Abstract
ABSTRACT The purpose of this paper is to analyze the catching-up processes of South Korea and post-1978 reforms China, based on a new-developmentalist approach that considers four fundamental factors: 1) a complementarity relationship between the state and the market as a dynamic process that changes over time; 2) necessary complementarity between macroeconomic policy and industrial policy; 3) the key role of public and development banks in attacking the problem of “development financing”; and a particular focus on 4) the centrality of exchange rate and balance of payments administration for the development process in these countries. The paper’s fundamental question is to what extent the catching-up process in these countries can be understood as the application of a new-developmentalist strategy, taking each country’s particular historical traits into account.
Highlights
It is consensus among economists that South Korea since the 1960 and China after the 1978 economic reforms are catching-up success cases, unlike Latin America, whose growth process began to collapse after the Mexican debt crisis of 1982
Most of the research on East Asia’s economic development shares several points, some of which include: (1) the state’s central role coordinating and developing industrial policy as means to execute the respective national development strategies; (2) the formation of public – or private-sector business conglomerates connected with the national financial systems; (3) challenging the chronic problem of eternal constraints based on international insertion strategies involving exports with increasing value-added over time, until the “technology frontier” is reached;1 and (4) the formation of highly-educated bureaucracies committed to the national project, working both in the state bureaucracy and in the management of business conglomerates (Evans, 1993)
The purpose of this paper is to analyze in general terms the catching-up of South Korea and post-1978 reforms China from a new-developmentalist approach taking account of four key factors: 1) a complementarity relationship between the state and the market as a dynamic process that changes over time; 2) necessary complementarity between macroeconomic policy and industrial policy; 3) the key role of public and development banks in attacking the problem of “development financing”; and a particular focus on 4) the centrality of exchange rate in these countries’ development process
Summary
It is consensus among economists that South Korea since the 1960 and China after the 1978 economic reforms are catching-up success cases, unlike Latin America, whose growth process began to collapse after the Mexican debt crisis of 1982. Within the framework of the crisis, Latin American countries embraced agendas that toed the line of the Washington Consensus, in particular trade openness They thereby dismantled the mechanism that neutralized the Dutch Disease by means of taxes on imports and subsidies to manufactured goods exports, financial accounts openness, and market-determined foreign exchange rates; and dismantled the developmentalist economic policy regime that had marked its industrialization in the four previous decades and launching a process of de-industrialization and exports (re)primarization. The purpose of this paper is to analyze in general terms the catching-up of South Korea and post-1978 reforms China from a new-developmentalist approach taking account of four key factors: 1) a complementarity relationship between the state and the market as a dynamic process that changes over time; 2) necessary complementarity between macroeconomic policy and industrial policy; 3) the key role of public and development banks in attacking the problem of “development financing”; and a particular focus on 4) the centrality of exchange rate in these countries’ development process
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