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Dirigiste modernization, coalition politics, and financial policy towards small business : Korea, Japan, and Taiwan compared

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Frame of Image d credit-based and priceadministered financial systems; yet these similarly structured systems were wielded differently to produce widely divergent industrial structures. The paper argues that economic policy in East Asia is best explained not by the technocratic preferences of an elite bureaucracy or by the bottom-up pressures of organized interests, but by political exigencies and choices of the ruling coalition, as defined both by the competition for state power among various elite policy factions and by the winning political coalition's consequent task in building paternalistic authority in the eyes of the society. Thus main policy changes occurred abruptly, within the same continuing governing party or elite group, and as a strategic decision. Understanding such dirigiste pattern of policymaking is important because the stickiness of statist institutions and policy legacies constrains and molds, for better or worse, how the dynamics of coalition politics shape modernization in these nations, no matter how strong the homogenizing globalization forces may be.
1 I . Introduction Why did Korea, Japan, and Taiwan follow distinct modernization trajectories, despite their similar history, culture, and placement in the international system. All three had credit-based, priceadministered financial systems;1 yet these similarly structured systems were wielded differently to produce widely divergent industrial structures. While small firms in both Japan and Taiwan flourished as the


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Title Dirigiste modernization, coalition politics, and financial policy towards small business
Similar Titles
Sub Title

Korea, Japan, and Taiwan compared

Material Type Reports
Author(English)

Park, Hun Joo

Publisher

Seoul:KDI School of Public Policy and Management

Date 1999
Series Title; No Working Paper Eeries / 99-06
Pages 36
Subject Country Japan(Asia and Pacific)
South Korea(Asia and Pacific)
Taiwan(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < Financial Policy
Industry and Technology < General
Holding KDI School of Public Policy and Management

Abstract

This paper investigates the political origins of striking variations in financial policy toward small business in Korea,
Japan, and Taiwan. All three had credit-based and priceadministered
financial systems; yet these similarly structured systems were wielded differently to produce widely divergent
industrial structures. The paper argues that economic policy in
East Asia is best explained not by the technocratic preferences
of an elite bureaucracy or by the bottom-up pressures of organized
interests, but by political exigencies and choices of the ruling coalition, as defined both by the competition for state power
among various elite policy factions and by the winning political coalition's consequent task in building paternalistic authority
in the eyes of the society. Thus main policy changes occurred
abruptly, within the same continuing governing party or elite
group, and as a strategic decision. Understanding such dirigiste pattern of policymaking is important because the stickiness of
statist institutions and policy legacies constrains and molds,
for better or worse, how the dynamics of coalition politics shape modernization in these nations, no matter how strong the homogenizing globalization forces may be.