Asian NICs Research Articles

World Market for Social Order, Embedded State Autonomy and Third World Development

Various arguments have been put forward to account for socioeconomic development in East Asia's newly industrializing countries. A blend of state-centred arguments with a proposed ‘World Market for Social Order’ concept is suggested in this article. The varying degree of legitimacy of particular social orders is introduced as a key factor for explaining success and failure in late development. The proposed analytical framework allows to simultaneously address issues related to international political economy and comparative political economy. It accounts for divergent historical development trajectories as represented by the successful East Asian NICs on the one hand and the less successful Latin American ones on the other. Furthermore, the peculiar case of Malaysia, whose sociopolitical and cultural background rather clearly deviates from the East Asian ideal typical conditions for successful late development, can be much better understood. We also reflect the significance of the Asian financial crisis in 1997/98 for our analytical framework.

Impact of Globalization: A Study of Quality Assurance Systems of Higher Education in Hong Kong and Singapore

Cet article examine a quel point l'enseignement superieur a Hong-Kong et a Singapour a ete affecte par un aspect de la mondialisation, la force du managerialisme, en particulier dans les mecanismes et systemes de direction et de gestion qu'ont adoptes la City University of Hong-Kong et la National University of Singapore en reponse a une vague mondiale d'assurance de la qualite.

Domestic Competition, Cyclical Fluctuations, and Long-Run Growth in Hong Kong Sar

This paper provides an empirical assessment of the degree of competition in Hong Kong SAR using industry-level data. Although due to data limitations only approximate measures of competitiveness can be estimated, the results do suggest that Hong Kong SAR is as competitive as a typical OECD economy. The dramatic shift of the economy toward services over the last decade has also made it slightly less competitive on average. Imperfect competition is not leading to counter-cyclical markups and slower price adjustment as some theories predict, however, since markups are more pro-cyclical than in OECD countries. Lastly, markups are sufficiently imperfectly competitive in both Hong Kong SAR and the OECD to significantly downwardly bias growth accounting estimates of total factor productivity in Asian NICs vis-a-vis OECD countries.

Domestic Competition, Cyclical Fluctuations, and Long-Run Growth in Hong Kong Sar

This paper provides an empirical assessment of the degree of competition in Hong Kong SAR using industry-level data. Although due to data limitations only approximate measures of competitiveness can be estimated, the results do suggest that Hong Kong SAR is as competitive as a typical OECD economy. The dramatic shift of the economy toward services over the last decade has also made it slightly less competitive on average. Imperfect competition is not leading to counter-cyclical markups and slower price adjustment as some theories predict, however, since markups are more pro-cyclical than in OECD countries. Lastly, markups are sufficiently imperfectly competitive in both Hong Kong SAR and the OECD to significantly downwardly bias growth accounting estimates of total factor productivity in Asian NICs vis-a-vis OECD countries.

Exemplars, Analogies, and Menus: Eastern Europe in Cross Regional Comparisons

This article evaluates three provocative cross‐regional comparisons that use Eastern European cases. It begins by defending such comparisons against serious objections emphasizing Leninist legacies. Books by Offe, Greskovits, and Henderson et. al. form the foundation for a discussion of comparisons to the Eastern German, Latin American, and East Asian NIC cases, respectively. The different comparative approaches are assessed with reference to three blocks of issues: the possibility of achieving democratic capitalism “by design,” the strength of social responses to economic hardship, and the viability of state instruments to keep reforms moving. Characterizing the different approaches as reliant upon “exemplars, analogies, and menus,” the article assesses the outcomes of East European transformations at the ten‐year mark. It concludes with a sketch of a partially convergent agenda for further research along all three lines.

China, Marxism, and Democracy: Selections from October Review (review)

Reviewed by: China, Marxism, and Democracy: Selections from October Review Stephen Philion (bio) Thomas Barret, editor. China, Marxism, and Democracy: Selections from October Review. Atlantic Highlands, New Jersey: Humanities Press International, 1996. vi, 257 pp. Hardcover, ISBN 0-391-09323-7. From 1978, when the move toward market-oriented policies in China was officially undertaken, until June 4, 1989, there was considerable excitement generated in intellectual and activist circles about the possibility of linking China's economic reforms with the goal of democratization. Since that day there has been considerably less optimism about such a prospect. The general trend in the literature on the problem of constructing democracy in China is to blame the lack of democracy on the legacy of Marxism in China and to see Marxism as one of the main barriers, if not the main barrier, to such a project. China, Marxism, and Democracy: Selections from October Review (hereafter CMD) departs from the mainstream determinist linkage of Marxism and anti-democratic forms of political-economic governance. Instead, it asks a much more theoretically coherent research question, namely how has the departure of the Chinese Revolution from the Marxist goal of a society in which working people could directly control the institutions (e.g., factories, banks, schools, and housing) that affect their fates derailed the project of democratic construction in China? The question is not of small import, on at least two grounds, which this book demonstrates quite well. First, to ignore it requires that we dismiss the considerable debate on the role of democratic forms of political-economic organization within Marxism. Second, the turn to markets in China has created a generation of "democracy activists" abroad who seem utterly ill equipped to theorize many of the undemocratic legacies of China's market-oriented policies, not to mention the conflict between democratization and progressive integration into global capitalist markets. What is widely forgotten by liberal Chinese activists (abroad or in China) is that capitalist development in nearby Asian NICs was carried out under glaringly authoritarian political conditions and that liberal political reforms carried out from the late 1980s onward have not led to a more democratic control or distribution of the surpluses generated by Asian NIC "miracles." Indeed, liberal political-economic institutions in Asia, especially since the onset of the Asian financial crisis, have been largely captured by local corporations and are ever susceptible to the will of foreign multinational investors and lending institutions (e.g., [End Page 373] the IMF and the World Bank). Therefore, this book pushes us to consider another important question, namely what kind of democracy should be constructed in China, if neither the present model of "market-socialism" nor the liberal alternative creates democratic institutions in much more than the formal sense. CMD is a compilation of articles from the Hong Kong-based Trotskyist journal October Review that were written during the 1980s and very early 1990s. The ones selected for this volume were originally written in response to Dengist market-oriented political-economic policies and the repression of the May-June 1989 democracy movement. CMD begins with a brief introduction by the book's editor, Thomas Barret, in which the urgency of these issues and an understanding of the background of the Trotskyist critique of the Chinese Revolution's Stalinist orientation and the Dengist embrace of markets is seen as the key to solving the resultant bottlenecks. Barret notes that while great hopes for prosperity and democracy were aroused with the fall of the Soviet Union and the Berlin Wall, these hopes have hardly been realized in most of the former Eastern Bloc countries. Instead, conditions of economic austerity and unemployment have proven to be far more fertile ground for the breeding of xenophobic far-right ideologies. Meanwhile, in China "Deng Xiaoping has been guiding China toward a restored capitalism while maintaining the CCP's harsh dictatorship." For the contributors, June 4, 1989, serves as a watershed moment in which the direction of China's market socialism was laid bare, a socialism that would establish the foundations for the emergence of a new class of much wealthier appropriators and roll back any attempts by workers and students to demand democratic reforms that...

The Effects of the Financial Crisis in the Mature Asian Nics: “Enterprise Association” and its Modifications

The Asian financial crisis can be attributed in part to the “enterprise association” model of governance pursued in East and Southeast Asia. As a consequence, business has served governmentally defined ends, the independence of the social sphere has been stymied, and autonomous legal institutions have been slow to develop. Although this model has conditioned important policies pursued in Singapore and Taiwan, other influences have mitigated - though unintentionally - its worst effects. In Singapore, the elites have seen the importance for international financial credibility of the rule of law as it applies in many areas of commerce; the desire to limit for political ends the development of a powerful local bourgeoisie has encouraged it to keep the country particularly open to the activities of trans-national corporations. In Taiwan, the division (before the mid 1980s) of politics and business which reflected the divide between “mainlanders” and “Taiwanese”, and the institutionalised resourcing of the ruling Kuomintang by the state, along with the “Taiwanese” (and thus potentially autonomous) character of most political and social movements, modified the business-government nexus. Comparison with Korea illustrates the different outcomes where analogous factors do not operate.

Exports, economic growth and structural invariance: evidence from some Asian NICs

In this paper we use the exogeneity techniques developed by Engle and Hendry (Journal of Econometrics, 1993, 56, pp. 119-39) and data from three Asian NICs to test the invariance assumption of the export-led growth hypothesis.

Un certain décalage. Perspectives 1999-2000 pour l'économie mondiale

Expected Growth Swings. Forecasts for 1999-2000 for the world economy Forecasts for 1999-2000 for the world economy Division Economie internationale The Asian turmoil seems to be over Spring 1999. Recovery is taking place in Asian NICs, whereas the Brazilian crisis leads Latin America to fall into recession. Growth would slow in Eastern European economies, while GDP would decline in Russia. Oil prices would slowly recover. Expansionary fiscal policy would allow a Japanese GDP growth of 0.5% this year and 2.5 in 2000. The US GDP, still boosted by internal demand, would rise by 3.5% in 1999 and by 2.6 in 2000. According to the Mimosa model, a fall of 20% in equity prices would have a negative impact of 0.7% on the US GDP. Industrial activity has strongly decelerated in the euro area as a consequence of world trade slowdown. Owing to internal demand, world trade acceleration and higher dollar, GDP would rise by 2.1% in 1999 and 2.7% in 2000. JEL Code : FO1

Hypergrowth in an East Asian NIC: Public policy and capital accumulation in Singapore

Singapore has produced the world's highest investment ratios, known to account for growth more rapid than in any other less-developed country over the past three decades, but such high investment needs explanation. We trace Singapore's public policy of increasing tax concessions and infrastructural spending—in effect subsidies to private firms—and use an open-economy, neoclassical model to show how, by attracting “footloose” foreign capital and raising investment levels, these policy measures can drive growth. The consequent transformation of living standards in Singapore suggests, in accordance with theory but contrary to most practice, that for some less-developed countries effectively zero tax on foreign direct investment may be a beneficial strategy. Yet for both Singapore and other would-be late industrializers, major issues of development strategy arise from the kind of input-driven growth analyzed in this article.

Growth effect of taxes in an endogenous growth model: to what extent do taxes affect economic growth?

This paper presents an endogenous growth model comprising of financial, human and physical capital and incorporating major features of a general tax system. Technology and preference parameter values in the model are chosen to fit the actual growth experiences of the United States and a rapidly growing East Asian NIC. Using the calibrated model, I assess the role of differences in taxes and other variables in explaining the difference in growth rates. The main findings are: (i) the difference in tax systems across countries explains a significant proportion (around 30%) of the difference in growth rates; (ii) the difference in preferences explains at most 4%; and (iii) differences in labor income tax, debt-equity ratio and inflation can be important in explaining the growth difference. Further, I evaluate the contribution of the monetary factor to the growth rate gap, and the growth effect of US tax reforms, e.g., revenue-neutral changes in relative tax structure.

Military Expenditures, Technological Change, and Economic Growth in the East Asian NICs

In the last 30 years the East Asian NICs (Indonesia, Malaysia, South Korea, Taiwan, and Thailand) have experienced significant economic and technological expansion alongside increases in military spending. We derive a production function model that is sensitive to both technological progress and the defense sector. We employ the model to assess the relationship between military spending, economic growth, and technological change in the East Asian NICs for 1961-90. Although the effects of defense spending vary across the countries, the general trend is that when technological progress is specified in the production function, defense spending has negative impacts on economic growth in the region.

Where Do Tigers Sleep at Night? The State’s Role in Housing Policy in South Korea and Singapore

A statist perspective holds that the autonomous state has enabled East Asian NICs, notably South Korea, Singapore, Taiwan, and Hong Kong, to achieve economic success. I challenge this perspective by showing that sociopolitical relations between the state and other social actors have deeply affected state actions in housing development in South Korea and Singapore. I demonstrate that the state role in housing is influenced by the nature of the political coalition the state has established with other social groups to promote economic growth. In South Korea, an exclusive developmental coalition between the state and large capitalists forced the state to minimize its role in housing provision and severely reduced state autonomy in controlling real estate speculation. In contrast, the state in Singapore has been proactive in providing public housing and controlling landownership on the basis of a balanced relation between growth and populist coalitions. This study suggests that the state role in national development needs to be understood in the context of political processes among social actors, such as political coalitions between the state and other social actors. The state can succeed in fostering social development only by establishing the proper political relations among social actors, such as the state, capital, and labor.

Long-run determinant of Korean economic growth: empirical evidence from manufacturing

This paper challenges the recent contrarian view that the phenomenal growth of East Asian NICs is fuelled mainly by the accumulation of production inputs not by TFP growth. To appraise this view, we investigated and re-evaluated South Korean manufacturing growth (1973(Q1)–1993(Q4)). Using Johansen's cointegrating analysis, our results show that South Korean manufacturing appears to have increasing returns to scale in production technology. The ‘learning by doing’ effect defined by Lucas (1988) is empirically supported. This effect appears to be observed as a long-run determinant of South Korean manufacturing growth. Consequently, South Korean manufacturing growth can be described by an endogenous economic growth model, such as the Lucas (1988) model, contradicting the contrarian view.

Neo liberalism revised? A critical account of World Bank concepts of good governance and market friendly intervention

This article examines recent World Bank reports on the role of the state in the development process, with particular reference to the rise of the East Asian NICs and the crisis of ‘governance’ in sub-Saharan Africa. The concepts of market friendly intervention and good governance are critically discussed, and are found to be inadequate as explanations for East Asian ‘success' and African ‘failure’. An alternative explanation for the rise of the NICs is presented, which draws out some of the implications for the developing world.

Development strategy and regime type: Why doesn’t democracy matter?

The development strategy literature argues that autonomous bureaucrats in authoritarian Asian NICs followed successful export-led growth strategies while Latin American policymakers were pressured by mobilized sectors to maintain doomed import substitution industrialization. What is more, this ISI strategy made the consolidation of democracy impossible. However, my research on Venezuela indicates that ISI and democracy can be made compatible—the democratic state was penetrated by business and labor, those avenues for penetration were protected from electoral politics, and the relative participation of business and labor remained fluid. How are recently established democracies being made compatible with a new market-oriented development strategy? Evidence from East Asia and Latin America indicates that the transition to market-oriented economies and the institutionalization of participation by key sectors have not gone together. Policymakers are trying to isolate bureaucrats from public pressure and centralize power away from bodies vulnerable to electoral oversight. The “deinstitutionalization” of democratic politics may make the relationship between regime type and development strategy unstable.

Relationships between SERVQUAL dimensions and organizational performance in the case of a business‐to‐business service

A growing recognition of the critical differences between industrial and consumer services requires additional research emphasis on marketing of services in business‐to‐business context. Presents an application of SERVQUAL as a measure of service quality in Ocean Freight Services. Based on a cross‐section sample of 114 business organizations in Singapore, which regularly utilize ocean freight services for their export needs, the study asked shipping lines for their heaviest used export routes and provide their overall evaluation of services provided by their preferred suppliers. Respondents also evaluated various interfacing departments in the shipping line and SERVQUAL measures on various service quality dimensions. This study identifies the various strengths and weaknesses of the interfacing departments as well as in‐service quality determinants. Further, the relationships between overall line performance, service quality, as well as specific customer service interfacing departments are examined. The findings have important implications for shipping lines’ marketing strategies. Though conducted in Singapore, the study is equally applicable to other Asian environments and NICs where many of the same lines are offering freight services to the exporting organizations.

State and ethnicity in Botswana and Mauritius: A democratic route to development?

Botswana and Mauritius stand virtually alone among developing countries in having achieved rates of economic development rivalling those of the East Asian NICs, while maintaining democratic institutions. We compare their experiences with the goal of identifying aspects of a democratic route to development that avoids the inherent authoritarianism of the East Asian model. Our study is based upon Hyden's [1992] governance model, but we suggest two important modifications to that model. A strong state seems essential to achieving economic development, and we identify means of reducing the tendency for such states to lose accountability. Secondly, the experience of these two countries suggests ways in which the ethnic and tribal divisions that are so common in LDCs can be recognised by the state so that social pluralism makes a positive contribution to effective and democratic governance.

Scale Economies and International Trade in a Rapidly Growing Region

Scale is universally acknowledged as important in the determination of national comparative advantage. Paradoxically, attempts to associate empiri cal measures of scale economies and international trade volume have proved largely inconclusive, and often have been found to sport the “wrong” sign. We examine the trade-scale nexus in the context of East Asian NICs and “NextTier” NICs whose economies and exports have grown especially rapidly since the mid-1960s. In a cross section context we replicate the negative correlations typically found in the literature. By combining time section and cross section analyses we demonstrate significant positive correlations in a dynamic context, finding that the smaller the country the greater the scale economy gains for any

DIVERGENT DEVELOPMENT: THE PURSUIT OF LIBERTY, EQUALITY, AND GROWTH IN ARGENTINA AND THE REPUBLIC OF KOREA

Divergence in the development of East Asian and Latin American NICs is catching the attention of a growing number of political economists. This divergent development has sparked debates over THEORY between advocates of neo‐liberal and neo‐dependency approaches (Biersteker; Stallings: 370) in accounting for the regional divergence: does the East Asian success confirm modernization theory (neo‐liberalism) generally, or does each region require its own theory? (see Barrett and Whyte on Taiwan; Alschuler: chap. 4 and Lanzarotti: chap. 5 on Korea; Evans, 1987). East Asian “miracles” have led to equally bitter controversies over PRACTICE with regard to policy recommendations for third world nations: is the East Asian model exportable and is this desirable? (see Amsden; Fishlow; Broad and Cavanagh).