9/17/13

9/17/13

Dependency Theory
1. Peripheral States screwed
2. Challenge
  1. Taiwan
  2. SIngapore
  3. Korea
1960s
1. SK and TW abandon ISI for EOI
  1. Confound Neo Classisists
    1. NICS focused on exports like NC model
    2. BUT state played major role in incentives
    3. STATE LED not completely MARKET LED
Neo Classical Economics
1. Fell out of fashion in Depression
2. Resurgence in 80s, 90s
3. Free market should determine who produces and sells what to whom; for how much
4. minimal state role
5. Altrnative Explanation of SIC
  1. Free Market Saved them
  2. Would have done better without government intervention
State Led Model
1. Developmental State
  1. Autonomous State: Form and Pursue goals independent of major societal interests
    1. Low political influence
    2. Insulated state bureaucrats
      1. They call the shots, not external interest groups
        1: Must be extremely well educated/highly skilled
    3. Must be a common interest or ideology; Cohesion
    4. If not, corruption in the system
  2. Interventionists
    1. Controls banking and loans
    2. Controls foreign investment
    3. Japan's Model
  3. Business Friendly
    1. Interventionist on behalf of business
      1. Crack down on unions
      2. easy access to credit
  4. Policies
    1. Industrial Policy
      1. Government chooses industries it want to promote.
        Chosen strategically, esp. heavy industry.
        State Finance
        Channel cheap loans in strategic directions
        State support for research/development
      2. Contrasted with: Comparative Advantage
    2. Regulating Foreign Capital
      1. If you cut yourself off, you loose access to tech
      2. Encouraged foreign investment, but regulated
      3. No buyouts, only joint ventures
        Maintained domestic upperhand
    3. Strategic trade
      1. Export promotion with selected protection
      2. Exports critical
      3. promotions forced firms to be competitive and efficient
        Only get loans if you perform well, economically.
      4. Kept certain foreign products out of the domestic market though tariffs and import taxes
2. Authoritarian
  1. Politicians can't think in the long term in midst of intermittent electoral pressures
  2. Need to keep labor costs down
    1. firms need to be competitive in international markets
    2. no unions
      1. requires dictatorship to crush strikes and unions
  3. Singapore: Single Party Rule
  4. South Korea: Military State
3. corrption
4. Inefficiency
Taiwan
1. Japan leaves Taiwan
  1. Chinese civilwar results in: Kuomintang.
2. US invests in KMT as a bulwark against Chinese regime
3. Authoritarian
4. Populated by cohesive group of skilled professionals
  1. Taiwan: Last bastion of hope against china
5. State was dominant force in Taiwan
  1. BC Taiwan was very underdeveloped
  2. Takes over
    1. Japanese companies
    2. Industrial production
    3. Banking
  3. 4 Year Development plans
    1. 70s
      1. Steel mills
      2. Research and Dev centers
    2. Heavy Industry AND High Tech
  4. Liberalzation
    1. Very slow. State held majority control eve up to 1980s
    2. Banking completely off limits
South Korea
1. Korean War
  1. Military Conflict
    1. Creates Developmental State
2. Cohesion
  1. Fear of N.K.
3. Land Reform left weak private sector
4. US Economic, Military, Market Aid
  1. Cold War Ally
5. Park Coup 1961
  1. Anti corruption drive
  2. Park
    1. More Insulation
      1. Ignored international suggestions
    2. More Cohesion
    3. Developmental
      1. POSCO: Jumped right into heavy steel industry
        Lay foundation for ship building and automobile production
      2. State supported automobile industry
        Privately owned, state supported
    4. Professional and Skilled
    5. Authoritarian
      1. No Elections

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