Varieties of Capitalism and re-thinking the East Asian model of economic growth after the Covid-19 pandemic: Rebalancing shareholder and stakeholder capitalism

Lee, Keun (2020): Varieties of Capitalism and re-thinking the East Asian model of economic growth after the Covid-19 pandemic: Rebalancing shareholder and stakeholder capitalism. Published in: Seoul Journal of Economics , Vol. 33, No. 4 (November 2020): pp. 487-504.

Abstract

East Asian economies had shown remarkable performance of high growth and low inequality, thereby forming a separate East Asian capitalism group within the VoC typologies. There are strong signs that these economies have recently been converging to the LME group, featuring low growth and high inequality, features shared by East Asian economies since the 2000s. Financialisation is arguably one cause for these outcomes of low growth and high inequality. This paper re-evaluates East Asian capitalism in the context of the Covid-19 pandemic, which has suddenly halted globalisation and further questioned the superiority of shareholder capitalism associated with financialisation and globalisation. It proposes rebalancing between shareholder and stakeholder capitalism. By doing so, East Asian economies can be reborn as a hybrid capitalism, with East Asian capitalism at its original core, to restore their growth momentum in an inclusive way. It is also argued that the post-pandemic retreat of globalisation is a good opportunity to restore autonomy in domestic economic policymaking over interest rates and exchange rates, while imposing some adjustments over formerly excessive capital mobility.

• Item Type: MPRA Paper
• Language: English
• Keywords: East Asian model; globalization; Covid-19; shareholder capitalism; stake-holder capitalism.
• Subjects: F - International Economics > F3 - International Finance > F32 - Current Account Adjustment ; Short-Term Capital Movements; F - International Economics > F5 - International Relations, National Security, and International Political Economy > F59 - Other; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O16 - Financial Markets ; Saving and Capital Investment ; Corporate Finance and Governance; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O19 - International Linkages to Development ; Role of International Organizations

References

Acemoglu, D, J A Robinson and T Verdier (2012), “Can’t We All Be More Like Scandinavians? Asymmetric Growth and Institutions in an Interdependent World”, MIT Department of Economics Working Paper No. 12-22.

Aghion, Philippe, Helene Maghin, André Sapir (2020, Covid and the nature of capitalism. Working paper. Vox EU. Available at https://voxeu.org/article/covid-and-nature-capitalism

Alvarez, I. (2015). Financialization, non-financial corporations and income inequality: the. case of France. Socio-Economic Review 13(3), 449-475.

Dore, R., Lazonick, W., Sullivan, M. (1999). Varieties of capitalism in the twentieth. century. Oxford Review of Economic Policy 15(4), 102-120.

Ferrari-Filho, F. and Paula, L. (2008) Exchange rate regime proposal for emerging countries: a Keynesian perspective, Journal of Post Keynesian Economics, Vol. 31.

Godechot, O. (2012). Is finance responsible for the rise in wage inequality in France? Socio-Economic Review 10(3), 447-470.

Hacker, J. S., Pierson, P. (2010). Winner-take-all politics: Public policy, political organization, and the precipitous rise of top incomes in the United States. Politics & Society 38(2), 152-204.

Kim, A., Cho, M.-H. (2008). Types of Foreign Investors, Dividend and Investment Policy: An. Empirical Study of. Korean Firms. Journal of Strategic Management 11(1), 25-42

Kim, S.-Y., Thurbon, E. (2015). Developmental environmentalism: Explaining South Korea’s ambitious pursuit of green growth. Politics & Society 43(2), 213-240

Kus, B. (2012). Financialisation and income inequality in OECD nations: 1995-2007. The. Economic and Social Review 43(4, Winter), 477-495.

Lazonick, William (2010) "Innovative business models and varieties of capitalism: Financialization of the US corporation." Business History Review 84.4: 675-702.

Lazonick, William (2014) "Profits without prosperity." Harvard Business Review 92.9: 46-55.

Lazonick, W., Shin, J.-S. (2019). Predatory Value Extraction: How the Looting of the Business. Corporation Became the US Norm and How Sustainable Prosperity Can Be Restored. Oxford: Oxford University Press.

Lee, C. H., Lee, K., Lee, K. (2002). Chaebols, financial liberalization and economic crisis: transformation of quasi-internal organization in Korea. Asian Economic Journal 16(1), 17-35.

Lee, Keun (2016). ECONOMIC CATCH-UP AND TECHNOLOGICAL LEAPFROGGING: THE PATH TO DEVELOPMENT AND MACROECONOMIC STABILITY IN KOREA, Cheltenham, UK: Edward Elgar Publishing Limited.

Lee, Keun., Kim, B.Y., Park, Y.Y. and Sanidas, E. (2013), "Big Businesses and Economic Growth: Identifying a Binding Constraint for Growth with Country Panel Analysis," Journal of Comparative Economics, 41 (2): 561-582.

Lee, Keun, Ginil Kim, Hong Kee Kim, and Hong-Sun Song, 2010, New Macro-Financial System for a Stable and Crisis-resilient Growth in Korea, Seoul Journal of Economics 23 (2): 145-186

Lee, K, and H. Shin. (2019). “Varieties of capitalism and East Asia: Long-term evolution, structural change, and the end of East Asian capitalism,” STRUCTURAL CHANGE AND ECONOMIC DYNAMICS, published online.

Lee, K, H.C. Shin, and J. Lee (2020), "From Catch-up to Convergence? Re-casting the Trajectory of Capitalism in South Korea, KOREAN STUDIES.

Lin, K.-H., Tomaskovic-Devey, D. (2013). Financialization and US income inequality, 1970–2008. American Journal of Sociology 118(5), 1284-1329.

Nayyar, Deepak (Ed.) (2019). Asian Transformations: An inquiry into the Development of Nations, UNU-WIDER Studies in Development Economics, ISBN 978-0-19-884493-8, Oxford University Press.

Ostry, J.D., Ghosh, A.R., Habermeier, K., Chamon, M., Qureshi, M.S. and Reinhardt, D.B.S. (2010) Capital inflows: the role of controls. IMF Staff Position Note SPN/10/04.

Popov, Vladimir (2020). Which economic model is more competitive? The West and the South after the Covid-19 pandemic. Working paper.

Shin, H and K. Lee (2019), Impact of Financialization and Financial Development on Inequality: Panel Cointegration Results using OECD Data,” Asian Economic Papers

Shin, J.S, and H.J Chang (2003). RESTRUCTURING KOREA INC., London and New York: Routledge Curzon.

Soskice, D. W., and P. A. Hall. (2001) VARIETIES OF CAPITALISM: THE INSTITUTIONAL FOUNDATIONS OF COMPARATIVE ADVANTAGE. Oxford: Oxford University Press.

Stabilini, A. (2015), "Revision of the Shareholders Rights Directive: It's a Long Way Home", Lexology.

Stockhammer, E. (2013). Why have wage shares fallen? ILO, Conditions of Work and. Employment Series 35(61), 1-61.

Thurbon, Elizabeth (2016), DEVELOPMENTAL MINDSET: THE REVIVAL OF FINANCIAL ACTIVISM IN SOUTH KOREA, Ithaca, NY: Cornell University Press

Thurbon, Elizabeth (2003). “Ideational Inconsistency and Institutional Incapacity: Why Financial Liberalisation in South Korea Went Horribly Wrong” in New Political Economy Vol. 8 No. 3, Carfax Publishing, pp. 341-361

Tomaskovic-Devey, D., Lin, K.-H., Meyers, N. (2015). Did financialization reduce economic growth? Socio-Economic Review 13(3), 525-548.

Williamson, J., (1999) Crawling Bands or Monitoring Bands: How to Manage Exchange Rates in a World of Capital Mobility, Institute for International Economics.

Williamson (1990). "What Washington Means by Policy Reform." in Latin American. Adjustment: How Much Has Happened, pp. 90-120. Washington: Institute for International Economics.

World Bank. (1993). THE EAST ASIAN MIRACLE: ECONOMIC GROWTH AND PUBLIC POLICY. New York: Oxford University Press

Zeiler, D., (2014), "Why Facebook Inc. (Nasdaq: FB) Stock Is a Bet on the Future", Money. Morning