18 JUNE 1999
SEOUL, REPUBLIC OF KOREA
The Political Economy of Pre-Crisis Growth
The sudden economic crisis in East and Southeast Asia took observers unprepared, just as the preceding spectacular economic growth in this region had invariably met with amazement. Scholars are beginning to realize that rapid growth and deep crisis are two sides of the same coin. We need to apply the same analytical tools to explain both and this can only be done by looking at economics in conjunction with politics. That was the main conclusion of an international workshop held in Seoul on 18 June 1999 with participants from both Asia and Europe.
By J. THOMAS LINDBLAD
The workshop was entitled 'The Political Economy of Rapid Modernization in Contemporary East and Southeast Asia'. It was organized jointly by the Graduate School of International Area Studies at Hankuk University of Foreign Studies in Seoul and the Korean Association of Southeast Asian Studies. It was co-sponsored by the IIAS and the Netherlands Embassy in the Republic of Korea. The one-day conference was comprised of presentations by six scholars from the Netherlands, Indonesia, Japan, and Korea. Each presentation was accompanied by elaborate commentaries by scholars at various universities in Korea. Professor Sung-Yeal Koo (Yonsei University), President of the Korean Association of Southeast Asian Studies, chaired a concluding panel session. The papers will be published in a special issue of the Korean Journal of Southeast Asian Studies.
Within the broadly defined theme of the conference, the papers focused on two specific questions. The first one concerned the renowned Asian model of economic development: Can Japan and Korea still serve as sources of inspiration for developing countries in Southeast Asia such as Indonesia and Vietnam? The second question referred to the impact of the current economic crisis on relations among East Asian countries, especially with regard to the prospects for economic development in China and the sensitive issue of Japanese leadership in the wider region of eastern Asia. The speakers stressed the importance of looking at both external and internal factors behind monitoring rapid growth prior to 1997 and handling the current crisis. The link between rapid growth and economic crisis was most succinctly expressed by Professor Jong-Kil Kim from Inha University (Inchon): 'Whether the cause of East Asian crisis is related to the East Asian growth mechanism or not, it can be said that the East Asian crisis was transmitted rapidly by the East Asian growth mechanism'.
The Socio-Economic Transformation of South Korea: Can it Serve as a Model for Vietnam? was the question addressed by Dr Raymond Feddema (University of Amsterdam). Feddema's answer was unequivocally 'No': because the conditions under which economic development takes place are so vastly different in the two countries. This bold assertion did not convince everybody and provoked a lively discussion.
Indonesia was treated in two papers which complemented each other. Professor Djoko Suryo (Gadjah Mada University, Yogyakarta) spoke about 'Political Transformation in Indonesia' whereas I myself chose the topic of 'Rapid Economic Growth and Sudden Crisis in Indonesia'. We both used the same subtitle: 'Can we learn from the South Korean Experience?' We both answered this question in the affirmative, while also acknowledging important differences. Similarities are especially pronounced when we compare accelerated and guided structural transformation of the economy under Park Chung-Hee in Korea and under Soeharto in Indonesia. Conspicuous differences concern the transition from authoritarian rule to democracy and the efficiency of conglomerates in fuelling economic growth. The need for far-reaching internal reform is even more urgent in Indonesia than in Korea. The subsequent discussion on such points as the nexus between political power and vested economic interests brought out an important difference in the type of authoritarian rule in Korea and Indonesia. Bureaucratic polity was (and perhaps still is) more important in Korea, whereas patrimonialism predominates in Indonesia.
Much of the literature about the so-called Asian model of economic development is highly empirical with only the barest theoretical underpinning. This prompted Dr Anil Khosla (University of Leiden) to suggest an alternative framework of analysis in his contribution entitled 'Political Economy of East Asian Development: the Japanese Experience'. He approached the subject from the point of view of institutions and institutional change. The emphasis on institutional reform may provide a ready-made link with the current crisis and thus help observers to escape from the present deadlock in the international discussion about a model that seemed to stop working in 1997.
The shift from rapid growth to crisis has repercussions for Japanese leadership in the region. The one-time source of inspiration is now expected to lead the others out of their predicament. Professor Ryokichi Hirono (Seikyo University in Tokyo) urged for more economic co-operation within East Asia and a more active role to be played by Japan in his paper on 'Changing Japanese Policies towards East Asia Now and in the Future'. He advocated a far more comprehensive partnership between Japan and other countries in East Asia but underscored that Japan could only take bolder diplomatic initiatives if it is prepared to undergo political and economic reform at home.
The high degree of interdependency between the economies in East Asia in particular was an asset in times of growth, but became a liability in times of crisis. Yet things again could take a turn for the better, as argued by Professor Jong-Kil Kim in his paper 'Economic Relations between Korea and China: Implications of the Korean Economic Crisis for China'. With recovery already in sight in Korea, this country could make a major contribution towards strengthening the process of further industrialization throughout East and Southeast Asia by establishing a partnership with China. Such a partnership could even serve as a counterweight to the dominance of Japan's economic power in the region.
The workshop on 18 June 1999 in Seoul covered much ground. If anything, it illustrated the synergy to be drawn from putting together economists and political scientists from both Asia and Europe in discussing Asian growth and crisis. *
Dr J. Thomas Lindblad, Department of Southeast Asian Studies, University of Leiden, can be reached at e-mail: j.th.lindblad@worldonline.nl..