Institutions and Economic Policy: Theory and a Korean Case Study

Abstract

Recent writing on the rapid growth of the East Asian newly industrializing countries—Korea, Taiwan, Hong Kong, and Singapore—has been dominated by an institutionalist perspective that focuses on the “strength” of the state vis-à-vis societal actors. A study of Korea's stabilization efforts in the 1980s underlines the importance of organizational factors in explaining policy outcomes, but also suggests important limits on institutionalist arguments. These include the absence of unique institutional solutions for political problems and the indeterminacy of institutional configuration with respect to the economic efficiency of policy. A focus on characteristics of the state alone can overlook the organizational resources of societal actors and the interest of politicians in building bases of support even in “strong” states.

Economic Development and Poverty Reduction in Korea: Governing Multifunctional Institutions

“…This escalating economic pressure exploded after the assassination of President Park in 1979. Political turmoil ended in another military government, led by Chun Doo‐hwan, which pursued vigorous structural adjustment aimed at stabilization and used a heavy‐handed approach towards trade unions (Haggard and Moon, 1990). Monetary and fiscal control became strict, which led to deflation in 1979–81.…”

U.S. and Japanese Foreign Direct Investment in East Asia: A Comparative Analysis

“…Governments in these countries often built leading but cooperative relationships with the dominant social economic forces, such as business companies and associations, in order to reinforce their autonomy from them. Regimes in South Korea, Taiwan, Indonesia, and, periodically, Thailand came to power by using force; accordingly, the regimes wanted to share benefits with the dominant social economic forces to draw their support to compensate for their lack of political legitimacy (Haggard & Moon, 1990; Hahm & Plein, 1997; Jesse, Heo, & DeRouen, 2002).…”

Policy Reform in Japan and South Korea (1997-2002)

“…When Chun Doo Hwan assumed power in 1980, however, the nature of business-government relations became increasingly contentious, as the government instituted tighter controls on credit, passed an antimonopoly law, and started to force a major restructuring of business (Haggard & Moon, 1990;Moon, 1994). This was due to the accelerating democratization process and resultant political pressure from labor, students, nongovernmental organizations, and the broader public, who eagerly wanted some action regarding the increasing concentration of business and ongoing allegations of corruption and corporate malfeasance.…”