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Political elites in East Asia have opted for a set of democratic institutions with a strong majoritarian bias that privilege efficiency and accountability over representativeness. Some have labeled these democracies “democratic developmental states.” Because the political architects of East Asia's democratic developmental states have met at least some of their objectives, it is time to ask, What has been the impact of the shift to majoritarianism on growth? I answer this question empirically by demonstrating that the contribution to growth from majoritarian democratic institutions in East Asia is as large as that from the region's developmentally oriented authoritarian governments.
Confucianism has been considered mainly to have had a negative influence on capitalistic development since Max Weber's theory on non-Western societies became widespread. However, in this article, we champion the positive role of Confucianism and attempt to explain Confucianism as providing fundamental “significance” to social development by imbuing it with religious significance. We present the self-sacrificing work ethic and zeal for education that characterizes Confucianism as having become the foundation for Korea's economic growth. In particular, we examine the religious significance inherent in the Confucian value of “filial piety” and illustrate how the value came to be a powerful economic motivator during the process of industrialization. The religious tendency of filial piety, which attempts to “remember” and “represent” one's ancestors, acted as an important spiritual ethos in Korea's social development centered on economic growth. Filial piety did not stop at being an ethical standard; it was the fundamental basis for macrosocial dynamism that was closely linked to the development of capitalism in Korea.
Scholars have long argued that institutional context significantly influences business strategy and economic performance. Research on the relationship between institutions and business strategy, however, has overwhelmingly focused on the decisions of larger, established corporations, mostly neglecting the strategic thinking of smaller, more entrepreneurial ventures. This article seeks to correct this bias by focusing the analysis directly on the critical decision of small-scale entrepreneurs to move from the informal and largely unregulated sector into operation as formal companies. Using a unique dataset and ranking of provincial governance institutions from Vietnam, the authors show that improvements in institutions make firms more likely to choose the formal sector from the start and, for those who do not, to spend less time in the informal sector. The study also finds that property rights have a more salient impact on formalization than other types of institutions.
Business interests are overrepresented in Hong Kong's nominally democratic political institutions. Many in Hong Kong perceive this as evidence of the existence of “collusion between government and business,” a phenomenon that has stirred public concerns in the city since its sovereignty transfer. Although anecdotal accounts abound, no systematic analysis has been conducted to evaluate the validity of this perception. In this article I use a rich firm-level dataset to offer the first systematic assessment of the effects of political connections on firm performance in Hong Kong. I define politically connected firms as firms that have stakeholders concurrently holding a seat on the Election Committee, a constitutional body that elects the city's chief executive. I found evidence, though not overwhelming, consistent with the “collusion” hypothesis: political connections do improve firm performance measured by return on equity and market-to-book ratio. The improvement is unlikely due to unobserved confounding factors such as firms' inherent ability. As for the origin of the political connections, the data show that a firm's economic power has little predictive value of its connections to the Election Committee. Rather, number of employees matters; firms that hire fewer workers were more likely to gain a seat on the 1997 Election Committee. This result may suggest that Beijing plays a more dominant role in the formation of political connections—that serve Beijing's co-optation needs rather than the interests of powerful firms that may have a desire to “capture” the state.
Despite having the fifth highest per capita GDP in the world (according to IMF PPP statistics for 2007), and despite numerous government efforts to spur innovation, Singapore has faced difficulties in establishing a durable base of entrepreneurial activity. Many ascribe this failure to the city-state's policies, which are often portrayed as generating a culture of risk aversion and a lack of creativity. In contrast to this conventional view, this article argues that the city-state's institutional arrangements generate conflicting innovation incentives and ultimately undermine innovative activity. Statistical tests across twenty-three countries offer evidence that is consistent with this argument.
Indonesia's 1999 decentralization law gave local governments in Indonesia an unprecedented opportunity to adopt prodevelopment policies. In this article, we study whether decentralization has in fact generated improved economic performance in Indonesia. Using a synthetic case control methodology, we argue that Indonesian decentralization has had no discernable effect on the country's national-level economic performance. To explain why not, we use subnational data to probe two political economy mechanisms—interjurisdictional competition and democratic accountability—that underlie all theories linking decentralization to better economic outcomes. Our findings suggest that extreme heterogeneity in endowments, factor immobility, and the endogenous deterioration of local governance institutions can each undermine the supposed development-enhancing promises of decentralized government in emerging economies such as Indonesia.
This paper empirically tests bellicist theories of state building in the East Asian context, paying attention to the interplay between external threats and internal challenges and their implications for these states’ extractive power. How much variation in state building in the region can be attributed to war and war preparation as a result of both external threats and internal challenges? In particular, it provides more fine-grained analysis on the different types of internal challenges and their impact on state capacity building. The article argues that in the East Asia region, both external threats and internal challenges are crucial to explaining the variation in state capacity across the region. However, we also find that different types of internal challenges have different effects. Particularly, communist insurgencies seem to have both an immediate and long-term positive effect in compelling the state to respond with more extraction to engage in state-building efforts.
In 1997, several of Asia's economies collapsed and the international community was called in to help mend the ailing region. The crisis attracted a great deal of attention among both the scholarly and policy communities. At that time, it seemed that the Asian miracle had come to an abrupt end. Places such as South Korea enjoyed a prosperous run though suffered a dubious demise. Later developers in Southeast Asia and China, having just emerged from out of the starting gate, quickly stalled in their attempts to ride the wave of Asia's postwar economic dynamism. Fortunately, things would not remain dour for too long. Some countries, such as Taiwan and Japan, made it through the crisis relatively unscathed. Both China and South Korea quickly rebounded. Southeast Asian countries, such as Malaysia, Indonesia, and Thailand, adapted and have consequently begun new growth trajectories. In the end, it seemed that the most severe and lasting casualty of the 1997 crisis was the East Asian developmental state model itself. To be sure, the more recent literatures on East Asian political economy have taken a sharp turn, wherein terms like “booty capitalism” and “crony capitalism” have quickly come to replace more laudatory titles such as the “East Asian Miracle.”
Of the ten fastest growing economies since 1960, eight
are in East Asia. As Haggard (2018) aptly
demonstrates for Northeast Asia, two explanations
account for this exceptional regional performance.
On the one hand, neo-liberals committed to an
Anglo-American night-watchman state (Krueger 1978;
Bhagwati 1978; Edwards 1993; World Bank 1993; Pack
and Saggi 2006) attribute performance to
macroeconomic stability, provision of public goods,
and openness to trade and investment. On the other
hand, a heterodox group (Johnson 1982; Amsden 1989;
Wade 1990/2004; Chang 2002, 1994; Rodrik 1995; Evans
1995; Lin 2009) focuses on market and coordination
failures and the need for states to adopt pragmatic,
‘trial and error’ and selective approaches to
high-speed growth. In this latter view, the strong
developmental states of Northeast Asia used their
embedded autonomy viz the private sector to overcome
market and coordination failures to usher in rapid
growth and technological catch-up.