  What is the biggest problem in comparing East Asian development to Latin American development?  How applicable is the developmentalist model to East Asian development?  From what we have seen, what is the most important factor in predicting a country’s development strategy?  What is the biggest problem in comparing East Asian development to Latin American development?