The new Korean state

New Political Economy

Volumn 10, Issue 1, 2005, Pages 25-42

  Pirie, Iain ^a  

^a LANCASTER UNIVERSITY   (United Kingdom)

Author keywords

[No Author keywords available]

Indexed keywords

GLOBAL ECONOMY; NEOLIBERALISM; POLITICAL ECONOMY;

ASIA; EASTERN HEMISPHERE; EURASIA; FAR EAST; KOREA; WORLD;

EID: 17944379739     PISSN: 13563467     EISSN: None     Source Type: Journal    
DOI: 10.1080/13563460500031172     Document Type: Article

References (95)

1. See Ha-Joon Chang, Hong-Jae Park & Chul Gyue Yoo, 'Interrupting the Korean Crisis: Financial Liberalisation, Industrial Policy and Corporate Governance', Cambridge Review of Economics, Vol. 22, No. 6, pp. 735-46 on the unravelling of the developmental state.
2. Bruce Cumings, 'The Asian crisis, democracy, and the end of "late" development', in: T. J. Pempel (ed.), The Politics of the Asian Economic Crisis (Cornell University Press, 1999), pp. 17-44.
3. However, a palpable shift has taken place between the majority of the work published immediately after the crisis and more recent scholarship, which comes much closer to recognising the epochal nature of the changes that are currently taking place
4. See Robert Emery, Korean Economic Reform: Before and Since the 1997 Crisis (Ashgate, 2001);
5. and Edward Graham, Reforming Korea's Industrial Conglomerates (Institute for International Economics, 2003), pp. 110-11 for examples of this shift.
6. James Crotty & Kang-Kook Lee, Economic Performance in Post-Crisis Korea: A Critical Perspective on Neoliberal Restructuring, Working Paper No. 23, 2001, Political Economy Research Centre, University of Massachusetts, Amherst, available at http://www-unix.oit.umass.edu/ -crotty/WP23.pdf;
7. and Jang-Sup Shin & Ha-Joon Chang, Restructuring Korea Inc (Routledge, 2003).
8. Linda Weiss, 'Guiding globalisation in East Asia: new roles for old developmental states', in: Linda Weiss (ed.), States in the Global Economy: Bringing Domestic Institutions Back In (Cambridge University Press, 2003), pp. 245-70.
9. Robert Boyer & Daniel Drache (eds), States Against Markets: The Limits of Globalization (Routledge, 1996);
10. and Steven Vogel, Freer Markets, More Rules: Regulatory Reform in Advanced Industrial Countries (Cornell University Press, 1996).
11. In order to support the assertion that the neoliberal state is synonymous with the minimal state these scholars cite a very limited range of radical free-market scholars for whom liberalisation is synonymous with state retreat. The most commonly cited texts are Richard McKenzie & Dwight Lee, Quicksilver Capital: How the Rapid Movement of Wealth Has Changed the World (Free Press, 1991);
12. and Kenichi Ohmae, The Borderless World: Power and Strategy in the Interlinked Economy (Harper Business, 1990).
13. Michael Moran's work on the British state reveals that neoliberal reform may actually be accompanied by an extension in the reach of central government as potentially anti-competitive systems of self-regulation are torn down.
14. See Michael Moran, The Politics of the Financial Services Revolution: The USA, UK and Japan (Macmillan, 1991);
15. and Michael Moran, The British Regulatory State: High Modernism and Hyper-Innovation (Oxford University Press, 2003).
16. World Bank, World Development Report 1997: The State in a Changing World (Oxford University Press, 1997);
17. Organisation for Economic Co-operation and Development (OECD), Pushing Ahead with Reform in Korea: Labour Market and Social Safety-Net Policies (OECD, 2000);
18. and World Bank, World Development Report 2002: Building Institutions for Markets (Oxford University Press, 2002).
19. The greater emphasis that transnational capitalist elites placed on re-regulation in the 1990s is captured in key World Bank reports which stress the importance of the strong neoliberal regulatory state. This stress on the importance of the state does not represent a retreat from the neoliberal project but a necessary part of the consolidation of earlier neoliberal reforms.
20. See World Bank, World Development Report 1997;
21. and World Bank, World Development Report 2002.
22. Although it must be stressed that many neoliberal restructuring projects have failed to achieve their stated objectives of creating functioning market economies.
23. Weiss, 'Guiding globalisation in East Asia', pp. 257-8.
24. Alex Mintz (ed.), The Political Economy of Military Spending in the United States (Routledge, 1991);
25. and Michael Moran, Governing the Health Care State: A Comparative Study of the United Kingdom, the United States and Germany (Manchester University Press, 1999).
26. Having said this, there are other important areas of institutional restructuring, relating to competition policy and key sectors such as telecommunications, which clearly merit attention. Unfortunately, constraints of space prevent us from exploring these areas here.
27. See OECD, Korea and the Knowledge-based Economy: Making the Transition (OECD, 2000);
28. and OECD, Regulatory Reform in Korea (OECD, 2000).
29. Alice Amsden, Asia's Next Giant: South Korea and Late Industrialisation (Oxford University Press, 1989);
30. Jung-en Woo, Race to the Swift: State and Finance in Korean Industrialization (Columbia University Press, 1991);
31. and Martin Hart-Landsberg, The Rush to Development: Economic Change and Political Struggle in South Korea (Monthly Review Press, 1993).
32. Peter Dicken, Global Shift: Transforming the World Economy, 3rd edn (Paul Chapman, 1998).
33. Susan Strange, States and Markets, 2nd edn (Pinter, 1994).
34. John Stopford & Susan Strange (with J. Henley), Rival States, Rival Firms (Cambridge University Press, 1991);
35. John Dunning, Alliance Capitalism and Global Business (Routledge, 1997);
36. Susan Strange, Mad Money (Manchester University Press, 1998);
37. and A. Prakash & J. Hart (eds), Globalization and Governance (Routledge, 1999).
38. Dunning, Alliance Capitalism and Global Business;
39. Dicken, Global Shift;
40. Prakash & Hart, Globalization and Governance;
41. and Leslie Sklair, The Transnational Capitalist Class (Blackwell, 2001).
42. Kanishka Jayasuriya, Governance, Post-Washington Consensus and the New Anti-politics, Working Paper No. 2, 2001, Southeast Asian Research Centre, City University of Hong Kong, available at http:// www.cityu.edu.hk/searc/WP2_01_Jayasuriya.pdf, pp. 7-9;
43. and Kanishka Jayasuriya, 'Globalization and the Changing Architecture of the State: The Regulatory State and the Politics of Negative Coordination', Journal of European Public Policy, Vol. 8, No. 1 (2001), pp. 101-23.
44. Chalmers Johnson, MITI and the Japanese Miracle (Stanford University Press, 1982);
45. and John Zysman Governments, Markets and Growth: Financial Systems and the Politics of Industrial Change (Cornell University Press, 1983).
46. John Dunning, The Globalization of Business (Routledge, 1993), p. 63.
47. Dicken, Global Shift, p. 326.
48. Peter Dicken, Global Shift: Reshaping the Global Economic Map in the 21st Century, 4th edn (Sage, 2003), p. 364.
49. Ibid., p. 407.
50. I b i d.
51. Tat Yan Kong, The Politics of Economic Reform in South Korea (Routledge, 2000).
52. Sylvia Maxfield, 'Financial Incentives and Central Bank Authority in Industrialising Nations', World Politics, Vol. 46, No. 4 (1994), pp. 333-61,
53. cited in Jayasuriya, Governance, Post-Washington Consensus and the New Anti-politics, p. 8.
54. Her Majesty's Treasury, Reforming Britain's Economic and Financial Policy: Towards Greater Economic Stability (Palgrave, 2002). The first thing the new Chancellor, Gordon Brown, did after taking office was to begin the process of increasing the autonomy of the Bank of England. Interestingly, another major theme of the British government's economic reports has been the importance of recent changes in systems of financial regulation. Shortly after its election, the Blair administration set about creating a unified independent financial regulator, the Financial Services Authority (FSA). The British FSA is very similar to Korea's new financial regulator. The structures of British and Korean financial and monetary governance would appear to be converging!
55. BOK, The Bank of Korea Act (Amended by Law No. 5491 promulgated on 31 December 1997, available at http://www.bok.or.kr/index_e.html
56. Jayasuriya, Governance, Post-Washington Consensus and the New Anti-Politics, p. 7.
57. The Minister of Finance retains the right to nominate one committee member.
58. BOK, The Bank of Korea Act.
59. Ibid., Chapter 5, Article 88.
60. Graham, Reforming Korea's Industrial Conglomerates, pp. 110-11.
61. Jayasuriya, Governance, Post-Washington Consensus and the New Anti-politics;
62. and Jayasuriya, 'Globalization and the Changing Architecture of the State'.
63. John Matthews, 'Fashioning a New Model out of the Korean Crisis: The Rebuilding of Institutional Capacities', Cambridge Review of Economics, Vol. 22, No. 6 (1998), pp. 447-59.
64. IMF, Republic of Korea IMF Stand-by Arrangement of the Economic Program, 5 December 1997, available at http://www.imf.org/extemal/np/ other/korea.html
65. Dae-Jung Kim, Mass-Participatory Economy: Korea's Road to World Economic Power, revised and updated edition (University Press of America, 1996), pp. 107-9.
66. Emery, Korean Economic Reform, pp. 41-2.
67. Author interviews with senior BOK officials, Seoul, October-December 2001.
68. Richard Robison & Andrew Rosser, 'Contesting Reform: Indonesia's New Order and the IMF', World Development, Vol. 26, No. 8 (1998), pp. 1593-609;
69. Natasha Hamilton-Hart, 'Indonesia: reforming the institutions of financial governance', in: Gregory Noble (ed.), The Asian Financial Crisis and the Architecture of Global Finance (Cambridge University Press, 2001), pp. 108-31;
70. and Stefan Eklof, 'Politics, business, and democratisation in Indonesia', in: Edmund Gomez (ed.), Political Business in East Asia (Routledge, 2001), pp. 216-49.
71. Jayasuriya, Governance, Post-Washington Consensus and the New Anti-politics;
72. and Jayasuriya, 'Globalization and the Changing Architecture of the State'.
73. Matthews, 'Fashioning a New Model out of the Korean Crisis', p. 455.
74. With the decline in comprehensive planning in the 1980s and 1990s the personal financial motive became increasingly important.
75. See Chang et al., 'Interrupting the Korean Crisis' for more details.
76. OECD, Economic Survey of Korea (OECD, 1998), pp. 57-61.
77. FSC, Financial Reform & Supervision in Korea (FSC, 2000), available at http://www.fsc.go.kr, p. 25.
78. Five of the nine members of the FSC are appointed directly by the President and enjoy security of tenure. The Deputy Head of the BOK and the Korean Deposit Insurance Corporation, both civil servants, and the Deputy Minister of Finance and Economy also sit on the FSC. The members of the FSC are expected to follow certain 'operating principles'. These include the obligation to operate in a transparent manner, harmonise Korean standards with international norms, protect financial consumers, respect the autonomy of private institutions, strengthen prudential standards and take swift action against institutions which fail to meet these standards. This endnote is based upon information derived from ibid., pp. 3-35.
79. Ibid., p. 25.
80. World Bank, Korea: Financial Sector Assessment, Economic Report, No. 26176, 2003, available at http://www-wds.worldbank.org/servlet/ WDS_IBank_Servlet?pcont=details&eid=000012009_20030619134312
81. Crotty & Lee, Economic Performance in Post-Crisis Korea;
82. and Shin & Chang, Restructuring Korea Inc.
83. Weiss, 'Guiding globalisation in East Asia', pp. 249-58.
84. World Bank, World Development Report 1997;
85. World Bank, World Development Report 2002;
86. OECD, Regulatory Reform in Korea;
87. and OECD, Korea and the Knowledge-based Economy.
88. Weiss, 'Guiding globalisation in East Asia', p. 252.
89. Emery, Korean Economic Reform, p. 44. It is difficult to see how a genuinely independent regulator, committed to developing and consistently enforcing a more rigorous set of regulatory standards, could have functioned in pre-crisis Korea. As we have already argued, the development and enforcement of higher prudential standards would have induced a systemic financial crisis.
90. OECD, Economic Survey of Korea (OECD, 1999), pp. 85-97.
91. Ibid., p. 88;
92. Anthony Richards, Kenneth Kang, Henry Ma, Hong Liang, Aung Win, Paul Cashin, Meral Karasulu, Thomas Laryea & Sungbin Cho, Korea: Selected Issues (IMF, 2002), p. 102.
93. Vogel, Freer Markets, More Rules;
94. and Linda Weiss, The Myth of the Powerless State (Cornell University Press, 1998).
95. Vogel, Freer Markets, More Rules.