Unintended consequences: social policy,state institutions and the ‘stalling’ of the Malaysian industrialization project

Abstract

This paper examines the relation of particular forms of social and labour market policy to economic development. Taking the history of Malaysian industrialization as its empirical case, the paper assesses the unintended consequences of redistribution policy, on the one hand, and migration policy, on the other, for the limited upgrading of the country's electronics industry. It argues that, while the former has been central to social harmony in Malaysia's multi-racial society, it has contributed to the underdevelopment of small and medium-sized firms capable of linking with the TNCs on the basis of knowledge-intensive and higher value-added operations. Migration policy, on the other hand, has allowed manufacturers to have continued access to supplies of low-cost, lower-skilled labour that have released the pressures that would otherwise have been there for technological and skill upgrading in the electronics industry. Only in Penang, where regional state institutions have intervened to encourage SME upgrading, has the national picture been moderated. Malaysia's industrialization project emerged at time when export competition in manufactured commodities was less intense than it is now. Largely as a result of federal government priorities and for other reasons explored in the paper, advantage was not taken of this ‘window of opportunity’. As a consequence, the country's industrialization project – exemplified by its electronics industry – is now ‘stalling’ in the sense that it remains locked into low- to medium-technology operations. With the rise of China as a manufacturing exporter, this is a dangerous situation for a country's principal industry to be in.     

The limits of economic globalization in East Asian developmental states

Abstract

In an attempt to adjust to economic globalization or internationalization, East Asian developmental states have liberalized their domestic economic systems, accelerating the introduction of the free‐market ideology. Despite their plan to establish the internationally compatible open‐market economy, however, the extent to which they can advance economic liberalization is limited. Political and economic burdens that the developmental state's extensive intervention in the market has incurred in the course of state‐led mercantile economic development, make it impossible for those states to execute full‐scale economic liberalization. The South Korean case clearly shows this. The Korean developmental state retains two major economic burdens: the exclusive ownership and the poor financial structure of the chaebôl. Insofar as Korean big business preserves those weak spots, the government cannot surrender the power of regulation despite its spontaneous implementation of the economic liberalization policy. In addition, the common ‘egoistic’ interests which government bureaucrats and the political class share also limit the degree to which economic liberalization policy can be implemented. The degree of state intervention in the market in Korea has been deeper than that in Japan which pioneered Asian developmental statism, and, thus, the political and economic burdens it has incurred for itself are heavier. Consequently, the East Asian developmental state cannot entirely withdraw its intervention in the market. The ‘support’ of industries is likely to diminish, but ‘regulation’ for the formation of the autonomous market will increase. For the Korean developmental state, globalization and economic liberalization are political economic slogans to re‐launch economic growth and to elevate the international economic competitiveness of industries under the initiative of the state, and motivated by nationalistic reasons. Hence, the role of the state in the market is still far from becoming redundant even in the tide of globalization and economic liberalization in the case of South Korea, where the legacy of strong developmental statism remains considerable.     

Crafting and dismantling the egalitarian social contract: the changing state-society relations in globalizing Korea

Abstract

Between the late 1960s and the early 1980s, the Korean developmental state implemented a series of drastic egalitarian educational policies that were primarily geared toward social integration. While promoting social mobility and educational expansion, they provided the basis of the egalitarian social contract in Korea's educational policymaking for decades. Since the 1990s, however, the Korean state has implemented neoliberal education reforms that led to the rapid dismantling of the egalitarian framework for the country's educational policymaking. These neoliberal reforms were strongly supported by the affluent middle class that prefer elitist education and can afford expensive private education. The general direction of change in Korea's educational policymaking suggests both significant change and continuity in the character of the Korean state and its relations to society since the 1990s. The contemporary Korean state still maintains a highly strategic and activist orientation in adopting and implementing policies although its policies are increasingly neoliberal in content. In doing so, the Korean state is gradually abandoning its broad social base and mobilizational capacity, while increasingly connecting with the upper segments of the middle class.     

Towards an organisational perspective on party funding: Explaining financial transfers from MEPs to their national parties

Which parties represented in the European Parliament (EP) are able to extract regular donations from their MEPs' salaries and, if they extract donations, how great are they? In the literature on party finances, there has been a lack of attention paid to the use of salaries of elected representatives as a source of funding. This is surprising given that the national headquarters of many parties in Europe regularly collect ‘party taxes’: a fixed (and often significant) share of their elected representatives' salaries. In filling this gap, this article theoretically specifies two sets of party characteristics that account for the presence of a taxing rule and the level of the tax, respectively. The presence of a tax depends on the basic ‘acceptability’ of such an internal obligation that rests on a mutually beneficial financial exchange between parties' campaign finance contributions to their MEPs and MEPs' salary donations to their parties. The level of the tax, in contrast, depends on the level of intra‐organisational compliance costs and parties' capacity to cope with these costs. Three factors are relevant to this second stage: MEPs' ideological position, the size of the parliamentary group and party control over candidate nomination. The framework is tested through a selection model applied to a unique dataset covering the taxing practices in parties across the European Union Member States.     

Introduction to Weber

Abstract

This article discusses the origins of the speculative configuration that has come to characterize English banking. It criticizes Gerschenkron's view that early nineteenth-century English banking developed relatively autonomously from manufacturing. Pointing out that he misunderstood the specific nature of English finance and the reasons that explained the later shift towards speculation, it shows how Gerschenkron and his followers have consistently underestimated the role of the state in shaping the nature of English finance. The main argument of the article is that state intervention was a decisive factor in shaping the nature of English finance. It proved crucial in initiating the divergence between English and continental finance, and contributed to the rise of modern banking in England. Finally, I argue that the speculative configuration of finance often associated with England was a late development of the nineteenth century that again reflected changes in the form of financial and monetary regulation.     

Crisis management and the diversity of capitalism: fiscal stimulus packages and the East Asian (neo-)developmental state

Abstract

This paper contributes to the understanding of East Asian capitalism by investigating the political economy of crisis management in Japan, Korea and China during the global economic crisis. Reacting to the global shock of the economic crisis that began in 2008, East Asian capitalism has remained a distinct state-led model that differs substantially from the liberal, neo-corporatist or welfare state varieties of capitalism in the West. More specifically, this paper studies the fiscal stimulus packages implemented by East Asian countries to address the global financial crisis from 2008 to 2010. We find that East Asian fiscal stimulus packages were comparatively large and supply-side-oriented. Unlike in the West, where a (short-lived) revival of demand-side-oriented Keynesian strategies stimulating consumption could be observed, East Asian countries reinforced industrial policies and supported investment and international competitiveness. We argue that the East Asian variety of crisis management can largely be explained by a path-dependent transformation of the East Asian developmental state into a neo-developmental competition state.     

Re-Stating the problem of regulation and re-regulating the local state

In recent years a substantial body of literature has grown up around the application of the theorectical insights of regulation theory to the evolution of patterns of local governance and the structures of the local state (Geddes 1988: Goodwin, Duncan and Halford 1993; Painter 1991: Peck and Tickell 1992: Stocker 1989 inter alia). These new patterns of local governance are characteristically seen to be associated with the replacement of the formallly accountable, democracitcally elected structures of local government with a plethora of unaccountable and non-elected agencies involving public-private sector ‘part-nership’, Within this literature the emergence of new patterns of local governance is accounted for in terms of a response to the crisis of Fordism. In this article it is argued that regulation theory's principal analytical strength lies in its analysis of the internal contradictions and dynamics of modes of regulation, but that it has thus far failed to develop an adequate explanation of the transition between modes. As a consequence, existing accounts of the emergence of new modes of local governance couched in terms of the transition from Fordism to post-Fordism (or after-Fjordism) have tended to fail to reveal the complex mechanisms and processes linking global economic dynamics and the transformation of the structures of the national and local state. By interrogating the concept of ‘crisis’ in regulation theory and by considering the processing of the failures of Foprdism through the state at national and local level as a condition of any response to crisis, it is hoped to begin to develop a theory of the transition between modes of regulation. Such a theory, as it is hoped to demonstrate, might provide the basis for a more nuanced understanding of the complex process and mechanism resulting in the transformation of political and economic structures at the local level.     

Recent interpretations of ideology

The ‘emergence’ of the ‘market’ as the basis of economic and political decision-making has become a main focus of debate within the social sciences since the late 1970s. Even while those opposing the growing centrality of neo-classical economics and market-oriented political discourses remain a significant academic constituency, within their ranks there has been a growing realization that regulatory mechanisms, and in particular the role of the state, have nevertheless been the subject of extensive changes. Alternative schools of thought have argued in terms of the way in which such mechanisms have been refashioned. Regulation has become, in the words of Regini and Majone, ‘transferred’ and the ‘boundaries’ between regulator and regulated ‘changed’: the regulatory process has been seen to shift at the macro/national level and at the micro/enterprise level. While supporting the general argument that it is the boundaries of regulation which are to be discussed, not its presence, we shall nevertheless argue that these changes are, if anything, more contentious and that a set of ironies emerges which politicize regulation even further.     

Embedded state autonomy and legitimacy: piecing together the Malaysian development puzzle

Malaysia's development trajectory has been comparatively successful, and the country arguably represents another example of the 'Asian developmental state'. However, when examined more closely, the Malaysian development experience is a deviation from the ideal-type 'East Asian success model', in that it occurred in the context of a predominantly Islamic cultural background, marked ethnic-religious heterogeneity,a relatively democratic political system, a strong reliance on FDI, abundant natural resources and a confined state autonomy. This article puts the Malaysian puzzle into perspective by giving a holistic account of the country's success against all odds and by applying an analytical framework centred on the concepts of embedded state autonomy and sociopolitical legitimacy. It is concluded that Malaysia's distinctive social, political and economic features constitute a web of countervailing forces that evolved into a positively self-reinforcing, if sometimes precarious, system of socio-economic reproduction.