Econ 332 - books

Tselichtchev & Debroux Chapter 7

China: A New Heavyweight - A few basics - Postwar Development > Industrialiazation Soviet-style > The "Great Leap Forward" > The "Cultural Rvolution" > Back to a Normal Planned Economy > A Historical Shift to Market Reform > Opening up for Foreign Capital *Special Economic Zones (SEZ) * Economic and Technological Development Zones > Three Years of Uncertainty and the Acceleration of Reforms > The Marginal Influence of the Asian Crisis and Surfacing Structural Problems - Structural Reform > SOE Reform 1. reduced the share of their production covered by the direct planning system 2. SOE under the pressure of growing competition a. Large SOE's were transformed into corporations and stocks sold to private investors b. SOEs reorganized, refocused, and turned into entities that were self-reliant and competitive by the standards of the market economy > Stock Market Reform * nontradable stocks owned by the government were made tradeable > Banking Reform - Present Performance > Aspects of Success > Global Production Center > Leading Financial Power > Investment-Driven Growth > Fighting with Overheating > Policy Changes in the Wake of the Global Financial Crisis 1. expansion of low-income housing construction 2. increase in spending on rural infrastructure 3. the acceleration of transportation network expansion 4. the improvement of the healthcare system and construction of education facilities 5. construction of sewage and rubbish treatment facilities preventing water pollution 6. the enhancement of innovation and industrial restructuring 7. the rebuilding of areas hit by natural disasters 8. raising average incomes in rural and urban areas 9. Reform of the value-added tax rules to cut the corporate tax burden by 120 billion yuan 10. increase in the financial support for growth by removing quotas on commercial bank lending - Three Super-Challenges > Super Challenge #1: Natural Resources and Natural Environment > Super Challenge #2: Employment 1. huge size of population 2. restructuring of SOE - downsizing - job loss 3. technology doing labor > Super Challenge #3: Intraregional Gaps > Changing Policy Priorities: From Growth to a Harmonious Society - The Upgrading Game > Growing Labor Cost > The Development of Original Products and Technologies > Brand Building - Foreign Trade > The Compositions of Exports > The Composition of Imports > The Trade Balance > The Exchange Rate of the Yuan > Unfair Trade Practices > Changes in Trade Policy > Safety Troubles - FDI and the Business Environment > Volume and Composition > Steps to Improve Conditions for Investors > Tax Incentives > Specifics and Problems * inadequate protection of intellectual property rights *land ownership > A Change in Policy Concept > Attitude to Foreign Acquisitions > Outward FDI *Africa

Pempel Chapter 2

Indonesia's Political Economy >The AFC that hit in 1997-98 devastated the Indonesian economy >political reforms that ended the existing authoritarian system and transformed Indonesia into the second largest non-Western democracy. >At least four important differences between the 1998 and the 2008 crisis account for the relatively mild effect of the GFC on Indonesia: the origin of the crisis, the exchange rate regime, policy responses, and the national political economy. The Asian Financial Crisis of 1997-98 >responded poorly to the contagion effect of Thailand's difficulties by committing itself to several errors in policy, such as tightening the budget and raising interest rates, the combination of which eventually brought the country into even greater difficulty. The Global Financial Crisis 2008 >depreciation of the exchange rates and the decline in the stock market. Economic Conditions that Divided the Two Crises: Good Policy and Good Luck > Thus the 1998 crisis was both homegrown and regional. In contrast, the 2008 crisis was almost entirely external; to be more precise it was triggered by the subprime crisis in the United States. > Prior to the Asian Financial Crisis, which hit in July 1997, Indonesia was applying the managed floating system under which there was no incentive for economic players to carry out any hedging because the rupiah constantly depreciated by 5 percent every year. The free floating system had been adopted in 1997 and was continued thereafter. This had taught economic agents to live in a world of exchange rate fluctuations. Thus, unlike ten years before, economic agents had now learned how to diversify their risks and were in the habit of doing so automatically. They diversified their portfolios, and hedged their assets. Therefore, even a sudden reversal of capital inflows would have had a relatively small impact compared to what had happened in 1997-98. > In 1998 the Bank of Indonesia responded to the crisis by implementing an extremely tight monetary policy by raising interest rates to a very high level. in 2008 the Bank of Indonesia responded to the crisis by lowering interest rates and ensuring that there was enough liquidity in the financial system. As a result, the rate of default was relatively low in 2008, thus minimizing any negative effect on NPLs owned by the banking sector. > that the structure of trade is very important in explaining the difference between the 1998 crisis and the 2008 crisis. The Political Economy of Crisis Management > This first agreement had four main targets: (1) efforts to restore the soundness of the financial sector, (2) fiscal policy changes, (3) monetary policy (including exchange rate policy), and (4) structural adjustment policies. The structural policy package included tariff reductions, and flour, soybean, and garlic deregulation Key Challenges >First, in 1998 the economic origins of the crisis were both domestic and external, while the 2008 crisis was almost entirely external. Second, prior to the 1997-98 crisis, Indonesia applied the fixed exchange rate system but replaced it with the free floating system after the crisis. Third, economic policy responses were different.

Tselichtchev & Debroux Chapter 12

MALAYSIA: DEVELOPED BY 2020? - A Few Basics > A Multiethnic State *segmenting economic activity along racial lines > The New Economic Policy and Beyond *increase Malay ownership and enhancing their access to high-income occupation's -> narrowing income inequality -Postwar Development > From Import Substitution to Export-Driven Growth > The Legacy of Mahathir * advocator of the Asiasnization of Asians sociopolitical and economic development * Nation transcending existing ethnic identities and loyalties > Industrial Policy *promote heavy industry -> heavy losers, drained money > New Incentives for Foreign Capital *e-government - paperless government > Encouraging Local Entrepreneurs * Bumiputra - group of successful millionaires became the new role models, replacing political figures and bureacrats * But these relied heavily on the state -Structural Reforms * stop currency speculations coming from short-selling of the ringgit in offshore markets * privatization *reforming and restructuring governmnet linked companies (GLC's) - Present Performance > The Economy is Restoring its Shape, But ... > Acceleration > An Overstrained Budget and Price Controls * largescale, pump-priming operation * price controls and subsides for many consumers and production goods *smuggling, hoardind, and supply shortages > Blunders and Problems Unresolved * most companies are unprepared to develop original, brand-name products targeting world markets > Human Resource Constraints *labor market is tight -> rely on immigrant workers > Vision 2020, Plans, and, Policies *plans to graduate from a middle-income economy 1. develop the knowledge-intensive society 2. encourage domestically driven growth along with attracting FDI into strategically important sectors 3. invigorating agriculture, mfg., and services through knowledge inputs 4. address the poverty problem of national minorities and raise the standard of living 5. enhance the Bumiputra share in stock ownership 6. promoting Bumiputra engagement in ,major sectors 7. human resource development Phase 2 1. the value chain through upgrading industries and generating new sources of wealth 2. develop a first class mentality by improving education and training 3. inequality problems have to be addressed 4. work on quality of life and sustainability issues 5. public institutions and public services delivery have been strengthened > The Impacts of the Global Financial Turmoil - Foreign Trade > The Composition of Exports > The Composition of Imports > FDI and the Business Environment > Regulations *caps on foreign ownership > Incentives > Scale and Composition *important outward direct investor

Leipziger - Chapter 4

SINGAPORE: PUBLIC POLICY AND ECONOMIC DEVELOPMENT - Defining Success * "basket Economy", "minidragon" > Structural Change and Success * Phase 1: Labor intensive, import-substitution industrialization, Phase 2: Labor intensive, export-oriented industrialization, Phase 3: First attempt to upgrade the economy, Phase 4: Economic restructuring, Phase 5: Retrenchment and further diversification * some of the main features of the developmental phases: 1. growth in private consumption 2. changes in the pattern of private consumption 3. a sharp rise in domestic savings from 10% to 40% 4. a slowdown in the rate of foreign capital inflows 5. a steep rise in gross fixed capital formation 6. balanced growth in the secondary and tertiary sectors > The Re-export Economy and World Trade > Economic Preconditions for Success * Strategic Framework: 1. defining the constrained economic growth objective function 2. Identifying the two "engines of growth" to be used 3. setting the criteria for policy design * to implement this framework => these were required 1. the choice of MNCs as the vehicle for launching the industrialization process2. identifying government interventions to enhance industries 3. minimizing domestic uncertainties and maximizing investor confidence 4. a free-market orientation and openness for competitive sourcing of inputs, rapid transmission of external changes and minimal scope for rent-seeking, unproductive activities 5. facilitation the evolution of entrepot trade via intensification of the international division of labor - Industrial Policy > Phase 1: Labor-intensive Import Substitution * Initial Conditions *Policy Response: 1. equal treatment for the four streams of education: Malay, Chinese, Tamil, and English, 2. emphasis on the study of mathematics, science, and technology subjects >> To ensure success the EDB had ample funds and strong powers 1. to grant loans or advances to or subscribe to stocks, shares, bonds, or debentures of industrial enterprises 2. acquire land for industrial sites > Phase 2: Labor-Intensive Export-Oriented Manufacturing * Changes in Environment: 1. the gov. success in tackling the housing problems led to its strong credibility with the people 2. the heavy investment in education and vocational training was beginning to produce a substantial pool of semiskilled workers 3. the EDB had developed several industrial estates 4. the EDB had developed its orgaizational capacity and accumulated considerable experience in investment proportion * Policy Responses: 1. tax relief was allowed in certain circumstances for incremental income resulting from capital expansion 2. a 90% remission of tax profit was allowed to approved enterprises for 1-5 years 3. tax exemptions were allowed on interest on foreign loans, royalties, know-how, and technical assistance fees * Economic Outcomes > Phase 3: First Attempts to Upgrade * Policy incentives; 1. a wage policy based on an orderly increase in cash wages under the guidance of the national wage council to ensure international competitiveness 2. manpower development- intensifies exports to promote industrial training 3. an open door policy for admitting qualified foreign engineers, technicians and other professionals 4. a special tax concession to industries with desired levels of tech * Economic outcomes *Discussion > Phase 4: Economic Restructuring * Diversifying: 1. its economical activities into new, information-based services such as computer, medical, consultancy, and warehousing services 2. its markets, so as to reduce the threat of protectionism and expand its exports to developing countries * Economic outcomes *Discussion > Phase 5: Retrenching and Further Diversification * 3 main factors: 1, high labor costs resulting from the increased rate of CPF contributions and from rapid wage increases continuing beyond 3 years 2. creeping rises in fees and charges levied by the public utilities board 3. the strength of the Singapore dollar as a result of the success in attracting foreign capital > What Constitutes Singapore's Industrial Policy? * 5 developmental phases key elements: 1. choice of industrialization as a developmental strategy 2. reliance on the private sector 3. investment in human capital and influence 4. consensus building, maintenance of good industrial relations 5. maintenance of a stable macroeconomic environment * Key industrial elements: 1. liberal fiscal incentives 2. industrial targeting via investment incentives - Governance and Institutional Framework > The Civil Service > Statutory Boards > State-owned Enterprises and Government-linked Corporation > The Economic Development Board * 1. the industrial facilities division -> separate statutory board 2. the financial division => development bank of Singapore 3. Export promotion center -> INTRACO > Drastic Reorganization of Government Agencies * THe Monetary Authority of Singapore * The Ministry of Education > Integrating and Coordination Mechanisms > Tripartite Arrangments - Design and Implementation of Vital Policies > Influence of the Leadership's Characteristics > Vital Policies 1. industrial and trade policies >> 1. investments being at least 1 bil. 2. the discretion of the Ministry of Finance as to the kind of enterprise that would promote of enhancing economic and technological development >> 1. double deduction, 2. accelerated 3-year depreciation for all plant and machinery used for R&D 3. an investment allowance of up to 50% of all capital investments in R&D 4, an extension of existing industrial building allowance 5. capitalization and the writing off of lump-sum payments for manufacturing licensing 2. infrastructure policy >> 1. more jobs for women 2. domestic transportation for the labor force as well as for goods 3. a reduction in pollution by noise and industrial effluence 4. improved quality of life 3. human development policy, including education and industrial training >> 1. the government's inheritance in 959 of an educational system geared to lower-rung jobs in the colonial admin. 2. the need to provide employment not only to the existing nontechnical labor force but the postwar generation 3. the multiracial population and the different language capabilities of school dropouts entering the labor force 4. labor and wage policy, including industrial relations and immigration 5. macroeconomic policy >> 1. monetary and exchange rate policy 2. CPF and public sector surpluses 3. public sector construction 4. other fiscal instruments 5. labor policy > Costs and Benefits of Policy Changes * recession: 1. a loss of international competitiveness as the high-wage policy causes an increase in the real effective exchange rate 2. a fall in cyclical domestic demand with the ending of the construction boom 3. a fall in cyclical external demand - Recent Developments > Overall Trends > Policy Developments * Labor Markets * Oversea Investments * Tax Policies * Savings and Investment Policies - Policy Conclusions > The Role of Government > Lessons from Japan and Other Industrialized Countries > The Relationship Between Development Success and Social Attitudes > Policy Lessons from Singapore's Experience 1. government with a vision of long-term development 2. a stable and hospitable environment conducive to economic growth 3. a public policy that emphasized investment 4. the capacity for sustained accumulation of human and physical capital A. importance of sound economic policy B. the reinforcement of the sound policies with policy implementation by a bureaucracy that is run on meritocratic lives c. government's role in winning credibility within the state and foreign investors

Pempel Chapter 5

China and the Two Crises >In the end, it is the crisis and the extreme measures taken in response that determine the long-run impact of the crisis. China's Response to the Asian Financial Crisis, 1997-98 > China wrote off trillions of RMB in bad loans; then injected trillions of RMB of government money into the banking system. On the foundation of these improved balance sheets, foreign strategic partners were solicited to take stakes in the healthiest banks. With strategic partners lined up, the better banks were then restructured and listed on the Shanghai and Hong Kong stock markets. It was an impressive, costly, and professionally executed effort. China pumped about 28 percent of GDP into its banking system in this period, counting only the first wave of large commercial banks > had recognized that the banking system could not be used indefinitely as a prop for inefficient and loss-making state-owned enterprises. After the state enterprise sector was downsized, the next step was to bring the state banks out of their near-insolvent position, restructure their incentives, and give them the opportunity to adapt to a more competitive economy. China came out of the AFC determined to continue with multisided reforms that made its economy more productive and more resilient. China's Response to the Global Financial Crisis (2008-9) > 1. the increase in bank credit during the first three months of 2009 was more than the total planned RMB4 trillion investment stimulus package, which had been intended to stretch over more than two years plus one quarter > 2. if we roughly calculate what ordinary credit needs would have been during the first quarter of 2009, then the excess credit above normal just in this one quarter was equal to 10 percent of annual GDP > China was arguably the first economy to have recovered from the global financial crisis, and the derived demand for commodity imports was crucial in stabilizing the global economy at the end of the first quarter in 2009 The Institutional Impact of the Global Financial Crisis Responses >1. banks relaxed their concerns about risk and loosened prudential standards, making massive loans to government clients > 2. the government more or less intentionally expanded the number of financially unsound local government investment corporations, as described previously. > Chinese leaders displayed a surprising willingness to discard the hard-won achievements of earlier reforms Connecting the Dots: From the AFC to the GFC and Beyond > 1. the crises were linked by a successful set of policies that dealt with the immediate challenge of both the AFC and the GFC. > 2. he institutional characteristics of the two crisis policy responses can be seen as virtually opposite, mirror images of each other. > hinese policies enabled U.S. policy mistakes because of the two main channels through which Chinese exchange rate policy influenced the United States. First, sustained Chinese government demand for U.S. treasuries (for its official foreign exchange reserves) helped keep long-term interest rates low.Second, maintaining a fixed RMB-U.S. dollar exchange kept Chinese export prices low, contributing to lower U.S. prices and restrained U.S. inflation.

Leipziger - Chapter 7

INDONESIA: DEVELOPMENT TRANSFORMATION AND THE ROLE OF PUBLIC POLICY - Introduction - Development Transformation since 1965 > Long term Development Trends * Influenced by: 1. big shifts in Indonesia's external environment 2. The evolution of policy * The Soekarno Era - 1949-65 * New Order Government: the Initial Years, 1967-73 * The Oil and Commodity Boom: 1973-81 * External Shocks of the 1980s >> 1. a sharp decline in the external terms of trade 2. the depreciation of the $ * The First Adjustment Period, 1982-85 * The Second Adjustment Periods >> 1. the introduction of an austere budget for the fiscal year 2. a 31% devaluation of the rupiah in sept >> Later Reforms: 1. a reduction in nontariff barriers as well as in tariffs 2. investment delicenicing and the relaxation of controls on foreign investment 3. financial deregulation by lowering entry barriers, increasing competitive pressures and reducing the role of subsidies 4. deregulation in other bottleneck areas * Nonoil, Export-led recovery > Impact on Economic Outcomes * Investment and savings * Export Performance * Efficiency and Productivity Growth - Continuity and Change in the Policy Framework > Overview of Policy Directions 1. Macro-economy stability 2. agricultural and rural development 3. improvement in social conditions and human resource development 4. infrastructure * willingness to rely on the market economy * tradeoff between growth and equity > Macroeconomic Policies * Fiscal Policies *Monetary Policy *Exchange Rate Management >> 1. simulating a strong export response that reduced the traditional costs of adjustment 2. restraining imports 3. facilitating trade liberalization 4. improving competitiveness and thereby supporting a strong recovery of private investment * External Borrowing > Trades and Regulatory Policies * Initial Liberalization * Inward Orientation and Regulation * Domestic Regulations and Foreign Investment Policies >> 1. generally more restrictive investment licensing criteria 2. minimum initial requirements for local ownership 3. a ban on domestic trading of outputs and the marketing of Indonesian exports as well as restrictions on what domestic inputs could be purchases 4. limitations on land lease 5. limited access to domestic capital * Public Enterprises >> 1. to earn profits and contribute to government revenues 2. to contribute to national economic development 3. to provide public utility services 4. to undertake pioneering activities that the private sector would not 5. to provide guidance to the private sector and cooperative and to complement their overall activities * Deregulation and Outward Orientation * Reform of NTB * Tariff Reforms * Reform of the Export Regime * Other Regulatory Reforms * Effects on Effective Rates of Protection and Competition > Financial Markets and Policies *Initial Conditions * Pre-oil-boom Period: Rehabilitation and Consolidation >> reestablish the financial institutions, restructure the state-owned financial institutions * Oil Boom Years >> 1. credit ceiling for individual banks 2. a complex rediscount mechanism, designed to reallocate credit and provide subsides 3. controls on interest rates of deposits >> What have been the effects of this financial system? 1. investments financed by credits contributed to overall economic growth, but their productivity was poor 2. nonmarket credit allocations allowed subsidized credit to increase its coverage 3. an efficient banking system did not develop 4. real interest rate on state bank deposits were negative throughout the period of regulated interest rates 5. the credit ceiling were not successful om sterilizing the inflow of money from oil revenues * Initial Oil Price Decline: First Phase Financial Reforms 1. remove all credit ceilings 2. a reduction in the number of credit categories financed by liquidity credit 3 the removal of controls on deposit and lending rates 4. the removal of remaining subsidized on deposit rates paid by state banks * Second External Shock: Liberalization of the Financial Sector >> tight money, prudential regulations and off-shore borrowing ceilings > Agricultural Development > Manufacturing > Human Resource Development * Family Planning * Nutrition and Infant Mortality * Basic Education *Tertiary Education - The Institutional Framework and Implementation of Reforms > The Political System and State Autonomy 1. the election of the Indonesian political elite is largely unaffected by financial contribution from certain grouped in society 2. the adoption of a corporatist strategy has ensured that policy making occurs without direct societal pressures 3. control within the state itself was achieve in several ways > The Process of Economic Policy Making 1. the Economic Stabilization Control 2. Cabinet on Economic Affairs 3. The Monetary Board > They Dynamics of the Cabinet 1. return of a western trained economist 2. beginning of the close relationship between the commander of the staff and the command school of the Army > External Influence over Policy * Formal Policy Inputs * External Influence over Policy * Parliament * The Presse * Business-Government Relations * Labor Grouped >> Perburuhan > Other Important Institutional Factors * The Bureaucracy * The Legal System > Continuity and Changes in Government Policy 1. the strong leadership 2. strong central authority has allowed the state to undertake painful economic reforms 3. the astute use of external agencies and consultants * Macroeconomic Policy * Industrial Policy - Recent Developments in the Regulatory Environment 1. restructuring of the state banks and overcoming its bad debts and insolvency 2. implementing the sounded regulations by the central banks 3. revitalizing the domestic capital and money market 4. improve disclosure as well as implementing strengthen regulations - Conclusion 1. size 2. low-income status 3 natural resources 4. has until recently pursued a resource-intensive and home-market-oriented industrialization strategy rather than one based on labor-intensive *Macroeconomic management * Agricultural Strategy * Human Resource Development \ * Infrastructure Development * Financial sector * Industrialization strategy * Institutional Setup

Tselichtchev & Debroux Chapter 15

PHILIPPINES: SPEEDING UP AT LAST - A Few Basics * agriculture remains crucially important in their economy * economy is supported by large-scale remittances from more than one million overseas foreign workers -Postwar Development > The Start of Industrialization * protected domestic industries with high tariffs * Did not go beyond light industry - growth was not sustained > The Marcos Era * Strong leadership, develop heavy industry and foster export-led growth, martial law, > The Financial Crisis of the Early 1980s * most of the financial institutions were bankrupt or in distress, structural weaknesses of the economy - too much gov. involvement and inefficient allocation of funds > Structural Adjustment * Reduction of gov. involvement, privatization, deregulation - cut spending and suspended many projects > Corazon Aquino's Term * helping the poor and creating jobs -> liberalization and privatization -> incentives, land reform > The Economic Recovery Program * rationalization of the tax system, improvement of tax collection, reorganization of the PNB and DBP > The Lost Decade *strengthened fiscal austerity *left out of the East Asian miracle > The Fidel Ramos Years: Positive Signs * decrease the minimum FDI and introduced incentives, continued liberation, > The Philippines and the Asian Crisis * Affected less bc less FDI bc FDI was cautious - Structural Reforms > Banking and Fiscal Reforms * risk management, corporate governance, competition, and microfinance > Agricultural reform * transfer land from landlords to poor farmers - much resistance > Energy Sector Reform * restructure and privatize - unbundled the power sector -Present Performance > Quick Recovery and New Troubles * strong performance in the agriculture sector, rapid increase in gov. spending, and rising exports > The Start of Rapid Growth > Improving Fundamentals *arroyo admin = credit for reducing the level of fiscal deficit -> Increase in tax, asset sales * reduction of countries risk premium > Growth Benefits are Not Felt by the Poor > Food and Energy Problems *food price inflation, oil prices^ > Economic Policy Priorities * Support micro-, small- and medium-sized enterprises *improve accessibility to clean water, healthcare *regional development - The Impact of the Global Financial Turmoil * inflation, investment weakened, - Foreign Trade > The Composition of Exports > THe Composition of Imports - Inward FDI and the Business Environment > FDI Volume and Consumption * low labor cost, the pool of educated, quick-learn laborers > Investment Laws and Regulation * foreigners cannot own land > Incentives * Income tax holiday - 6 years + extra insentives and deductions > Problems and Impediments *infrastructure remains a difficulty, electicity ^, effency low

Tselichtchev & Debroux Chapter 10

SOUTH KOREA REFORMED: CHALLENGES FOR A NEWLY DEVELOPED NATION - A Few Basics * Samsung, Hyundai, LG, and SK - Postwar Development > The Late 1940's and the 1950s * war was horrible for south Korea > Development Dictatorship and Export-Oriented Industrialization *military regime turned out to be one of the most successful development dictatorships > Structural Problems > The 1980s * sustainable development and social welfare * declaration of democratization > The 1990s - Structural Reforms 1. disposal of nonperforming loans 2. transformation of company management 3. reorganization of conglomerates and banks 4. the strengthening of supervision and prudential regulation 5. liquidation of ailing companies and financial institutions 6. creation of sound framework for genuine corporate governance 7. opening up for FDI > A Case in Point: Reorganizing Daewoo > The Transformation of the Corporate Sector > Capital Market Reform - Present Performance > Growth is Fast but Uneven > Concerns About Capital Outflow > Good Macroeconomic Performance and Mounting Social Problems *income gap, real estate hikes, too ambitious > The Impact of the Global Financial Turmoil > Seeking to lead in Technology *in both gov. and business * biotech and nanotechnology >The Service Industry and "Soft Power" * TV dramas - K pop > Ties With the North * Sunshine Policy - better environment for expanding economic links - Foreign Trade > The Composition of Exports * one of the leading exporters of electrical and electronic products > The Composition of Imports * most are natural resources - FDI and the Business Environment > A Changing Attitude > Composition > Investment Promotion * getting better access to the local market for goods and services - Problems 1. inflexible labor Market - hard to layoff people 2. relations with local personnel 3. very heavy traffic 4. high cost economy > The Government Vison * need to boost inward FDI > Outward FDI

Leipziger - Chapter 2

Taiwan, China: Policies and Institutions for rapid growth Introduction Indicators of Successful Economic Performance - Very rapid growth with equity -rapid structural transformation in production and trade - Impressive export performance - Macroeconomic and politicaterm-33l stability - Capital Accumulation -very high total factor productivity growth - effective strategy for productivity improvement - a flexible industrial structure - a pragmatic approach to economic development - integration into the world economy despite diplomatic isolation Initial Conditions -the Japanese colonial legacy - the impact of initial immigration from mainland china - the role of the US Aids - The impact of Confucian Ethics Phases of economic development: Public policies and economic outcomes - Land Reform and Reconstruction - Policy Response 1. reduction of rent 2. sale of public land to tenant farmers 3. the land to tiller program - Economic Outcomes 1. exogeneous Status of the newly implanted mainlander government vis-à-vis the native Taiwanese population 2. integrated fashion in which agricultural development was planned, coordinated, and implemented 3. implementation of agricultural pricing policies that transferred resources from agriculture to the rest of the economy 4. offered incentives to different groups - Import-substitution industrialization (1953-57) - Export Promotion (1958-72) - Policy Response 1. The multiple exchange rate system was gradually dismantled in 1958 and replaced in 1961 with a unified and undervalued exchange rate that maintained its real rate versus the US dollar through 1972 2. the effective rebate of protection on various items was lowered to stimulate competition and promote greater economic efficiency 3. export-oriented industries were given a host of insentives4. gov. adopted high real interest rates on savings deposits to encourage private saving - Economic outcome Industrial Consolidation and New Export Growth (1973-80)- Policy Response: 1. Government adopted two short term stabilization measures to counter inflation 2. gov. shifted to an industrial strategy that called for the development of capital-intensive, heavy, and petrochemical industries 3. to remove bottlenecks and revitalize the economy launched 10 major public sector projects High technology industrialization (1981-Present)governance and Institutions - Mainland Government Heritage 1. rampant inflation, depleted savings, foreign trade deficit, the social and economic pressure 2. the circumstances of the nationalist favored the establishment of a dominant one-party state 3. Kuomintang governing ideology called for the gov. to assume a leading role in the economy 4. a host of external factors overtime provided the rationale for strong government involvement in Taiwan's economic affairs 5. cultural tradition to a strong, autocratic gov. - Key policy makes - the economic Bureaucracy - Institutional innovation - other special institutional arrangements 1. agencies concerned with industrial policy - the IDB and CEPD have benefited from the direct involvement of the president and prime minister 2. inclusion of both trade and industrial policies within the IDB has been given it wide authority and power 3, top decision makers in industrial policy generally reached their positions only after long experience in several agencies and public enterprises 4. the feature of overlapping and sequential memberships Public -Private Sector Relations -The Private Sector - Local Capitalist - Mainland Industrialists - overseas Chinese - Relations between the public and the Private Sector The Role of Government Intervention in Taiwan's Economic Development -Industrial and Trade Policy - The Financial Sector - High Savings and Investment 1. positive real interest rate on savings as a result of high nominal interest rates and low inflation 2. the rapid growth of income and relative equal income distribution have facilitated saving 3. high savings rate bc of Chinese frugality and Taiwan's 4. consumers needed to save in order to be able to make large purchases such as automobiles and housing 5. state-owned enterprises and government institutions also contribute to savings 6. a considerable portion of household savings consists of "forced" savings by the owners of small and medium enterprises because of the discrimination - The Preponderance of Loan-based financing - state-dominated banking sector - Controlled interest rates - Directed credit - The large and active curb market Human capital and labor markets - investments in education - labor markets conclusion on the role of government 1. the gov. has played a key role in pursuing policies to restructure economic incentives, induce greater competition, facilitate the role of market, and maintain macroeconomic and political stability 2. the gov. has played a functional role in promoting economic development by establishing programs and institutions that support economic development through investments in physical and human infrastructure and technological capacity 1. providing incentives to improve local R&D 2. promoting the development of technical human capital 3. providing incentives and regulations to address concerns about the environment 4. encouraging local exporters to move from simple subcontracting arrangements Recent Developments - introduction - rising domestic cost - labor shortages - declining inward foreign investment- increasing competition from the new Asian NIEs - Over-regulated banking sector - inadequate financial systems - fiscal weakness - strained infrastructure - Rising "Quality of Life" concerns The China Issue - Financial liberalization - Political Liberalization Lessons for Other Developing Economies - Political Stabilities and development-oriented government - macroeconomic stability - High savings and investment - heavy investment in human resources - Agriculture and land reform - flexibility and pragmatism in industrial and trade policies - outward orientation and competition - effective government institutions - investment in institutional support infrastructure for the private - Technology Development strategy - effective use of comparative advantage

Pempel Chapter 1

-Global Financial Deregulation and the Role of Financial Engineering -From Being a Miracle to Needing One -High Demand for Investment Capital -Close Government -Business Relations -East Asian Development Meets Global Finance -The Global Financial Crisis - East Asia's "Escape"

Tselichtchev & Debroux Chapter 2

A New Wave of Growth East Asian in the world: Its Present Position - East Asia's Shares of the World's GDP and Exports -Ranking by GDP (PPP) - Size Matters - Running Fast But Slowing Down Labor and Capital: Inputs and Productivity - Labor Resources are still Abundant - The Deficit of Highly Skilled Laborers - Investment Ratios - The Falling Productivity of Capital - Total Factor Productivity Growth Drivers on the Demand Side - Still, Growth Remains Export-led China-Led Growth -Why China? 1. highest growth rates in the region 2. become a major competitor for practically all other East Asian Economies 3. China is the region's leader in terms of attracting FDI 4. Opens a lot of Market and investment opportunities -China's Share in Regional TradeThe Growth of Poor Quality: Energy Inefficiency and Environmental Unfriendliness -Low Energy Efficiency -Energy Resource Constraints as Growth Impediments - China Has Become the World's Greatest Polluter - Greenhouse Gas Emissions in the Region's Other National Economies - Environmental Constraints on GrowthThe Impact of the Global Financial Turmoil 1. financial sectors are resilient and essentially healthy 2. current account of surpluses and foreign currency reserves create a cushion 3. household consumption is dynamic and continues to support growth 1. decline in exports 2. credit crunch and liquidity constraints 3. withdrawal of funds by international investors

Leipziger - Chapter 11

Common Foundations of East Asian Success Introduction: -Three Characteristics seem to be associated with each success story 1. An economic environment that encouraged investment and enterprise 2. Powerful incentives that guided resources and initiatives into efficient activities 3. some engine of growth that provided economic leadership Theories of the Miracle-Neoclassical Explanations: Right Fundamentals 1. adopted an outward oriented trade strategy 2. pursued conservative macroeconomic policies 3. invested vigorously in human capital 4. maintained competitive markets for factors - Structuralist Explanations: Wrong Prices 1. Targeted sectors that offered strong opportunities 2. directed resources into targeted sectors 3. avoided big policy mistakes - Culturalism Explanations: Confucianism 1. Emphasized group over individual values 2. developed meritocratic institutions 3. Legitimized authoritarian institutions - Interaction Effects: contagion 1. Encouraged the imitation of policies 2. Promoted the imitation of technologies and business strategies 3. Facilitated direct investment and trade Causal Factors and Country Experience -Outward-oriented Development Strategies - Macroeconomic Discipline - Public Resource Mobilization and Investment - Targeted Industrial Policies - Regulated Financial Markets -Sophisticated Bureaucracies - Favorable External Environment Toward a Synthesis 1. outward orientation 2. macroeconomic discipline Multiple Solutions to Key Functions 1. The Track - idea that the general economic environment needs to be stable and conductive to market-oriented decision making 2. Steering - mechanisms that guide the allocation of resources into productive industries instead of waste 3. Engine - leadership from a vital economic sector or an entrepreneurial class - Fitting the Model to the Environment Can East Asian Success Be Imitated?

Leipziger - Chapter 10

Foreign Direct Investment in East Asia Introduction Foreign Direct Investment in a Macroeconomic Model - The Effect of Foreign Direct Investment on Domestic Investment -The Effect of Foreign Direct Investment on Saving 1. an INCREASE in FDI would be accompanied by a REDUCTION in recorded national savings through this round-trip capital flow - The Effect of Foreign Direct Investment on Exports and Imports The Effect of Foreign Direct Investment on Economic Growth - two factors that explain the paradoxical outcome: 1. higher growth increases the saving ratio by more than it increases the investment ratio 2. the FDI stimulates saving directly, the more so in the medium and longer runs Some Policy Implications

Leipziger - Chapter 9

Government Policies and Productivity Growth: Is East Asia an Exception? Introduction East Asia's Outstanding Performance The Analytical Approach Distortion, Interventions, and Growth - the Borda ranking rule Country Differences East Asian Policies and Effects -Trade and Price Policy -importance of Macroeconomic stability reflected in inflation, interest rates, and the parallel market premium for exchange rates - Investment in education 1. policy changes in east Asia were deeper than those of other developing countries 2. the reforms were carried out vigorously 3. the supply response to reforms depends on complementary conditions - manpower skills, flexibility, infrastructure and institutional factors.

Leipziger - Chapter 1

HONG KONG: A UNIQUE CASE OF DEVELOPMENT - Introduction >Defining Success * Entrepot trade - not farming > Economic and Social Progression > Sources of Growth * Mfg. employment, a city of merchants *1. political stability 2. no exchange controls 3. a stable currency fully backed by international reserve assets 4. a well defined and well administered legal system 5. a noninterventionist government with low taxation 6. a geographical location midway between NY and London *shoppers paradise - low tax rates, free port, large volume > External Circumstances * Politics in China - Public Policy and Economic Structure 1. open economy 2. small government 3. nonintervention * Positive nonintervention = the gov. will not reject every proposal for intervention as a matter of principle but has a strong bias against intervening > The Macro Environment * Monetary system - there is no central bank - 2 major private banks * Budget and Fiscal Policy - tax rates are low, simple, and stable > Industry and Trade * subcontract for larger or they may sell their products to overseas buyers through the multitude of import-export firms > Banking, Finance, and Business Services > Labor Market * Constraints on market forces, like labor laws, gov. intervention, unionism, monopolistic employers, and inertia * little job security > The Property Market * government participation and intervention is extensive and visible - very expensive - public auctions > Flows of Funds * banking, bullion trade, stock market, real estate * stable, convertible currency, backed by sterling, well developed and reliable banking system, low taxation, and a functional legal system for the protection of property rights - The Nature of Growth and Public Policy > Industrialization 1. narrowly based - textiles and clothing 2. Product diversification accompanied by drastic changes in the trade pattern > Broad-based Development * Industrial diversification and modernization * correlation between income growth and consumption weakened bc: increase household net worth and growing confidence, entry to the labor force of the baby boom. the spread of consumerism, aggressive marketing, and the proliferation of new products > The China -Hong Kong Economic Nexus *re export with China, giving them their industry * specialized in "front office operations" - Modeling Hong Kong's Economic Growth > Culture and Institutions: an Eclectic Model * adaptiveness and flexibility of business men, their work ethic, respect for authority among workers, thrift, emphasis on education, and role of the family in the formation and operation of business > Hong Kong Development Model * Merchant entrepreneurs 1. Arbitrage; acting upon the discovery of a present discrepancy between the prices at which a given item can be bought and sold 2. speculation: an arbitrage across time 3. Innovative activity: the creation of an output, method of production, or organization not hitherto in use > The Role of Government and Institutions * An Environment Conductive to Private Enterprise * grassroot capitalism * Infrastructure and Resource Development 1. Infrastructure and Intuitional Support >>gov directly invests in roads, railways, subways, airports, waterworks 2. Land >> very scarce in HK 3. Human Capital >> health and education has been improving 4. Capital >> the government did not arrange a financing for the private sector -> but low taxation = major savings * The Promotion of Industrial diversification * Financial Regulation - Recent Developments * "three Violations" - threats of setting up their own "Stove" meaning china would form its own apparatus to handle the transition - Policy Conclusion * struck the right balance between growth and equity

Tselichtchev & Debroux Chapter 8

HONG KONG: TEN YEARS WITH CHINA - A Few Basics * keep the public sector small and governmental interference minimal - A Historical Perspective > Under British Rule > Special Administrative Region (SAR) - Postwar Development > Three Crises 1. Unemployment increase 2. burst of the speculative asset (real estate) bubble 3. SARS Outbreak > The Acceleration of Growth 1. Individual Visitor Scheme (IVS) allowed Chinese citizens to obtain individual visas, valid for 7 days 2. Sign a free trade agreement between Hong Kong and China > Closer Integration with the Mainland > A Weakening Role as Trade Intermediaries > The Tourism Industry Under Pressure * structural weakness, and competition of the mainland > Weakness in R &D * Not enough spending, still lags behind other countries > A cohort of Technology-Intensive Companies > Structural Unemployment and Disneyland *the Disneyland scheme was important to curve unemployment > Frustration -Foreign Trade > The Composition of Exports * apparel and clothing > The Composition of Imports 1. retained imports and goods imported for re-export > FDI and the Business Environment

Tselichtchev & Debroux Chapter 14

INDONESIA: THE START OF THE POST-SUHARTO ERA -A Few Basics > Overview >Natural Resources and Industries > Companies * Indofood > A Multiethnic State * Nationalism, elite, and unity *Dutch > The Elite and its Role *military commanders and officers 1. providing national defense and ensuring the safety of citizens 2. participating in politics and social development "dual function" > Support for the Pribumi and the Dominance of the Suharto Clan * entrepreneurs - got special treatment - Postwar Development > The Sukarno Years * positive attitude towards communism, deprivatizing things *hyperinflation > The New Order Regime * development dictatorship - followed the IMF, US and Japan funding = market economy > The 1970's * oil booms > Import Substitution * as soon as imports reached a certain level, the government moved to start domestic production > The Early 1980s: Hard Times *oil prices fell > The Mid-1980s Policy Shift and Acceleration *structural adjustment to promote exports of labor-intensive mfg. products > Overheating, Overborrowing, and Cronyism * asset bubble merged, abuse of power, resource allocation bias > Hardest Hit By the Asian Crisis - Structural Reform > Agreements with the IMF *raised interest rates & tightened fiscal and monetary policies > Banking Reform and the IBRA *initially focused on ailing banks then switched *3 categories A. healthy banks B. instructed to submit a business plan, had to get approved c. Had to be closed * creation of a new leading state-owned bank * policies of nationalism, restructuring, and selling off > Restructuring SOEs * reduce their numbers and make them more efficient - Present Performance > A Period of Uncertainty *political > A Picture of Indonesia's Growth * slow recovery > The Impact of the Global Financial Turmoil * Consumer Spending helped > The Long Terms State Development Plan * building prosperity and self-reliance; justice and democracy; and safety and unity. - Foreign Trade > The Composition of Exports > The Composition of Imports -FDI and the Business Environment > Volume and Consumption * US and Singapore > Foreign Companies Operating in Indonesia * examples of many foreign companies working in Indonesia > Rules * no foreign investment in natural forest exploitation and areas as such > Problems * not a favorable investment environment by international standards 1. Red tape: long time to get permits 2. Very inflexible labor market 3. contract enforcement > Three Policy Packages and a New Investment Law * Regulatory, regime, taxation, customs, and excise

Pempel Chapter 4

Institutional Path Dependence in Korea and Thailand > both of which had suffered great losses, were able to restructure their financial sectors. Following the internationally standardized menu of restructuring measures, the countries disposed of nonperforming loans (NPLs), increased their capital base, and realigned the banking sector. Their restructuring improved the health of the banking sectors and minimized the adverse effects of the global financial crisis (GFC) of 2008 on their financial markets. > 1. the two countries fell into a similarly serious crisis in 1997-98 and were required to undergo liberal financial reforms in exchange for the IMF rescue package > 2. although their export and GDP growth were adversely affected by the economic downturn during the GFC, their exposure to toxic assets was low because local banks had not invested heavily in U.S. subprime loans Liberalization and the Onset of the 1997 Crisis >Institutional Persistence and Change >> 1. under new domestic and external circumstances, the existing system may not be able to continuously function properly and satisfy everybody; disenchanted or dissatisfied actors will therefore demand the transformation of the system. >> 2. changes in the balance of power among stakeholders may lead to actors' efforts to readjust the system to the new balance of power, or to recover the former balance of power. Third, formerly absent players, including both domestic and external actors, may appear and make new demands for change. > The Korean Case >>The failure of chaebol firms such as Hanbo Steel and Kia Motors triggered the crisis. > The Thai Case >> This practice led to an asset bubble, the same double mismatch of short-term foreign borrowing, and the conspicuous default of several finance companies and banks. However, the government continued to rescue ailing nonbanks and commercial banks, thus exacerbating the problem incurably. Financial Restructuring > Postcrisis Restructuring Measures >> (1) to dispose of NPLs through the establishment of public and/or private asset management corporations, (2) to recapitalize ailing or failed banks by injecting public, private, and/or foreign funds, and (3) to realign the banking sector through nationalization, private merger and acquisition, and/or the invitation of foreign banks. > The Korean Case >> 1. Kim Dae-jung had always been in the opposition and had no chaebol connections >> 2. as there was a general feeling that chaebol were responsible for the crisis, resistance from them was relatively weak. >> 3. national crisis was so profound that the general public, as well as political parties, supported the reforms > The Thai Case >> Thai financial restructuring was characterized by the gradual and private sector-led reforms and a very limited acceptance of foreign capital. Different Impacts of the GFC > Financial Systems on the Eve of the GFC >> ironically, however, when the GFC hit Asia, Korea was impacted far more seriously than was Thailand. Korea actually was driven to the brink of a second financial crisis in 2008 while the effects on Thailand were minor. > The Korean Case >> 1. Korean depositors, unsatisfied with low deposit interest rates, shifted their assets to foreign investment funds as well as the capital market >>2. the scope of the tax exemption on dividend income extended to overseas-listed shares during 2007-9 >> 1A. the government allowed a rapid increase in short-term borrowing by the banks in the belief that the banking sector was now on a much stronger foundation after the successful financial restructuring with broad foreign participation >> 2B. the government did not ask foreign banks to square their position with foreign currency-denominated assets because it wrongly believed that their assets were mostly held in foreign currencies and that their main offices were powerful enough to help their subsidiaries in times of crisis > The Thai Case >>after that, the BOT regained its authority and even succeeded in consolidating its legal independence in 2008.

Pempel Chapter 8

Japan > The Political Economy of Long Stagnation > Explanations for Japanese Stagnation > Mixed Nature of the Developmental State and Its Consequence > Neoliberal Upsurge, AFC, and Policy Drift > Koizumi Reforms and Reversal >> "people's lives are the first priority." > Continuity and Change in the Mixed Nature of Japan's Postwar State > A Comparison with the Korean Experience >> he nature of the external sector of Japan and Korea contrasts sharply. >> unlike the Japanese case, the developmental state in Korea was characterized by a very strong executive >> 1. as the parties were not well institutionalized, the popularity of the top party leader and his place of birth had paramount importance in winning voters' support >> 2. the weakness of party identity and internal cohesion allowed the president to take strong policy initiatives without worrying so much about the popularity of his party, unlike the pressures that bedeviled Japan's prime ministers

Tselichtchev & Debroux Chapter 20

Japan: Forgotten Giant - A few Basics - Postwar development - Postwar Reconstruction and the Three Reforms 1. Zaibatsu -- dissolved 2. labor laws provided basic rights for employees, raised employment standards, and strengthened the bargaining power of labor unions 3. Agricultural reforms land from landowners to farms - Rapid Growth and heavy industrialization - Role of Government - The first oil shock abd beyond - oil prices quadrupled 1973 - The slowdown of the early 1980's - 2nd oils shock - The golden years of the Japanese economy - the Bubble - their lost decade - Structural Reform - Banking Reform - New Fiscal Policy - Privatization - Corporate Sector Reforms - Post-Koizumi Policy Change -Present Performance - Getting back on track - More Domestic Factories Built - Robust Exports and Sluggish Consumption - The Impact of the Global Financial Turmoil - the decline and aging of the population - pension reform - Healthcare reform - Trying to revitalize the regions - Innovation-led Growth - Innovation strategy - interaction and exchange of ideas between parties involved - Foreign Trade - The composition of Exports - The composition of imports - A reluctant importer - FDI and the Business Environment - Polices and targets - Entry rules and changes in the legal Environment - incentives - Impediments - Success Stories and Withdrawals - Inward FDI - Outward FDI

Leipziger - Chapter 3

KOREA: A CASE OF GOVERNMNET-LED DEVELOPMENT - Economic Performance * Suchul Ipguk -> "Nation building through exports" > Export Dominance * setting and monitoring of export targets, allocation of credit for export purposes, maintenance of an export friendly tax and trade regime, effective policies for tech acquisition, and strong international market effort * modestly pro-export bias > Changing Industrial Structure * agriculture -> Mfg. -> rapid transition - changes in output structure * Korea's Industrial Flexibility at the Firm Level * rapid development of heavy and chemical industry > Economic Welfare * Land reform - saemaul - "new villages" * Education * income distribution, purchasing power to land and housing prices remained unchanged > Characteristics of the economy 1. Chenery-Syrquin Norms >> meant to explain the genera; evolution of structure; variables as a function of income and population variables as well as net imports of goods and services 2. Human Capital >> Education level was high 3. Infrastructure and the Role of Government >> Heavily depended on us foreign aid for food, fuel, and other raw materials, Not seen as promising to FDI, infrastructure was ranked very low, movement towards self-reliance 4. The Importance of Savings >> Nation of savers, shortage of mortgage lending -> forces self-financing > The Importance of Economic Management 1. the real effective exchange rate was maintained within a narrow band of fluctuation 2. the public sector deficit was kept under control 3. despite occasional bouts of inflation, real wages increases were not allowed to outpace productivity growth A. Exchange Rate Control >> consistently used devaluation in its economic reform packages - puts pressure on inflation but improves the trade balance B. Inflation Control >> second only to the growth-oriented development strategy - comprehensive stabilization measures C. Savings Promotion >> Gov. = low-interest-rate policy designed to reduce the cost o capital for exports and strategies industries = modest savings >> High savings = personal savings ^ bc of high real interest rates D. Fiscal Management >> Expansionist until the stabilization period in the 1980s E. Policy Flexibility >> flexible and pragmatic economic management - successful response to shocks >> restrictive fiscal and monetary policies - 1. government expenditure was restrained by reducing the grain price support program, deferring some public investment projects, and suppressing wages of civil servants 2. the money supply was restrained by reducing credit available to the government and reducing and rationalizing policy loans - Industrial Policy > Introduction * 6 strategic industries: steel, petrochemical, metals shipbuilding, electronics, and machinery *it was a conscious government policy from the outset to be internationally competitive, detailed planning, forward-looking nature, and financing > Evolution of industrial Policy 1. takeoff, aggressive promotion of exports was combined with classic protection at home >> strongly dualistic trade regime, instruments of export promotion were highly discretionary >> a. moderate overall protection of domestic markets offset by special subsidies to export b. approximately world market pricing of inputs and outputs across different export products c. high protection of the domestic market in industries with poor export prospects d. high protection of final consumer good relative to industrial raw materials and capital goods 2. The Heavy and Chemical Industry Drive >> a. minimum scale: during active government planning and support accompanies protection b. Optimum scale, at which time government lending and support continues but the industry matures c. international scale, by which time industries are expected to be self-sustaining and initiative is to come from the business itself d. international first-class scale, by which time the industry is expected to be internationally competitive 3. A Shift Towards Functional Incentives >> a. sod the commercial banks to private shareholders although it continued to exercise significant influence over banking decisions b. established new financial institutions and permitted some growth in the international activities of domestic banks and the domestic activities of foreign banks c. to increase real interest rates, reducing the gap between the organized and unorganized sectors of the financial market d. substantially reduced the scope of interest rate subsided for particulate borrowers > AN Assessment of HCI * a. those investments that were successful - defined as yielding rates of return higher than the cost of capital either ex-ante or ex-post b. those that were unsuccessful - yielding negative internal rates of return - despite ex-ante, expectations to the contrary, or due to changes in relative prices * Market conforming industries success is easy to discern * Pohang steel = most successful infant industry 1. Korean decisions makers did select industries in which the achievement of dynamic comparative advantage was possible 2. the scale of support was massive and project executions were largely excellent 3. self-reliance and ultimately internationally competitive performance was expected and the authorities were not patient with non-performers 4/ the institutional environment in Korea favored success 5. tremendous efforts were made to absorb foreign state of the art technology, aided by the return home of Korean scientist and engineers 6. progress was continually monitored and Koreans were not untouched by fear of political and economical reprisal - The Role of Institutions * Korean Government had: 1, a clear vision of industrial and agricultural goals 2, an ability to control the economy via economic instruments supplemented with jawboning and coercion when needed 3. a willingness to share risk with industry or, put differently, to use business to achieve national goals 4. an excellent track record of creating institutions such as development banks, trade promotion agencies, and general trading companies 5. a unique ability to make pragmatic policy decisions * much of the success is from: 1. Koreas bureaucracy and planning apparatus led by the economic planning board 2. the unique relationship between business and government 3. the intangibles of policymaking, which revolve uniquely around culture and country-specific circumstances > The Government and Bureaucracy 1. the planning function, originally located in the ministry of reconstruction, which b=had worked with the US 2. the power of preparing the government budget, which was removed from the ministry of finance 3. the function of collecting and evaluating the national census and other statistics * The EPB had 3 main functions: 1. planned and formulated economic policy programs 2. coordinated economic poly implemented by individual ministries 3. evaluated policy programs implemented by individual miniseries on a continual basis * Bureaucracy: staffing, dedication, and access >> 3 key principles: a. with a few exceptions, appointments to be based on the results of open competitive examinations b. promotions to depend on the evaluation of the performance of each individual in a particular positions c. all civil servants to be guaranteed job security * Achieving Policy Consensus * Rewards and Penalties * Policy Research Insititute s > Business and Entrepreneurs * Characteristics of the Korean Firm * The Chaebul * State-owned Enterprises > The Intangibles of Policies 1. The Role of Confucianism 2. The influence of Japan 3. The Effect of the Korean War 4. The Effect of the North-South Division 5. Th Role and Influence of the United States in Koreas Development - Recent Development > Economic Structure > Political Economy * Institutional Reform * Deregulation * Finacial Sector Liberalization >> Several goals: a. elimination of underlying documentation requirements for financial transactions b. lifting the ceiling on foreign investments in the stock and bond markets c. allowing offshore borrowing for all firms d, easing government controls on most lending and deposit rates e. reducing "policy loans" * Privatization

Leipziger - Chapter 5

MALAYSIA: GROWTH, EQUITY, AND STRUCTURAL TRANSFORMATION - Introduction: > Development Success * Aggregate growth, equity, and resilience - ability of the economy to withstand internal and external shocks *Structural Transformation >> overcoming regional disparities * Growth - managerial accountability = problem > Initial Conditions * Economic Conditions * Political and Social Conditions >> newly independent Malaysia found itself left with a valuable institutional tradition and a coalition government willing to seek compromise > Development Phases *Market-led Development * Macroeconomic Developments * State-led Development >> trickle down, modern and urban sectors, pioneer industries * Macroeconomic Development * Adjustment and Liberalization * Macroeconomic Developments - Sector Analysis > Investment and Trade 1. an export allowance that provided a deduction of taxable income, the amount of the subsidy depends on export performance and domestic input content, 2. tax deductions for promotional expenses for exports 3. an accelerated depreciation allowance for companies that exported at least 20% of their output 4. export financing and insurance facilities from the government at preferential rates * Heavy Industry > The Public Sector * Government Expenditures >> Departmental Enterprises that were required by law to maintain their financial accounts in accordance with commercial standards >> Public corporations and bodies established by states and federal statues >> State-owned companies established under the 1965 companies act * Privatization > Human Resource Development * Schools/education > Infastructure * Steady support > Agriculture > Finance * Types of intervention 1. ownership structure of banks 2. directed credit 3. the export credit refinancing scheme - Institutional Capacity * Political Will * Institutional Strengths - Evaluation and Lessons *Equity > Lessons > Recent Developments 1. sustainable FDI flows with much flowing into the export sector 2, encouraging Malaysian investment in other developing countries 3. Upgrading education, skills, labor productivity, and technological efforts 4. investing in strategic alliances through government links 5. investing in environmental technologies and resources 6. aligning short- and medium-plans

Pempel Chapter 6

Political Business and External Vulnerability in Southeast Asia -Business and Politics in the 1990s -The Asian Financial Crisis and Post crisis Reforms -Surviving the GFC -Political Business and External Vulnerability

Tselichtchev & Debroux Chapter 6

Regional Integration and Prospects for the East Asian Community 1. economic interdependence in East Asia has been visibly boosted by rising intraregional trade and capital flows, deepening division of labor and production linkages and an intensifying movement of people 2. growing sense of crisis about being outpaced by other regions, in terms of speed and intensity at which regional institutions have creates 3. Asian Crisis - Address urgent issues as a group and to create the mechanisms that make this possible The Interdependence of East Asian Economies - The Nature of Regional Interdependence - Trade Interdependence - Intra-Industry Trade and East Asian Production Networks - FDI Interdependence East Asia's FTA's- Overview4 types of FTA's 1. trade in goods (G) 2. (G+S) includes services 3. Investment 4. cooperation enhancement (CE) - AFTA - ASEAN-China Comprehensive Economic Partnership Agreement - ASEAN-South Korea Comprehensive Economic Cooperation Agreement - ASEAN-Japan Comprehensive Economic Partnership Agreement - Japan-China-South Korea Triangle - East Asia's FTA's as Part of a Global Trend Regional Institution Building: ASEAN Plus Three - The EAEC Idea - ASEAN Plus Three - Financial Cooperation - Asian Bond Market Initiative - An Asian Currency Unit? - Other Areas of Cooperation - East Asian Summits The Creation of the East Asian Community: Dilemmas - Who Will Do It? - Alternative Proposals for a Regionwide Free Trade Area 1. East Asia Free Trade Area (EAFTA): ASEAN +3 2. Comprehensive Economic Partnership for East Asia (CEPEA): ASEAN +6 3. Free Trade Area Asia-Pacific (FTAAP): 21 APEC Economies East Asia's Integration Pattern: A "Do-What-You-Can-Do" Community

Tselichtchev & Debroux Chapter 11

SINGAPORE: GLOBALIZED, ENTREPRENEURIAL, DIVERSIFIED - A Few Basics 1. Foreign-affiliated firms - biggest exporters 2. several hundred state-owned, or government linked companies (GLC's) 3. Domestic Private Businesses, mostly small-and medium-sized enterprises *Economic Development board = plays a major role in articulation and implementing economic development * Tripartism - cooperation between trade union, employees and government - Postwar Development > A Historical Perspective > Independence and merger with Malaysia > Export-led Industrialization * transistors, textiles, and leather > Climbing Up the Value Chain * Labor intensive -> capital- and tech-intensive industry > Growth Acceleration After Interruption > The Asian Crisis - Marginal Influence * only had to fight nonperforming loans - Structural Features > The Key Role of the Bureaucracy *improving and polishing the system already in place > The Transformation of the GLC's * reduce the role of GLC's -> privatization and rely more on the private sector >Nurturing Domestic Private Businesses, Esp. Tech Startups - Present Performance > A Picture of Singapore's Growth * economy depends on exports > The Impact of the Global Financial Turmoil 1. job creation 2. stimulation of bank lending 3. enhancing business cash flows and competitiveness 4. supporting families 5, building a home for the future > The Goal of Economic Policy 1. a globalized economy, positioned as a key node in the global network 2. a creative and entrepreneurial nation willing to take risk 3. a diversified economy, powered by mfg. and service BY 5 Strategies 1. expanding external ties through world trade organization, regional cooperation, bilateral free trades agreements 2. maintaining competition and flexibility by keeping taxes low, flexible labor markets and wages, the prices of production facts competitive 3. promoting entrepreneurship and domestic companies 4. promoting growth of both mfg. and services through improving cost competitiveness, raising skills, and developing new capabilities and industries 5. developing human capital by actively investing in education and training, and welcoming global talent > A Knowledge based Economy * major R&D spending > From the lower half to the top half of the first world > The "Making of the Cite" *aggressive policy of making it uniquely beautiful > Problems *asset inflation * high-cost city > Foreign Trade * International trade liberation > The Composition of Exports > The Composition of Imports > FDI and the Business Environment * attractive place to invest

Tselichtchev & Debroux Chapter 4

Structural Transformation: Business Three Big Shifts Ownership Shift - The Growing Presence of Western -Style Shareholders 1. Ownership Structure Change in Japan 2. Japan's Leading Shareholders 3. Ownership Structure Change in South Korea 4. Ownership Structure Change in Thailand 5. A Special Case - Singapore 6. Corporate Ownership Structure in China 7. State Regulations 8. Globally Competitive Chinese Companies - the State is Involved 9. Still, Private Owners Are Needed - Foreign Acquisitions are Booming 1. Acquisition in South Korea 2. Acquisitions in Malaysia, Thailand, and Singapore 3. Growing M&A Activities in China 4. Foreign Investment in Leading Chinese Banks - Conglomerates Collapse 1. Daewoo and Hyundai 2. Salim 3. Renong Corporate Governance Shift - Governance Matters 1. In Asia, Governance Means Control from Outside 2. Growing Interest and Initial Steps - Outside term-102Directors: A Time for Us? 1. South Korea 2. Southeast Asia and China - Better Disclosure, More Accountability - Grassroots Movements Emerge - Difficult Questions Remain Dominant Shareholders: A New Mentality, a New Mode of Action - The Need to Modernize - Pioneers of Change 1. Ayala Group 2. Hutchison Whampoa 3. Thailand's Hybrid Systems A New Mode of Action: Three Features 1. Prioritizing Returns 2. Focusing on Core Business 3. Working on Global Competitiveness

Tselichtchev & Debroux Chapter 5

Structural Transformation: Labor Relations Overview: Directions of Change and New Challenges Evolving Practices and Way of Thinking - In Search of Advanced Methods and Systems - The US as a Model - Less Hierarchy, First Signs of "Impatience with Rule" - Approaches to Employment and Compensation The Signs of a New HRM System - The Shortage of Skilled Laborers - Diversity Management - Recruitment and Promotion - Evaluation and Remuneration Building Sustainable Labor Relations - Toward a Balanced Psychological Contract, But Not for All 1. Relational w/ high mutual (affective) commitment, high integration and identification, continuity, and stability 2. Transitional w/ ambiguity, uncertainty, high turnover, termination, and instability 3. Balanced w/ high member commitment and integration, ongoing development, mutual support, and dynamic - The Two-Tier System - Labor Market Flexibility - Providing Relevant Labor Standards - Employee-Management Dialogue

Tselichtchev & Debroux Chapter 3

Structural Transformation: The State The Developmental State Is Yesterday - Reassessment was Inevitable 1. favor for money relations 2. gov.s made mistakes when choosing industries and sectors to be promoted 3. Changing economic environment made the preservation of the developmental state difficult - Shock Therapy Asian-Style -Cultural Deterrents "Less Government, More Market" - Koizumi's Motto (Japans Prime Minister) - Restructuring Zaito (the Fiscal Investment and Loan Program) - Privatizing the Post - Reconsidering Established Practices Industrial Policy: Still There, But ... - Indonesia's Manufacturing Sector Development Policy - The Changing Role of Thailand's BOI (board of investment) - The Present Stage of Industrial Policy in Chine - New Features of Industrial Policies An Emphasis on Upgrading and Innovation - A vector of Change - The Malaysia Microchip - The Promotion of Innovative Entrepreneurship in China - Massive Support for Venture Business in South Korea Modernizing Agriculture: A New Old Task - an outline of the Problem - Japan Tries to Boost Agra-Exports -Indonesia's Agriculture Revitalization Program - Other New Developments Around the Region SOE's and GLCs as Leaders in the Market Economy -New Global Players 1. Europe = Laissez Faire, East Asia = states deep and extensive involvement in business 2. sovereign wealth funds = new model of state company - interests in a wide range of industries - Operating "Almost" like Private Companies - Thailand's PTT - State-Owned Investment and Holding Companies

Pempel Chapter 7

Success as Trap? Theoretical Approaches to Growth Divergence -Development Stages, Development Challenges, Institutional Capacities -The Politics of Institutional Origins and Evolution 1. Labor as a Growth Partner 2. Crises Development Trajectories and Responses to Crises -Low Income—Vietnam 1.Development Performance 2.Reform Strategies and Stages -COMMAND ECONOMY - MARKET RETRENCHMENT - DOI MOI - REFORM INTENSIFICATION - HINTS OF AN EARLY MIDDLE -INCOME TRAP? 3.Crises and the Politics of Reform Middle Income: Malaysia and Thailand 1.Development Performance 2.Reform Strategies and Stages 3.Crises and the Politics of Reform - 1980S CRISIS - 1997 ASIAN FINANCIAL CRISIS - 2008-9 CRISIS Conclusions and Key Questions - Threats as Stimuli to Institutional Development and Upgrading -Foreign Investment as Alternative to Threats - Indigenous Business Demand for Upgrading - Potential for Labor Inclusion

Tselichtchev & Debroux Chapter 13

THAILAND: RICE BOWL, REGIONAL FACTORY, AND LAND OF SMILES - A Few Basics *Board of Investment designate investment Zones 1. Bangkok, and 5 adjacent providences 2. encircles zone 1, consists of 12 providences 3. less developed zone, encompasses the remaining 58 providences -Postwar Development > The Historical Perspective *rice liberated in 1851- rapidly expands Thailand >The Phibun Era: Nationalist Policy *Thailand for the Thai > The Sarit Regime: A Development Dictatorship * Monarchy, Buddhism, Nation * Proved to be successful > The 1970s * export-led industrialization > The 1980s * Oil shock deteriorated economic standing *Liberalization and the opening of the economy * "market-field" > The Years of Best Performance * rice and rubber * equal light and heavy industries > The Blows of the Asian Crisis * catalyst of the Asian crisis * supported themselves through working in the fames * strive for "self-sufficiency" - reducing dependence on foreign capital and an emphasis on the upgrading of production and better utilization of domestic resources - Structural Reforms > Financial Sector * closure of financial companies *established the Financial Restructuring Authority and Asset Management Corporation > Bankruptcy Law Amendments * Leniency and protection, leaving creditors very little room to act against delinquent debtors > State Enterprises * intermediate step towards privatization > The Financial Sector Master Plan * boosting competition through the elimination of barriers - Present Performance > Growth and Industrial Development *promote the high-quality, upstream steel sector > Thanksinomics *while continuing to attract foreign investment - to focus more on supporting local enterprised and the grassroots economy in order to leverage their unique skills, raise the standard of living, and reduce poverty > Achievement and Criticism *populist *instrumental in addressing crucial social problems > The SHin Corporation Affair > The Military Coup * Sept 2006 *imposed restrictions on the freedom of speech > Economic performance under the military Regime * self-sufficient economy * capital controls, reduced budget expenditures > A Return to Thaksin-Style Politics > Inflationary Pressures > The Impact of the Global Financial Turmoil *moderate, major blow for exports, bad political uncertainty, and unrest - Foreign Trade > The Composition of Exports > The Composition of Imports - Inward FDI and the Business Environment > Business Entry Rules * some restriction on foreign ownership, foreign banks can only have one branch > Investment Promotion Zone 1: promoted projects may get a 50% reduction of import duty on machinery, corporate income tax exemption, 1-year exemption of import duty Zones 2&3: ^ those plus an extended corporate tax exemption > Hurdles * hard to do business in Thailand > Inward FDI Volume and Composition *Japan

Leipziger - Chapter 6

THAILAND: THE INSTITUTIONAL AND POLITICAL UNDERPINNINGS OF GROWTH - Introduction - Overview of Thailand's Development > Sources of Growth * Macroeconomy = strongest - Sectoral Interventions >Trade * pattern of industrialization > The Board of Investment > Export Promotion Policies 1. Tax Privileges and refunds 2. Zoning 3. Electricity Cost Reduction 4. Refinancing Facilitates 5. Marketing Assistance 6. International Trading Firms 7. Quality Control > Financial Policies 1. no one person can own more than 5%R of a banks outstanding share 2. a commercial bank must not have fewer than 250 shareholders 3. 3-quarters of the shareholders must be Thai nationals * Direction of Lending > Direct Foreign Investment > Provision of Infrastructure - Institutions of Economic Policy Making > Bureaucratic Autonomy, Administrative Law, and Patronage * The rights of the individual are not protected uniformly from the state > The Division of Management: Macro- and Mircopolicies > The Private Sector and the state - Macroeconomic Policy Making > Fiscal Management - Developments Since 1991

Leipziger - Chapter 8

THE PHILIPPINES: THREE DECADES OF LOST OPPORTUNITIES - Introduction > Summary Performance Indicators * Growth * Total Factor Productivity * Export Shares * Sectoral Performance * Labor Force Transformation *External Debt Accumulation * Poverty * Overall Assessment > Dashed Expectations 1. the country was endowed with a good natural resource bas 2. enjoyed special relations with the united states 3. 83% of the population above 10 years of age were literate, with little difference between genders 4. there was an early start in developing labor-intensive manufacturing for exports 5. already achieved a domestic savings rate of about 20% - Macroeconomic Performance and Management 1. the Philippines had reasonable growth until it lost its way in 1980s 2. the sustainable performance has been poor for sometime but was disguised for over 20 years > Natural Resource Degradation > External Debt Accumulation > Illusory Growth of the 1960s and 1970s > Fiscal Imprudence > Inefficient Public Investment - Swings in the Industrial Performance and Policy 1. special access to US Markets and Heavy investments by US Multinational and the domestic private sector 2. an early appreciation of the importance of exports 3. a reasonably diversified export structure 4. early entry into the most dynamic manufactures export sectors 5. relative capital equipment prices about the same as world prices > Import Substitution and Commodity Exports, 1950-1967 > Industrial Activism and Debt Accumulation, 1967-82 > Structural Adjustment and Paying the Piper, 1982-93 > Competition Counts: Better Late Than Never * Industry was Highly Concentrated and ineffective * Low Quality - The Social Compact > Wasted Human Capital > Exceptional Assistance for the Poor * Private Transfer * Public Distributional Policies * Taxes * Expenditures - Politics and Governance * Benigh dictatiorship > Utang Na Loob * Concentrated Political Power >> executive branch has all the power -> rewards incumbents is the use of pluralistic - "winner takes all" voting rules * Corruption > Constrained Technocrats > Weak Institutions Hinder Implementation - Recent Developments and Growth Prospects > Lessons learned and Playing Catchup

Tselichtchev & Debroux Chapter 9

Taiwan: A Center of Advanced Manufacturing - A Few Basics - Postwar Development - The beginnings - "Development Dictatorship" - Export-led Growth - Corporate Structure - The need for upgrading - liberalization and Democratization - New Relations with China - The Effect of the Asian Crisis - Structural Reform - Present Performance - the picture of Taiwan - The Nonperforming loans problem and the household debt crisis - The collapse of a conglomerate - The impact of the global Financial turmoil - Leadership in electronics manufacturing - Brand building - Science Parks - Development Strategies - Deepening Ties with the Mainland -Foreign Trade - FDI and the business environment - The composition of Inward FDI - The conditions for Investing - The composition of Outward FDI

Pempel Chapter 3

Unraveling the Enigma of East Asian Economic Resiliency - The Case of Taiwan 1. not all the post crisis institutional changes and policy adjustments turned out to be conducive to strengthening financial stability and economic adaptability. 2. many elements underwriting its economic resilience had deeper roots. 3. the two crises and the circumstances under which they occurred were very different in character - Taiwan in Comparative Perspective 1. the region was relatively well insulated from the global financial meltdown, as it had inherited relatively healthy financial systems prior to the subprime loan crisis and built up a huge foreign reserve as a hedge against a replay of the 1997 regional financial crisis 2. the degree of foreign participation in their banking sector was comparatively much lower 3. most East Asian economies have shown considerable resilience, thanks in part to high household savings during good times on which they could fall back during lean times without having to make drastic cutbacks in private consumption 4. the macroeconomic fundamentals were quite healthy in most East Asian economies. 5. the region's resilience should be attributed to the rapid turnaround in the region's larger, less export-dependent economies STRUCTURAL 1. Taiwan's economic vitality is built on a more decentralized industrial structure 2. Taiwan was more insulated from the external financial shock because the island's economic growth has been financed almost exclusively by domestic savings 3. Taiwan's big enterprises maintain a sound corporate financing structure that allows them to withstand any credit crunch during economic downturns. - The Historical Roots of Taiwan's Economic Resilience as long was there was no alternative power pact in sight, the KMT elite could effectively use its unabated staying power and incontestable ability to make long-term policy commitments and construct an unequal partnership with the business elite, under which the party-state elite set the limits on influence-buying and policy contestation. - Domestic Transformation during the DPP Era 1. institutionalized channels of interest intermediation no long functioned as they had. 2. the morale of the economic bureaucracy was severely damaged. - Coping with the 2008-9 Global Financial Crisis - The Transformation of the Region

Tselichtchev & Debroux Chapter 16

VIETNAM: A NEW MAGNET FOR INVESTORS? - A Few Basics - Postwar Development > Division and Reunification * socialist economy -> hard to change to in the south bc of strong private entrepreneurship > Failure of the Planned Economy * disaster - food and consumer good deficit, chronic shortages > The Doi Moi Reforms *de facto decollectivization -> Market socialism * Hyperinflation stopped, foreign trade restrictions were lifted > A Shaky Aftermath * Corruption, red tape, bias - Structural Reform (the 1990s and the 2000s) > Toward a Multisectoral Economy * Market-oriented socialist economy > Financial and Monetary Reform > The Enterprise System 1. State-Owned Enterprises 2. Non-state 3. foreign-invested > Entrepreneurship * Discouraged > SOE Reform *Leitmotiv - improve their transparency and accountability to create an effective corporate governance system > A New Openness - Present Performance > A Picture of Vietnam's Growth * import sub till 1990 - soe heavy industry > Towards a Mass Consumption Society > Changes in the Industrial Structure * IT > Hurdles * Trade deficit -> structural weaknesses in the economy > The Asset Bubble and Inflation * Refused to switch to anti-inflationary policies for a while > The Impact of the Global Financial Turmoil - Foreign Trade > Liberalization > The Composition of Exports *Oil > The Composition of Imports - FDI and the Business Environment > The Low-Labor-Cost Advantage * High turnover = problem > Improving Conditions for Investors * Cut telecommunication costs, and end discrimination against foreign companies(Water and Electric) > Impediments * lowest degree of protection against directors misuse of corporate assets > Inward FDI Amount and Composition > Investing Companies

Tselichtchev & Debroux Chapter 1

similarity in diversity Why rapid growth 1. saving rate 2. demographic situation = Favorable(a lot people in the working age) 3. workers = diligent and learn quickly 4. households willing to to invest in education 5. politically stable6. sound economics East Asian Model of Capitalism: an Outline -The East Asian Model Exists-The role of the state -Asian companies -corporate finance - Labor relations - the reliance on inward FDI The East Asian model as an Alternative The East Asian Model of Capitalism: How it worked for Growth - Developmental states: promoting Industries -conglomerates: Bringing Dynamism to the private sector - massive bank lending - labor relations: creating commitment The East Asian Model: working better than western capitalism The Asian Crisis: the Final Curtain - Financial side of the crisis -Structural side of the crisis 1. widespread cronyism 2. conglomerates blocked the control of outside shareholders 3. direct lending - companies addicted to large scale borrowing Entering a new stage: 1. cut/eliminate subsidies 2. give up support of ailing banks 3. supervision of banks = strengthened 4. liberalize imports and inwards investments 5. intro laws and regulations to improve gov.

Leipziger - Introduction

three factors that influence a country's development prospects: 1. endowments 2. policies 3. institutions making the most of Initial conditions - an adaptable and disciplined labor force -national vulnerability - relative equality of income - export development - domestic entrepreneurship External circumstances Macroeconomic Policies: -Fiscal Discipline -Investments: more the better -outward orientation and an export push Selective Industrial Policies -the diversity in Industrial Policy 1. government guided but did not override the decisions of firms 2. International price signals were used to gauge efficiency and success 3. Firms were offered support in exchange for specific performance requirements Policy Making Bureaucracy Leadership conclusion: - getting higher payoffs 1. policy making style= consensus building, policy flexibility, and pragmatism 2. greater payoff because of regional contagion 3. picking winners could have high payoffs but also disastrous results -Early versus Later NIEs - The question of Replicability