Linda Weiss

Developmental states in transition: adapting, dismantling, innovating, not 'normalizing'

Capitalist diversity is doomed in a global economy and the coming century will see ever more countries adapting their institutions to resemble more closely the Anglo-American model. Or so many believe. But to what extent have the ideological and institutional fundamentals of East Asian developmental states been eroded and in what measure is change being driven by an external-economic logic? Five propositions are developed in the light of the catch-up process, the sources and outcomes of financial liberalization, the Asian financial crisis, and Japans bank crisis. The article concludes that the East Asian experience offers little comfort to those who expect that liberalization will lead to ‘normalization’.

Global governance, national strategies: how industrialized states make room to move under the WTO

ABSTRACT Global and national governance are sometimes seen to stand in a zero-sum relationship, particularly in the post-GATT era of multilateral trade. A more nuanced view expects states to seek the benefits of multilateralism whilst finding convenient loopholes and escape routes from its policy constraints. This paper steers a different course, focusing on the overt (‘legitimate’) measures industrialized states are undertaking to succeed in the international arena. Rich nations as a group have carved out a multilateral order which best suits their current developmental trajectory – one that diminishes space for promoting industries critical to their climb up the development ladder, while increasing scope for sponsoring the technology-intensive sectors now critical to securing national prosperity. State activism continues and in some respects has taken on a more strategic and collaborative quality. This paper discusses several forms of ‘strategic activism’ in trade, technology, and finance and considers why it has emerged in the context of increased multilateral discipline.

Governed interdependence: Rethinking the government‐business relationship in East Asia

Abstract Analyses of East Asias high‐performance economies have highlighted the advantages of a coordinated approach to market failures. With states dominating the process, both public and private agencies are increasingly involved. The recent literature sees public‐private cooperation as a limit to state capacity and thus a challenge to statism. Within an institutionalist framework, this paper proposes a fresh view of the government‐business relationship which avoids the statist premise of domination, but without relying on ‘weak state’ arguments. Through an examination of key organizational features of state and industry in Korea, Taiwan, and Japan, the paper proposes a theory of ‘governed interdependence’ in which both state and capital are taken seriously; where both strong state and strong industry go hand‐in‐hand; and where the capacities of both are mutually enhanced. The article identifies four principal types of government‐industry cooperation in the East Asian experience — some apparently ‘stat...

Investing in Openness: The Evolution of FDI Strategy in South Korea and Taiwan

Much has been written about the decline of developmentalism in East Asia and the neoliberal makeover of states once renowned for ‘strategic industrial policy’. The adoption of more open trade and investment policies following the 1997 crisis, along with substantial financial sector reforms, has led some observers to conclude that the era of the developmental state is over and that of the ‘liberal-regulatory’ state has begun. 1 But while concepts such as ‘regulatory state’ and ‘post-developmental’ state are now the common currency of accounts seeking to conceptualise state transformation in post-crisis Asia, systematic empirical research that goes beyond surface policy shifts to appraise underlying institutional changes – both organisational and ideational – is thin. This paper takes a small step towards filling this gap, focusing on the evolution of foreign investment strategy in South Korea (hereafter Korea) and Taiwan since the financial crisis. 2 In particular, we seek to ascertain what recent reforms say about these states’ hitherto strategic approach to foreign investment issues. It is now widely appreciated that, over several decades, the governments of Korea and Taiwan engineered a set of institutional arrangements that enabled them effectively to guide foreign investment (both inward and outward) towards developmental ends. 3 Over the past decade, however, the emergence of a more complex set of domestic economic imperatives (reflecting the success of these countries’ industrial promotion efforts) and the proliferation of new international rules that proscribe certain domestic regulatory controls have made traditional forms of investment coordination more difficult and less viable. Moreover, upon their accession to the World Trade Organization (WTO) in 1995 and 2001 respectively, as well as in the immediate aftermath of the 1997 financial crisis, Korea and Taiwan declared major financial sector reforms, removing most foreign direct investment (FDI) conditionalities and relaxing capital controls on inbound and outbound flows. So what does this more liberal investment environment mean for these erstwhile developmental states? The fact that substantial policy shifts have occurred in Korea and Taiwan is beyond dispute. As we have argued elsewhere, however, policy changes alone tell us little about a state’s underlying orientation – whether it is motivated by liberal or developmental ambitions. 4 Indeed, if East Asia’s developmental states

The State-augmenting Effects of Globalisation

Global integration raises many questions about the state of the state. Its policy capacities, its institutional integrity and, not least, its political powers have been dramatically altered, so many pundits claim, by the spread of social relations across the globe. Although debate on these issues continues unabated, the ground has recently shifted. Nowadays, political analysts talk less of the decline of the state, and even less of its continuing potency, than of its transformation. Tightly constrained by exposure to global capital markets, the exit power of multinationals, participation in the multilateral trade regime and, in specific cases, European integration, the transformed state appears to be ‘straitjacketed’ rather than ‘in retreat’. In this updated vision, global integration acts as a force that constrains states and reshapes institutions, severely restricting the room for manoeuvre, standardising domestic institutions and dispersing decision-making authority downwards, upwards and sideways to other power actors. In the new global drama of multilayered governance, states are metamorphosing not into minor figures, but into supporting players in a cast led by ever new protagonists. This is the influential ‘constraints’ view of state transformation. It is the story being told about globalisation’s impact on the domestic capacities of the world’s most advanced political institutions – those that prevail in the developed world. It is these that are the focus of discussion here. There is, of course, a strong kernel of truth to the ‘constraints’ view of state transformation. Nevertheless, it suffers from two major limitations. One is an overwhelming concentration on the constraining effects of globalisation, which ignores its enabling consequences. The constraints can certainly seem convincing when examined in their own right, but when set within the larger context of state behaviour, the picture alters. Using two eyes rather than one, we find that some policy constraints are real (such as the difficulty in controlling interest and exchange rates), but that these become less important when set against the existence of ample room for action in key policy areas (such as social welfare, trade and industrial development); that important challenges for domestic adjustment do arise from the pressures of economic integration, but that these are neutralised, moderated or heightened by the domestic institutional context; and that pressures for policy and institutional conformity can at times be strong, but that this New Political Economy, Vol. 10, No. 3, September 2005

State Power and the Asian Crisis

Earlier versions of this paper were presented at the jointly sponsored seminar of the Department of Sociology, the School of Asian Studies, and the Center for Social Theory and Comparative History, UCLA, the Woodrow Wilson School, Princeton University, the Department of International and Public Affairs, University of Columbia, the Institute on Globalization and the Human Condition, McMaster University, the Henry R. Luce Lecture, Clark University, and the Program on US-Japan Relations, Harvard University. I am grateful to those who participated for their many astute and valuable comments. In particular, I wish to thank Parminder Bhachu, Jagdish Bhagwati, Ha-Joon Chang, Wan-wen Chu, William Coleman, Sheldon Garon, Nicky Hart, Atul Kohli, Arvid Lukauskas, Michael Mann, Richard Stubbs, Steven Vogel, and Robert Wade and the two anonymous referees of the Working Paper series for their comments on an earlier draft.

The Myth of the Neoliberal State

This chapter discusses how and why the state – well before the financial crisis and in spite of expectations fostered by debates on globalisation and neoliberalism – remains at the core of economic governance. It examines three areas of state activism in the economy – two long-standing (in industry and finance), one more recent (sovereign investment funds) – and proposes (as the counterpoint to the globaliser-cum-neoliberal argument) that the state’s role as an economic and developmental actor has been valorised rather than diminished by the pressures of economic integration.

Introduction: Neoliberalism and Developmental Politics in Perspective

This book is a result of interdisciplinary reflection on the conditions, processes and outcomes of neoliberal-era developmental politics. Its aim is to probe collectively and debate the developmental conditions of the world as enmeshed with neoliberal ideas, interests and powers. While national development was for decades a focal subject of research in political science, sociology, political economy as well as development economics, the global neoliberal hegemony since the 1980s – often summarised in terms of “the Washington Consensus” – has critically dampened the ideology, politics and scholarship of national development. In the neoliberal era, macro-prudential economic measures have been prioritised as the most imperative task of each state, global financial flows have been liberalised behind corresponding regulatory pressure on individual countries and, not least importantly, many developing (and even developed) countries have been institutionally and politically incapacitated in their mercantilist developmental efforts. With the birth of the twenty-first century, the disastrous outcomes of national and global neoliberal transitions have engulfed virtually every nation in the form of regional or global (financial) crises. In the latest manifestation of the destructive force of neoliberalism, its hegemonic centre in the Euro-American economies has become the main source of recurrent global financial crises. Paradoxically, the emergency remedies for the Euro-American crises –involving Keynesian, developmental and even “socialist” elements – have been bluntly different from what had been recommended for or imposed upon developing countries under similar situations.

Free trade in mad cows: how to kill a beef industry

Australia is the worlds second largest beef exporter, dominating the highest value beef markets of Japan and Korea. Australias competitiveness is underpinned primarily by its freedom from Bovine Spongiform Encephalopathy (BSE)—better known as ‘Mad Cow’ disease—thanks to strict animal feeding and importation regulations adopted in 1966. Why then would the Australian beef industry appear to agree to soften prohibitions on beef imports from BSE-affected countries, which would have the effect of opening Australia to BSE and potentially destroying its BSE-free status, along with its prime Asian markets? Our analysis begins with commitments that appear to have been made under the Australia–United States Free Trade Agreement. If our interpretation is correct, these commitments would compel Australia to accommodate US trade goals by recognising and adopting the weaker international standards on meat trade. To understand why the US would want Australia to abandon its stringent BSE safeguards, we consider wider US policy on BSE and beef exports, and its strategy for re-entering the valuable Japanese and Korean markets. To explain why the Australian beef industry might allow its interests to be sacrificed to serve US trade goals, we examine institutional and ownership features of the industry. Government pre-emption or ‘capture’, we suggest, explains industry subservience. The apparent willingness of the Australian government to sideline its countrys economic interests in order to serve those of a foreign power raises the question of Australian exceptionalism.

Michael Mann, State Power, and the Two Logics of Globalisation

It may seem premature to comment on work that is largely still in progress, but some of Michael Manns writing on globalisation has already begun to make its mark. In this article, I comment on two of Manns central insights which emphasise complementarities in the global-national relationship and indicate how these may advance the globalisation debate concerning industrialised states.