Strategic Government Spending in South Korea and Taiwan: Lessons for Emergent Democracies

Abstract

A debate persists over how economic performance fuels democratization. It is fanned partly by the divergent experiences of the East and Southeast Asian nations of Indonesia, South Korea, Thailand, Taiwan and the Philippines. This paper provides a theoretical model that shows that economic downturns lead to democratization and evaluates the conclusion systematically with data from South Korea and Taiwan. It departs by treating democratization as an outcome of strategic interaction between government and non-government actors. The model and statistical results corroborate that economic downturns motivate government and non-government actors to credibly pursue political reforms and democratization in East and Southeast Asia. This paper makes three contributions: First, it provides a model to show democratization as the outcome of strategic responses under weak economic conditions. Second, the model’s conclusions are tested with different operationalizations of democratization, ensuring that the findings are robust to alternative specifications. Third, the evidence from East and Southeast Asia expands strategic treatment and systematic analyses to critical cases to augment theoretical and empirical bases towards the debate.