Developmental Mindset: The Revival of Financial Activism in South Korea

Elizabeth Thurbon

Published by Cornell University Press 2016

Developmental Mindset

The Revival of Financial Activism in South Korea

Elizabeth Thurbon

In the series Cornell Studies in Money

https://doi.org/10.7591/9781501704178

Overview
Contents

About this book

The Asian financial crisis of 1997–1998 was supposed to be the death knell for the developmental state. The International Monetary Fund supplied emergency funds for shattered economies but demanded that states liberalize financial markets and withdraw from direct involvement in the economy. Financial liberalization was meant to spell the end of strategic industry policy and the state-directed "policy lending" it involved. Yet, largely unremarked by analysts, South Korea has since seen a striking revival of financial activism. Policy lending by state-owned development banks has returned the state to the core of the financial system. Korean development banks now account for one quarter of all loans and take the lead in providing low-cost finance to local manufacturing firms in strategic industries.Elizabeth Thurbon argues that an ideational analysis can help explain this renewed financial activism. She demonstrates the presence of a "developmental mindset" on the part of political leaders and policy elites in Korea. This mindset involves shared ways of thinking about the purpose of finance and its relationship to the productive economy. The developmental mindset has a long history in Korea but is subject to the vicissitudes of political and economic circumstances. Thurbon traces the structural, institutional, political, and ideational factors that have strengthened and at times weakened the developmental consensus, culminating in the revival of financial activism in Korea. In doing so, Thurbon offers a novel defense of the developmental state idea and a new framework for investigating the emergence and evolution of developmental states. She also canvasses the implications of the Korean experience for wider debates concerning the future of financial activism in an era of financialization, energy insecurity, and climate change.

Author / Editor information

Thurbon Elizabeth :

Elizabeth Thurbon is senior lecturer in international relations at the University of New South Wales, Australia. She publishes widely on the international political economy of techno-industrial development and change, with a focus on Northeast Asia and Australia.

Reviews

Stephen Bell, School of Political Science and International Studies, University of Queensland:

"If you think that liberalization equals neoliberalism, or that the state is on the retreat, or that financial dominance or deindustrialization are inevitable, think again. In this important new book Elizabeth Thurbon explains how Korean state elites have reanimated the developmental state and the mindset that underpins it and pursued new forms of financial activism in support of industrial competitiveness. This book will become a classic in the tradition of developmental state literature and provides an important guide as to what can be achieved through judicious state activism."

Joseph Wong, Ralph and Roz Halbert Professor of Innovation and Professor and Canada Research Chair of Political Science, Munk School of Global Affairs, University of Toronto:

"Developmental Mindset offers a refreshing take on the developmental state model in Asia, and specifically in Korea. Elizabeth Thurbon identifies an important empirical reality: that financial activism and state-controlled banking for the purposes of industrial development are at the center of Korea's contemporary political economy. Developmental Mindset is the most convincing book I have come across in recent years about the role of the state in Korea’s—and East Asia’s—political economy of growth, industrial development, and economic adjustment."

Thomas Kalinowski, Ewha Womans University, Seoul, South Korea:

"Thurbon’s new book is a welcome revitalization of the important discussion on the developmental state and improves our understanding of a distinct and path-dependent model of state-led capitalism that is emerging in East Asia. Her focus on the developmental mindset of the political elite is an important contribution to this understanding while at the same time raising many new questions for future debates... [I] strongly recommend this book for all scholars and students of development as well as those curious about Asian capitalism and its spirit."

Hyoung-kyu Chey, National Graduate Institute for Policy Studies, author of International Harmonization of Financial Regulation? The Politics of Global Diffusion of the Basel Capital Accord:

"Elizabeth Thurbon provides a novel and valuable analytic framework and perspective for the study of the developmental state, and her arguments are clear and convincing. She demonstrates that financial activism has revived in South Korea since the 1997 crisis, leading us to reconsider the broad theme of states versus markets in the current environment of deepening globalization. Developmental Mindset provides a rich historical account of the origin of developmental ideas in Korea and is also based on extensive field research, including in-depth interviews with a number of key Korean officials."

Topics

Frontmatter Publicly Available Download PDF	i
Contents Publicly Available Download PDF	vii
List of Illustrations Requires Authentication Unlicensed Licensed Download PDF	ix
List of Abbreviations Requires Authentication Unlicensed Licensed Download PDF	xi
1. Rebirth of the Developmental State Requires Authentication Unlicensed Licensed Download PDF	1
2. Developmental States: Bringing Ideas Back In Requires Authentication Unlicensed Licensed Download PDF	11
3. Makings of a Developmental Mindset and Emergence of Strategy Mark I Requires Authentication Unlicensed Licensed Download PDF	26
4. Rise of Financial Activism Requires Authentication Unlicensed Licensed Download PDF	47
5. Fracturing Consensus and the Abandonment of Financial Activism Requires Authentication Unlicensed Licensed Download PDF	66
6. Return of the State Requires Authentication Unlicensed Licensed Download PDF	89
7. Emergence of Strategy Mark II Requires Authentication Unlicensed Licensed Download PDF	99
8. Return of Development Bankers Requires Authentication Unlicensed Licensed Download PDF	111
9. Full Flowering of Financial Activism Requires Authentication Unlicensed Licensed Download PDF	125
10. What Future for Financial Activism in Korea and Beyond? Requires Authentication Unlicensed Licensed Download PDF	143
Acknowledgments Requires Authentication Unlicensed Licensed Download PDF	165
Notes Requires Authentication Unlicensed Licensed Download PDF	169
References Requires Authentication Unlicensed Licensed Download PDF	199
Index Requires Authentication Unlicensed Licensed Download PDF	213

(Deutsch)

Language: English
Publisher: Cornell University Press
Audience: General/trade;
Pages
- Main content: 240
Illustrations
- Illustrations: 6
- Tables: 6
- Other: 3 line figures, 6 tables, 13 charts
Keywords: Asian financial crisis; financial liberalization; financial activism; economy; political leaders

eBook

Published: June 9, 2016
ISBN: 9781501704178