Neoliberalism and Institutional Reform in East Asia: A Comparative Study

297 Pages·2007·0.955 MB·English

by  Meredith Jung-En Woo (eds.)

Neoliberalism and
Institutional
Reform in East Asia
A Comparative Study
Edited by
Meredith Jung-En Woo
Neoliberalism and Institutional Reform in East Asia
Also by Meredith Jung-En Woo
Capital Ungoverned: Liberalizing Finance in Interventionist States, 1996, also by Kent
Calder, Sylvia Maxfield, Sylvia Perez and Michael Loriaux
The Development State, 1999 (editor)
Past as Prelude: History in the Making of the New World Order, 1992 (co-editorMichael
Loriaux)
Race to the Swift: State and Finance in Korean Industrialization, 1991
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Neoliberalism and Institutional
Reform in East Asia
A Comparative Study
Edited by
Meredith Jung-En Woo
Professor of Political Science, University of Michigan, USA
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Library of Congress Cataloging-in-Publication Data
Neoliberalism and institutional reform in East Asia / edited by
Meredith Jung-En Woo.
p.cm.
Includes bibliographical references and index.
1.Law reform—Asia. 2.Rule of Law—Asia. 3.Neoliberalism—Asia.
I.Woo,Meredith Jung-En,1958–
KNC108.N46 2007
340(cid:2).3095—dc22 2007021653
10 9 8 7 6 5 4 3 2 1
16 15 14 13 12 11 10 09 08 07
Contents
List of Figures vii
List of Tables viii
Foreword ix
Preface xi
Acknowledgements xv
Notes on the Contributors xvi
List of Abbreviations and Acronyms xviii
1 After the Miracle: Neoliberalism and Institutional Reform
in East Asia 1
Meredith Jung-En Woo
PART I: LAW
2 Ideology, Experience, and the Rule of Law in Developing
Societies 35
Frank K. Upham
3 Asia’s Legal Systems in the Wake of the Financial Crisis: Can
the Rule of Law Carry any of the Weight? 63
John K.M. Ohnesorge
PART II: BUREAUCRACY AND INDUSTRIAL POLICY
4 Re-engineering the Developmental State in an Age of
Globalization: Taiwan in Defiance of Neoliberalism 91
Yun-han Chu
5 Developmentalism as Political Culture and Liberalization
in France 122
Michael Loriaux
PART III: LABOUR
6 Asian Regimes and the Labour Contract 145
Juhana Vartiainen
v
vi Contents
7 Continuity and Change in Welfare State and Production
Regimes in Advanced Industrial Societies 180
Evelyne Huber and John D. Stephens
PART IV: GOVERNANCE OF THE PRIVATE SECTOR
8 The Korean Corporate Governance System: Before and
After the Crisis 215
Sung Wook Joh
9 Institutionalizing Creative Destruction: Predictable and
Transparent Bankruptcy Law in the Wake of the East
Asian Financial Crisis 238
Bruce G. Carruthers and Terence C. Halliday
Index 281
List of Figures
4.1 Taiwan’s policy apparatus for high-tech industries 120
4.2 Industrial policy apparatus under the Ministry of Economic
Affairs 121
8.1 Debt to equity ratio of Korean firms 224
8.2 Profitability relative to capital cost 225
8.3 Voting Rights Premium (1st–25th biggest groups, simple
average) 232
vii
List of Tables
4.1 Taiwan’s top 25 manufacturing firms, 1998 and 1988 110
7.1 Welfare state regimes, circa 1980 183
7.2 Labour market regimes, circa 1980 191
7.3 Inequality and poverty 192
7.4 Unemployment, female labour force participation and
dependency rates 194
8.1 Controlling shareholder ownership (per cent) 217
8.2 In-group ownership trends of the 30 largest chaebols
(percentage) 218
8.3 Degree of influence of minority shareholder opinion in
selecting directors and auditors (per cent) 219
8.4 Debt payment guarantees of the 30 largest chaebols
(trillion won) 220
8.5 Equity investment of the 30 largest chaebols(trillion won) 221
8.6 Number of cases and duration of bankruptcy
proceedings, 1993–95 221
8.7 Six bankrupt conglomerates among the 30 largest chaebols 226
8.8 Percentage of firm ownership needed to exercise the following
shareholders’ rights (per cent) 227
8.9 Intra-group ownership after the 1997 economic crisis
(per cent) 232
viii
Foreword
The idea of bringing together a group of scholars to study the 1997–98 Asian
crisis arose in response to the concoction of theories and explanations of the
crisis premised on a highly stylized view of western economies, on the one
hand, and on the other, a sudden re-labelling of what only a few years earlier
had been hailed the ‘Asian Miracle’ as ‘crony capitalism’.
The initial idea was to bring to Asian debates, the previous African and Latin
American experiences with the kinds of institutional reform that were now
being proposed for the Asian economies. In Africa and Latin America, the ‘good
governance’ discourse had been used to explain why growth had not taken
place, even when countries had adopted the recommended economic policies.
Specifically, it seemed then that the institutional reforms proposed to the belea-
guered Asian economies were the same as those whose efficacy had aroused
grave doubts in Africa, Latin America and Eastern Europe. It also seemed then
that the Asian developmental states would not fully embrace the ‘Washington
Consensus’ – and that, perhaps, one ought therefore to pay special attention to
forms of adjustment and institutional innovation emerging in the region.
In the course of a project seminar held in Bangkok in 2000, however, a dif-
ferent and preferable approach emerged. First, the studies would confront
the argument that the crisis was the consequence of the failure of regulatory
institutions or the absence of ‘rule of law’ (that is, it was due to ‘bad gover-
nance’). Secondly, they would examine the set of institutions being foisted
on Asia and compare them to those of ‘really existing capitalism’ in the West,
to see whether such institutions were likely to return the Asian economies to
their historical development path.
The recasting of the focus has meant that the time between Bangkok and
the publication of the book has been long. However, one result of this lengthy
gestation and shift of emphasis is a book of much general relevance to the
whole debate about institutions and development.
The book’s comparative approach brings fresh insights and perspectives to
current debates about institutional reform that, many caveats notwithstand-
ing, are still driven by an unflinching commitment to what Peter Evans has
labelled ‘institutional monocropping’. It also suggests that even if the par-
ticular highly stylized institutional arrangements of the West were the pre-
requisites for growth in those economies, this does not preclude the possibility
of others devising their own institutional arrangements that are functionally
equivalent and provide the needed predictability and security in economic
transactions.
This project received financial support from the Rockefeller Foundation,
to which we are most grateful. As is the case with all UNRISD projects, the
ix