Asian developmental state China in the World Economy (Bonus) Asian developmental state •„How Asia works“ – Joe Studwell • Obsah obrázku text Popis byl vytvořen automaticky Asian developmental state •„How Asia works“ – Joe Studwell •1) Land reform •2) Industrial policy > promotion of exports •3) State owned banks – also promotion of industry Asian developmental state •New firms are not going to succeed on their own, they need protection and help from the state (x free trade) Asian developmental state •New firms are not going to succeed on their own, they need protection and help from the state (x free trade) •But they must be tested so that they don‘t become complacent > „export discipline“ – they must be able to sell products abroad Asian developmental state •New firms are not going to succeed on their own, they need protection and help from the state (x free trade) •But they must be tested so that they don‘t become complacent > „export discipline“ – they must be able to sell products abroad •Why abroad? Success in the closed domestic market doesn‘t prove anything Asian developmental state •Undervalued currency – helps with export Asian developmental state •China – somewhat similar, but even more statist •Most large enterprises continued to be state-owned (to this day) Asian developmental state •China – somewhat similar, but even more statist •Most large enterprises continued to be state-owned (to this day) •No liberalization after successful growth Asian developmental state •China – somewhat similar, but even more statist •Most large enterprises continued to be state-owned (to this day) •No liberalization after successful growth •J, K, T attempted to catch up, not to become the undisputed leader (x China‘s ambitions for next generation Internet, AI….) • Asian developmental state •J, K, T – developmental state as a necessary evil, a precursor to capitalism which isn‘t possible yet •= more or less in line with Western theorists of protectionism – Alexander Hamilton, Friedrich List Asian developmental state •J, K, T – developmental state as a necessary evil, a precursor to capitalism which isn‘t possible yet •= more or less in line with Western theorists of protectionism – Alexander Hamilton, Friedrich List •CH – developmental state as a necessary evil, a precursor to socialism which isn‘t possible yet Asian developmental state •J, K, T – developmental state as a necessary evil, a precursor to capitalism which isn‘t possible yet •= more or less in line with Western theorists of protectionism – Alexander Hamilton, Friedrich List •CH – developmental state as a necessary evil, a precursor to socialism which isn‘t possible yet •= China does not yet posses the capacity for planning and redistribution necessary to achieve socialism, so it has to accept markets Asian developmental state •CCP – China‘s advantage continues to be the ability to mobilize resources • ISI •Import-substituting industrialization (ISI) •Not so important for us, but often discussed in IPE •Latin America, circa 1945-1980 ISI •Protectionism, state-owned banks and large enterprises – similar to Asia ISI •But – no promotion of export! – closed economies ISI •But – no promotion of export! – closed economies •> trade deficits > financed by debt ISI •But – no promotion of export! – closed economies •> trade deficits > financed by debt •Overvalued currencies – to pay back the debt – but exacerbated the trade deficits ISI •But – no promotion of export! – closed economies •> trade deficits > financed by debt •Overvalued currencies – to pay back the debt – but exacerbated the trade deficits •Also – no sweeping land-reform = surviving inequality, „old elite“ ISI •But – no promotion of export! – closed economies •> trade deficits > financed by debt •Overvalued currencies – to pay back the debt – but exacerbated the trade deficits •Also – no sweeping land-reform = surviving inequality, „old elite“ •1980s – bankruptcies, transition to free trade (IMF, WB) ISI •Economists – identification of ISI with protectionism and Asia with free markets •= misinterpretation Shock therapy/Neoliberalism •Eastern Europe after 1989 •= full transition towards free market capitalism •= privatization of enterprises, market prices, free trade • Shock therapy/Neoliberalism •Main idea – the Communist regimes have collapsed > there is no power capable of overseeing central planning Shock therapy/Neoliberalism •Main idea – the Communist regimes have collapsed > there is no power capable of overseeing central planning •> we must move quickly towards markets, otherwise the managers of the SOE‘s will plunder the assets •= the need to dissolve public ownership relatively quickly, before it‘s completely hollowed out • Shock therapy/Neoliberalism •Derided and discredited today – collapse of Russia, Ukraine etc, poverty, rise of oligarchs Shock therapy/Neoliberalism •Derided and discredited today – collapse of Russia, Ukraine etc, poverty, rise of oligarchs •But – Baltic countries, Poland, Czechia, Slovakia, Slovenia, Hungary… •> often reasonably successful! Shock therapy/Neoliberalism •China – We don‘t want shock therapy, because: •1) we still basically believe that socialism will win in the end •2) doing so would drastically curtail the Party‘s power Shock therapy/Neoliberalism •China – We don‘t want shock therapy, because: •1) we still basically believe that socialism will win in the end •2) doing so would drastically curtail the Party‘s power •Eastern Europe – We don‘t want Chinese-style mixed economy because: •1) we no longer believe in socialism •2) doing so would mean keeping the security apparatus to oversee the SOEs •Czechia – managed to keep its absolute advantage in GDP per capita ahead of China since 1990! •The end J