“Autochthoneity or Development? Asian ‘Tigers’ in the World: Ten Years after the Crisis”
The Report about the Workshop of WG “Transformations in the World System – Comparative Studies of Development”, Vienna, September 19-20, 2007
The workshop was proceeded in framework of broad debates about the development trends of different regions in the world system over the last years with focus on tendencies that impede to development in the conditions of globalisation. The workshop was hosted by the Austrian Foundation for Development Research/ Österreichische Forschungsstiftung für Entwicklungshilfe (ŐFSE) in Vienna. (The workshop‘s programme as specified on September 18 is applied – see below.)
The workshop was partly funded by EADI (travel and accommodation expenses for the participants from India and the Philippines). The current expenditures (tea, coffee and biscuits for coffee breaks) were covered by ŐFSE.
A duration of each presentation was about 30 minutes, and then questions had been put to speakers as well as discussion around the presented text was held during one hour. The final version of the workshop programme (for September 17) can be performed as following.
September 19, Wednesday
Session 1.
9:00 – Karin Küblböck, ÖFSE, Vienna. Opening speech.
9:15 – Imre Lévai, Victor Krasilshchikov, conveners of the WG. Agenda and order of the sessions. Introduction.
9:30 – 10:00. Clara García, University of Complutense, Madrid. Ten years after the East Asian crisis: Interpretations, recommendations and policy space.
10:00 – 11:00. Discussion
11:00 – 11:30. Coffee-break
11:30 – 12:00. Edo Andriesse, Hye Jin Zumkehr, Utrecht University. Asian Miracles and Economic Catastrophes: Capital Controls in Malaysia versus Neo-liberal IMF Policies in Korea.
12:00 – 13:00. Discussion
13:00 – 14:30 – Lunch
Session 2.
14:30 – 15:00. Amiya K. Bagchi, Institute of Development Studies, Kolkata. Akamatsu’s Flying Geese: Some Are Sparrows and Hawks Are in the Air.
15:00 – 16:00. Discussion
16:00 – 16:30. Coffee-break
16:30 – 17:00. Kunibert Raffer, Vienna University. The Main Lesson from the Asian Crisis: “Dragons” Should Not Fundamentally Change Their Policies.
17:00 – 18:00. Discussion.
September 20, Thursday.
Session 3.
9:00 – 9:30. Victor Krasilshchikov, Institute of World Economy and International Relations, Moscow. The Dilemma of ‘Tigers’: The Growth or Development?
9:30 – 10:30. Discussion.
10:30 – 11:00. Coffee-break
11:00 – 11:30. Anna-Katharina Hornidge, the Centre for Development Research, Bonn University. Knowledge Society as New Focal Point of Collective Identity in Singapore’s Second Modernity.
11:30 – 12:30. Discussion
12:30 – 14:00. Lunch.
Session 4.
14:00 – 14:30. Johannes Dragsbaek Schmidt, Research Centre for Development and International Relations, Aalborg University. From Thaksin’s Social Capitalism to Self-sufficiency Economics in Thailand
14:30 – 15:30. Discussion.
15:30 – 16:00. Coffee-break
16:00 – 16:30. Allen B. Surla, De La Salle University, Manila. The Overseas Filipino Workers (The Philippines’ Only Hope after the Crisis?).
16:30 – 17:30. Discussion.
It is notable that the workshop was held on the next day after the conference “Making the Financial Markets Work for Development: Were the Lessons of Asian Financial Crisis Learnt?” organised by ŐFSE. Three participants of the workshop, A.K. Bagchi, K. Raffer and J.D. Schmidt, as the main speakers have taken part in this conference presenting their papers. Two potential participants of the workshop, C. Carcía, Madrid, and Ai-Lada Chotechuang, Bangkok, submitted papers but could not come on various reasons.
After the brief opening speech by Ms. Karin Küblböck on behalf of ŐFSE as the host organisation, Victor Krasilshchikov, convener of the WG, proposed to approach to the problems under scrutiny from the three points of view.
At first, he drew attention to the title dilemma, autochthoneity or development, which had become very important after the failure of ‘Washington consensus’ by the end of the past decade. In his opinion, justified criticism in regards to neoliberalism has been accompanying by the rise of new utopianism when the neoliberal version of globalisation has been criticised from obsolete, old attitudes. The alternatives to this globalisation are various autochthonous ‘models of development’ but not another, alter-globalisation. This revival of reactionary utopianism can be observed not only in Eastern Europe (Russia, Ukraine, Poland, and some other countries of the former Soviet block) or Latin America, but also in the region under consideration, East and Southeast Asia. In practice, it justifies refuse of development eternalising obsolescence and backwardness (the case of Burma/Myanmar under the junta rule).
Secondly, it was proposed to assess the post-crisis development in the region taking into account what is significance of the governance issue. In the recent situation, the concept of good governance has become new package for ‘the structural reforms’ that have been recommended by Bretton-Woods institutions. In essence, it is ‘intellectual-political child’ of post-Washington consensus arisen already in 1996-97 when neoliberal modernisation in Latin America revealed its inconsistency being accompanied by the economic stagnation and financial storms.
Thirdly, the participants were requested to discuss what are the region’s prospects in the world system. Is it possible to share the East Asia’s revival attitude, following ideas of A.G. Frank, G. Arrighi and some other scholars who are adherent to the world-system analysis school? Do these assessments correspond to reality? Are the data on the capital accumulation and growth rates sufficient foundations to make conclusion s about the rise and decline of any region/country in the world system whereas significance of ‘intangible goods’ (knowledge, education, force of creative imagination) increases in ever-extending degree? As convener underlined, clarification of whether causes of the crisis that occurred ten years ago were abolished or not would be very important for adequate answer to this general question.
The papers submitted for presentation at the workshop could be grouped according to their topics: 1) the first group was dealing with issues of the neoliberal project’s implementation in East Asia as well as the choice of post-crisis strategy (the papers by C. Carcía, E. Andriesse and H.J. Zumkehr, A.K. Bagchi, and K. Raffer); 2) the second group focused on the problems of transition towards new, post-industrial model of development (the papers by A.-K. Hornidge and V. Krasilshchikov); 3) the third group dealt with the concrete case studies (Ai-Lada Chotechuang, J.D. Schmidt, and A. Surla). At the same, the general consideration of the region’s problem in the first group of papers was mainly founded on the concrete cases of such countries as Korea, Taiwan and Malaysia.
The main problem scrutinised in the first group of papers concerned the neoliberal, IMF project for East Asia and its impact on the most crisis-affected countries (Korea, Indonesia, Malaysia, and Thailand). Why the countries where governments were strong, particularly, such as Korea and Malaysia with their active developmental state, accepted the anti-statist programmes aimed at minimisation of any state interventionism? Who were the social agents of the neoliberal projects implementation in the called countries? What was the role of Bretton-Woods institutions and the local governments in the post-crisis development of East Asia? These and other concomitant questions were discussed while the first three papers had been presenting.
Hye Jin Zumkehr and Edo Andriesse, Utrecht University, devoted their paper to comparative study of the anti-crisis policies in Korea and Malaysia. Seemingly, the governments in each country had chosen different policies. Malaysia had turned to the practice of hard capital control, restoring the strong state regulation with emphasis on pro-Keynesian policy aimed at resumption of the domestic demand. On the contrary, Korea accepted the neoliberal version of the post-crisis economic policy, although the Korean government was soon enforced to correct it partly rejecting the ‘orthodox’ neoliberalism. Nonetheless, in the both cases, the economic growth resumed rapidly; the both countries began demonstrating good results already in 1999, evident differences between their policies notwithstanding.
The authors have explained these post-crisis achievements (although neither Korea nor Malaysia reached the pre-crisis rate of growth) referring to differences of factors that succeeded to the crisis. Since these factors were different, different anti-crisis policies had to resolve the problems each country confronted ten years ago. It could be presupposed that each anti-crisis policy corresponded to the concrete conditions which existed in each case, otherwise the growth would hardly resume over short time. As well, human development index in both countries continued increasing, too, in spite of short-term decline during the crisis. The main conclusion H.J. Zumkehr and E. Andriesse made from their analysis concerned a necessity of flexible approach to analysis of crises, according to the concrete situation but not to dogmas.
Prof. Amiya Kumar Bagchi, Institute of Development Studies, Kolkata, focused on methodological background of approaches to the study of East Asian ‘miracle’. In this connection, he considered the flying geese model of development elaborated by Japanese economist K. Akamatsu in 1932. A.K. Bagchi considered the utility of this model for analysing the pre- as well as post-crisis development of the newly industrialising countries of East Asia, mainly Korea and Taiwan province. In his opinion, this model is much more interesting and useful for comprehension of East Asian ‘miracle’ than the Gerschenkron model of leapfrogging across backwardness. The Akamatsu model deals not only with several countries but also with sectors of the economy in the world context. It enables us to describe the internal mechanism of moving on to a trajectory of industrialisation, taking into account what processes have been developing in other, more advanced countries. In addition, this model has intrinsically been correlated with Lenin’s and Trotsky’s theories of uneven development. The author also mentioned the so-called Feldman model of the accelerated industrial growth in Russia/USSR (1928). This model was partially adapted to the Indian conditions because of the strong influence of the Russian/Soviet experience on India in the 1950s. The model(s) of development in Korea and Taiwan differed from all previously known models of accelerated development, including the Feldman model. It was outward-looking development, initially basing itself upon the growth of textile industry, oriented mainly towards external markets. The newly industrialising countries then moved into more technology-and capital-intensive sectors as the incomes, wages and technical capability of the industrialising countries developed further. The flying geese model could describe this development more adequately than other models on view: it analysed the trajectory of development in different countries as part of a single process subjugated to some common logic of industrialisation. He, however, pointed out that in Akamatsu’s and Kiyoshi Kojima’s formulation, Japan would always remain the lead goose, outpacing the others, thus revealing the imperialist underbelly of this formulation, as applied to East Asia.
A.K. Bagchi drew attention to such important circumstances as the abolition of non-market power of landlords after World War II and a strong upward movement of literacy that facilitated the process of capitalist development in both Korea and Taiwan. Moreover, they copied many aspects of the operation of the Japanese developmental state, including the practice of direct involvement in the operation of the market, so as to govern it and preventing the entry of foreign capital in any major sector of the economy. He asserted that the developmental state in South Korea had begun unravelling in 1993 when premature financial liberalisation of the Korean economy was effected, partly under pressure of the USA and Bretton-Woods institutions, partly because of the ambition of the Korean politicians and business circles to become a member of the OECD, of which Japan had been until then the only Asian member. The Asian financial crisis created conditions that were beneficial for ‘hawks’ to attack ‘the flying geese’.
As A.K. Bagchi argued, the real intention of ‘the fire band’ of IMF in regards to Korea during the crisis consisted in capturing the Korean chaebols’ assets (‘policy of hawks’) by means of bankruptcies, sometimes artificially provoked. It hugely increased the irruption of mergers and acquisitions, which became more profitable for financial capital than for foreign direct investment contributing to the growth of the Korean economy. In fact, ‘the IMF medicine’ aggravated the crisis, so it was not accidental that the Korean state was obliged to adopt some most odious aspects of ‘the recuperation programme’ imposed by the IMF. At the same, according to the author, competition among ‘geese’ in the markets of electronic devices contributed somewhat to the eruption of crisis. On the other hand, implementation of the IMF ‘remedies’ enabled the authorities to enfeeble the Korean trade unions and, therefore, to cut wages. The resulting compression of home demand and price wars intensified this competition.
Assessing the post-crisis development of East and Southeast Asia, A.K. Bagchi drew attention to a new mode of appropriation of the region’s resources by the hawks from advanced capitalist countries, led by the USA. If in the period of the crisis it was direct outflow of hot capitals aided by the IMF programme implementation, in the post-crisis period it has been realised through the burgeoning gap between domestic saving and domestic investment. Since the accumulation of foreign exchange has been allocated as ‘reserve funds’ nominated in US dollars and bonds of the American Treasury, it enables the financing of the US huge deficits, in its budget, external trade and balance of payments.
Prof. Kunibert Raffer, Vienna University, presented the paper which was very close, in methodological respect and by its content as well, to the paper by A.K. Bagchi. According to the opinion of K. Raffer, Asian ‘tigers’ had found themselves as victims of a ‘Bretton-Woods institutions’ (BWI) trap, into which they were lured in the 1990s. Insisting on capital account liberalisation in Korea or Thailand, the international institutions, such as IMF and World Bank, foresaw what the likely results of such liberalisation in East Asia would be. Hence, as the author indicated, turning away from the BWI policies should be the best decision for the region.
Observing some studies of East Asian ‘miracle’ over the last twenty-five years, K. Raffer demonstrated that the BWIs changed their opinion after the crisis. Previously, they glorified ‘the Asian model’ until the mid-1997 but then began criticising it as ineffective, corrupted, and anti-market. Meanwhile, one of the most important ‘secrets’ of the Asian success story lied in pragmatism and flexibility of the ‘tigers’ governments that combined pro-market and protectionist measures, correspondingly to the concrete tasks which had to be solved at each stage of development. In this respect, as K. Raffer argued, the East Asian newly industrialising countries (NICs) followed advices of such prominent developmentalist as Raúl Prebisch.
In the author’s opinion, there were ‘predecessors’ of the Asian crisis of 1997, such ones as the crisis of 1982 in Chile and that of 1994-95 in Mexico. The both countries had apparently become ‘successful’ in liberalisation of capital markets but then had scandalously crashed. As K. Raffer asserts, “[I]f Asian countries had not liberalised their economies so quickly and strongly, the crisis could not have happened”.
What concerns the post-crisis development of ‘tigers’, they have a doubtful pleasure to deal with the BWI new mantra about ‘accumulation of reserves’, the phenomenon to which A.K. Bagchi has drawn out attention. At the same time, K. Raffer reminded that the IMF statute admitted a possibility of capital control in some conditions, and Malaysia exercised it in 1998. The best way to avoid of new storms, he argued, is to continue practising the control for capitals if it is really necessary.
The papers by H. J. Zumkehr and E. Andriesse, A.K. Bagchi, and K. Raffer had provoked discussion about considered issues. One of the most debatable problems was the rise of the short-term external debt (‘the debt trap’ situation) of East Asian ‘tigers’. How did this debt arise? Whence did it come and what were its origins? Were the BWIs’ ‘snares’ the only cause of this debt? These and similar questions were put by the authors themselves and other participants of the workshop. As J.D. Schmidt noted, discussing the presented papers and speaking about ‘a wonderful transformation’ of ‘miracle’ into ‘debacle’ and ‘vices’ of the Asian model in eyes of the same people, ‘crony capitalism’ has not been exclusively East Asian phenomenon, it can be seen in the Western countries, too. Moreover, the IMF programmes did not abolish ‘cronyism’; on the contrary, the latter is well compatible with ‘good governance’ programmes because none IMF anti-crisis remedy could touch the roots of this phenomenon. J.D. Schmidt as well as K. Raffer put question: if the crisis has been explained by an existence of ‘crony capitalism’, it is unclear why the crisis did not come earlier, in the 1970s-80s when ‘crony ties’ were stronger than in the second half of the 1990s? As they both underlined, the widespread, mainstream explanations of the crisis could hardly be treated as relevant and adequate, being corresponding to the short-term vested interests. V. Krasilshchikov expressed presupposition that a part of the developmental state bureaucracy and big business represented these ‘vested interests’; otherwise, the IMF recommendations would not be accepted with easiness, as it occurred in the case of Korea or Thailand. A.-K. Hornidge asked A.K. Bagchi, whether the flying geese model could be applicable, at first, to development of Singapore and, secondly, in the conditions when knowledge-based society rises in the region, or not. A. Surla put the similar question concerning the Philippines. In his reply, A.K. Bagchi remarked that Singapore, in many respects, is a unique case, so the flying geese model could not directly be applied to study of this city-state. The problems of the Philippines, in his opinion, would have to be treated against the burdensome heritage of the past when non-market socio-economic relationships of domination and subordination were not eroded but adapted to the new conditions. A.-K. Hornidge asked A.K. Bagchi, whether the flying geese model could be applicable, at first, to development of Singapore and, secondly, in the conditions when knowledge-based society rises in the region, or not. A. Surla put the similar question concerning the Philippines. In his reply, A.K. Bagchi remarked that Singapore, in many respects, is a unique case, so the flying geese model could not directly be applied to study of this city-state. The problems of the Philippines, in his opinion, would have to be treated against the burdensome heritage of the past when non-market socio-economic relationships of domination and subordination were not eroded but adapted to the new conditions. In this respect, and J.D. Schmidt joined A.K. Bagchi, speaking about the Philippines, we could see almost the same problems as in many Latin American countries where relics of the pre-capitalist relationships were not abolished and blocked the capitalist development.
V. Krasilshchikov noted, commenting the paper by K. Raffer, that ‘the BWI trap’ does not exclude ‘the modernisation trap’ when the old achievements and social-political institutions, which enabled to reach definite ‘industrial heights’ in the past, had been transforming into obstacles to further development in new conditions. Moreover, the BWIs used the internal vulnerabilities of the NICs economies; in its turn, all ‘vices’ in which the BWIs accused ‘tigers’, whether it was the state regulation or ‘cronyism’, had been indispensable for the region’s success story. At the same time, A.K. Bagchi drew the attention of the audience to fluctuations of the global demand for computer hardware that NICs met still in 1995-96. A relative decrease of this demand was additional factor, which affected ‘tigers’ exports, particularly, in the conditions of ever-intensifying competition with China. He said that this competition should inevitably influence trade balances of the affected countries and behaviour of ‘hot capital’ investors who decided to withdraw their money in 1997. From the point of view of K. Raffer, dismantling the developmental state elements was more important, because it weakened ‘the tigers’ immunity system’ and, consequently, they could not adequately respond to the new challenges. I. Lévai put the general question about relevance of the Keynesian policy in the conditions of globalisation. He underlined that sometimes the state intervention could aggravate a crisis whereas the neoliberal programmes, in spite of all their deficiencies, looked as ‘lesser evil’. In this connection, I. Lévai asked whether it was possible to see the similar situation in the case of East Asian NICs or not. Replying to this question, K. Raffer focused on the unique character of the Asian crisis what did not admit transplanting the other regions’ experience to the case under scrutiny. For example, when the financial crisis occurred in Mexico or Argentina (1994/95), the US authorities together with the BWI were interested to rescue these countries. In the case of East Asia, neither the US nor the BWI tended to deliver an aid to ‘tigers’. Certainly, K. Raffer continued, sometimes the state intervention could succeed to deepening crisis but the case of East Asia in 1997-98 was another matter: the most crisis-affected countries in the region suffered because of insufficient state regulation.
J.D. Schmidt reminded about significance of such factor as the US and BWI fear of the Asian Monetary Fund that could prospectively countervail the Bretton-Woods Institutions being their powerful competitor. It was necessary to prevent the creation of this Asian financial institution, and the crisis could be used, from the point of view of the BWI, as the best way to reach this goal. At the same time, K. Raffer, speaking about multidimensionality of the Asian crisis, remarked that the latter, of course, could not be reduced to the BWIs’ activity only: some reforms initiated according to the IMF recommendations after the crisis were also favoured by influential national groups in the NICs. These interests, as the participants of discussion spoke, depend on the character of corporations that dominated in the region. In particular, J.D. Schmidt proposed to distinguish multinational and transnational corporations from each other because they had different interests and, henceforth, different modes of behaviour. As A.K. Bagchi said, the Japanese corporations, being very active in the region, operated as transnationals but were always nationally grounded. Correspondingly, the education system in Japan was nationally oriented, too. The same could be said, although to a lesser degree, about the education system in the NICs. The political and business elites in East Asia considered themselves as the nationally rooted leading groups whereas their counterparts in Latin America preferred to see themselves, at least, superficially, as aligned to Western Europe and the USA. These two different attitudes greatly influenced differential developments in the two regions, and continued to operate even in the periods of liberalisation. K. Raffer had drawn attention to indicators of the share of foreign investors in newly privatised formerly state-owned enterprises in Latin American and East/Southeast Asian countries. Those were 56 and 2 per cent, respectively! Invasion of foreign investors into the Korean economy after 1997 has been a new moment in the economic development of East Asia, K. Raffer concluded. In the opinion of K. Küblböck, this circumstance allows speaking about a relative convergence between development models in Latin America and East Asia after the crisis because foreigners captured many assets of the Korean firms as it occurred in Latin American countries. Certainly, it should have to impact on behaviour and role of the developmental state bureaucracy in all crisis-affected countries.
Dr. Victor Krasilshchikov, Institute of World Economy and International Relations, Moscow, convener of the working group, presented the paper that was focused on two groups of issues. The first of them concerned a reconsideration of East Asian ‘miracle’ in light of the global long-term trends observed over the last thirty-thirty five years, whereas the second one dealt with the post-crisis development of the NICs. The author proposed applying the conception of associated-dependent development, elaborated by F.H. Cardoso and E. Faletto for analysis of the Latin American situation in the 1960s-80s, to the Asian ‘tigers’ experience. According to such an approach, the development of East Asian NICs depended on the processes that took place in the western economies and in the world as a whole to much more degree than it had been observed in the case of Latin America. This dependency encompassed economic as well as political aspects. Moreover, East Asian ‘miracle’, as V. Krasilshchikov argued, could hardly be possible without this dependency. It did not revoke a significance of the internal factors of development, in particular, such one as nationalist attitudes of the local elites. The speaker illustrated how dependent development, at the same time, pre-determined the rise of many macroeconomic disproportions and deficiencies which attributed a definite vulnerability to the ‘tigers’ economies. However, otherwise East Asia could not reach the industrial heights remaining underdeveloped region for a long time. In addition, the countries under scrutiny, the author said, had not sufficient time to develop their scientific and technological base what conditioned the rise of some difficulties when scientific knowledge and technological achievements became decisive factors of competitiveness.
According to V. Krasilshchikov, the crisis of 1997-98 was result of ‘modernisation trap’ when the previous accomplishments of catching up development turned into the obstacles to further development in the changed global conditions. Therefore, the Asian crisis had, in essence, the same social-economic nature as the collapse of the former Soviet Union, an apparent non-co-measurability of the both events notwithstanding. Namely, neither ‘tigers’ nor the USSR were capable to cross a threshold of post-industrial shift. They all became ‘victims’ of their proper ‘success story’ in the past because continued following ‘the industrial way’ and underestimated a significance of human capital and ‘intangible goods’. The author approved it referring to some macroeconomic proportions (the ratios consumption/investment, consumption/ savings in GDP, exports/GDP) and indicators of scientific-technological development as well. A relative ‘over-industrialisation’ of the region restrained its adaptability to fluctuations of the global demand and deprived ‘tigers’ of necessary flexibility in the changed conditions. Thus, ‘modernisation trap’ enabled to the BWI to lure ‘tigers’ into ‘BWI trap’.
In addition, the crisis in Asia marked the objective historical limit to ‘conservative modernisation’ which has been the form of compromise between traditions and modernity in East Asian societies.
In the opinion of V. Krasilshchikov, only few aspects and details of the developmental mechanism changed after the crisis. A complement of problems that succeeded to the crisis (and was used by the financial speculators to spoil the region) continues existing with insignificant modifications. The economies of ‘tigers’ remain to be depending on the external markets but now the role of the western countries is decreasing whereas the role of China increases. Despite attempts of the NICs’ governments to steer these economies towards post-industrialism, resolution of this problem has been more difficult than it was previously suggested. At the same time, some cultural traditions of the past begin impeding to the strategic manoeuvre aimed at change of the development pattern.
The paper by Dr. Anna-Katharina Hornidge, the Centre for Development Research, Bonn University, dealt with Singapore’s transition towards a knowledge-based society. This transition was treated, with references to many official government documents, as indispensable alternation of the developmental model of the city-state in rapidly changing conditions. As A.-K. Hornidge asserted, since the early 1980s, Singapore’s government massively pursued the construction of a knowledge society and approached this construction in parts also through means of social engineering. The National Computerisation Plan (1981) was ‘the ground floor’ of the social building under construction. A.-K. Hornidge demonstrated how this plan had been extended and modified over the last twenty five years. She argued that today knowledge society in Singapore is actually offered by the government as a new focal point of collective identity counterbalancing insecurities and felt risks in Singapore’s ‘second modernity’. Really, it suggested embracing almost all aspects of social-economic life in the city-state. Starting from broad implementation of information and communication technologies (ICT) in business, administration, etc., the government of Singapore moved on to solution of ever-complicate tasks. The presented paper performed a brief history of this movement.
At the same time, A.-K. Hornidge outlined not only of the Singapore authorities but also how those plans had been accomplished, clarifying what was done and what had still to be done at next stages of the plans’ realisation. She observed, too, a set of institutional and managerial decisions aimed at their realisation. In addition, the paper put attention to reforms of the education system because of obvious significance of the latter for accomplishing proclaimed strategy. A.-K. Hornidge considered simultaneously some essential changes in the cultural policy of Singapore. The government goal to transform the city into ‘a global cultural hub’ was launched in 2000. However, as it was noted, this goal has implicitly been considered as means to attribute new dimension to the Singapore economy’s competitiveness because of ever-increasing importance of ‘intangible’, intellectual factors of the economic growth. In fact, as A.-K. Hornidge remarked presenting her paper, the Singaporean efforts towards the creation of a knowledge society were very much driven by the aim to assure future economic growth.
The discussion around V. Krasilshchikov’s paper was concentrated on two main problems: the role of traditions in East Asian development and significance of imitation for catching up industrialisation whereas the paper by A.-K. Hornidge stimulated debates about impact of the Singapore government pro-knowledge-based society policy on other ASEAN countries.
A.K. Bagchi and A.-K. Hornidge were sceptical in regard to the assertion about incompatibility of Confucianism and invention of new technologies. For instance, China, where the Confucian doctrine dominated over many centuries, was very active in creation of new technologies until the twelfth century at least, and in the last few years we could observe a notable resumption of this activity. K. Raffer reminded that Confucianism, for instance, was first interpreted rather as the development blocker than as the reason for quick and successful development. In addition, K. Raffer underlined that imitation of the borrowed technologies was not peculiar feature of the Asian NICs only: all countries, even the most developed in the world, imitated technological accomplishments of their partners and rivals, and the East Asian success story would be impossible without imitations, particularly, at the first stages of industrialisation. In the opinion of A.K. Bagchi, any imitation presupposes learning (sometimes, by doing), and ability to learn from others is an indispensable aspect of economic progress. When multinationals entered the East and Southeast Asian economies, mainly, in the case of the second-tier ‘tigers’, new technologies, principles of management, etc., were transferred through imitation of their achievements by the local business communities, A.-K. Hornidge and J.D. Schmidt remarked. As A. Surla added, the social-economic situation in many developing countries, including the Philippines, would be much worse without imitation of technologies, managerial skills, patterns of consumption, etc. by the local entrepreneurs.
A.K. Bagchi disagreed with V. Krasilshchikov’s assertions about slowdown of the structural changes in the NICs and refused to accept the idea of ‘latinamericanisation’ of East Asia after the crisis. In his opinion shared by K. Raffer, most Latin American countries cannot produce and export such technically complicate goods as Korea or Malaysia do.
Replying to critics, V. Krasilshchikov specified that imitation as itself in the process of catching up development should be indispensable; but what is a matter is a degree of imitation. In the case of ‘tigers’, imitation that was necessary at the start of industrialisation, continued to be the main mode of technological upgrading even at high stage of development. Factually, technological dependence of ‘tigers’ was not reducing despite their obtained level of economy. It attributed additional vulnerability to and restrained competitiveness of the NICs economies. What concerns the structural changes in the latter, according to speaker, these changes could be subdivided into the pre- and post-crisis ones. As V. Krasilshchikov noted, the restructuring after the crisis in some NICs have not always been progressive, from the point of view of ‘technoeconomic paradigm’ (Carlota Pérez). It is the main circumstance that allows us speaking about the post-crisis situation of ‘growth without development’, as it has been observed in many Latin American and East European countries since 1989-90. Despite obvious differences between the levels of technological and economic development in East Asia and Latin America, it is possible to fix ‘the coincidence of several tendencies’ in the both cases.
However, as it was noted, to reach the stage when imitation could have to be combined with the proper technological breakthroughs was very difficult task. J.D. Schmidt focused on this problem, making comments to the paper by A.-K. Hornidge. Even in the case of Singapore, not speaking about less developed ‘tigers’, transition towards a knowledge-based society looks as difficult-reachable goal. In this connection, J.D. Schmidt asked what is the role of collaboration between different ASEAN countries in promotion of knowledge-based society. From the point of view of A.K. Bagchi, the most disputable problem in the given case concerned the gap between Singapore and neighbours. Indeed, Singapore attracts engineers, scientists and other specialists from other countries, accelerating, thereby, Singapore’s movement towards a new stage, as A.-K. Hornidge noted, but this practice stimulates the brain drain from there and, therefore, can impede to development of other ASEAN members. Moreover, A.K. Bagchi said, the rise of knowledge-based society in one place does not exclude but, on the contrary, presupposes a definite enlargement of semi-skilled and unskilled workers’ activity. It succeeds in deepening differentiation between sectors of economy as well as countries, slowing their development in some respects.
A. Surla had drawn attention to definite contradiction between undeniable achievements of Singapore in social-economic and scientific-technological development, on the one hand, and excessively hard political system, on the other. In addition, according to A. Surla, it seems to be relevant to clarify what is type of knowledge Singapore promotes. Is it knowledge elaborated in Singapore, or translated from other scientific centres to the region? A.-K. Hornidge pointed out that Singapore’s media industry as well as science parks try to use the knowledge potential of the region for further development and applied knowledge creation. It is notable that efforts aimed at transition of the city-state towards knowledge-based society are undistinguished from reform of the education system; the latter has been reorienting to training of creativity of students beginning from primary school.
I. Lévai advised to avoid of involuntary technological determinism, speaking about the rise of knowledge-based society. It is necessary to take into account that such transformation presupposes not only broad-scale technological innovations but also changes of social relationships, political system, and so on. Unfortunately, these aspects of the problems were not completely considered in presentation, which emphasized mostly on purely technological and managerial innovations. Continuing discussion, V. Krasilshchikov proposed to consider whether the proclaimed transition towards knowledge-based society in Singapore is motivated by search for response to the external conditions (competition, globalisation, etc.) or excited by impulses from inside. In the first case, the authoritarian political structures, which initially corresponded to definite traditions of society and facilitated the process of industrial modernisation, could continue functioning but with restrained efficiency. In the second case, those structures should be transformed, according to democratic principles. However, the problem of transition has not been reduced to a set of political reforms. Its resolution would mean erosion and abolition of authoritarianism in the social structures of everyday life, at the micro-level of society. This process might be initiated by enlightened rulers but could not be accomplished until society would be matured for democratisation. In Singapore, the government proclaimed a course to teaching creativity but a big part of society was mentally not yet delivered from authoritarian customs. Such co-existence of new imperatives for development and old habits excites a temptation to use old modes resolving new problems, and it concerns the Singapore realities even to lesser degree than other ‘tigers’. Indeed, A.-K. Hornidge agreed, an inertia of old development model is big, and it would be very difficult to overcome this inertia over a short time. Hence, the process of changes will be longer than it was initially supposed.
A.K. Bagchi and J.D. Schmidt reminded the audience that new social differentiation arose as a result of transition towards knowledge-based society. The latter needs to attract a lot of semi-skilled workers who assist the personnel occupied in research and other creative activity. Obviously, it leads to new social tensions and conflicts that aggravate, in particular, the difficulties of social, vertical mobility.
Dr. Johannes Dragsbaek Schmidt, the Research Centre for Development and International Relations, Äalborg University, considered the aftermath of the crisis in Thailand, emphasising on the social-economic policy of the former Prime Minister Thaksin Shrinawat dismissed by the royalist-military forces in September 2006. Dealing with apparently concrete problems of one country, the author tended to find the general, world-scale tendencies that were sometimes hidden beyond a lot of facts and politicians’ declarations.
The presentation started from scrutiny of the financial crisis and its impacts on the social-economic situation in the country because many peculiar features of Thaksin’s policy were rooted in the pre-crisis as well as post-crisis development of Thailand afflicted by neoliberal globalisation to a bigger degree than other ‘tigers’. J.D. Schmidt performed a mournful picture of broad decline after the crisis: mass bankruptcies, the skyrocketing growth of unemployment, etc. As the author showed, despite the economic recovery in the first half of the recent decade, the main problems of Thailand, in particular, an excessive dependence upon the external markets and foreign investment, remained substantially to be unresolved.
The difficult aftermath of the crisis also affected the political life of Thailand. J.D. Schmidt argued that Thaksin could create his party (TRT) and come to power only in the conditions of mass disappointment in the neoliberal projects and US-image-driven growth. A complement of eclectic ideas Thaksin propagated, as the speaker had illustrated, had been concentrated in the slogan of ‘a new social partnership’ between the state and ‘civil society’. It was not occasional that this slogan involved clearly expressed features of populism and nationalism. Henceforth, the economic policy of Thaksin meant a more active intervention of the state into economy. Considering various directions and forms of such intervention under Thaksin rule, J.D. Schmidt pointed out the government efforts aimed at improvement of health care for poor people, particularly, in rural areas. At the same time, Thaksin intended to stimulate foreign investment in Thailand. In this connection, the presenter mentioned such events as the tax-free sale of Thaksin’s media/telecommunications company to Singapore’s “Temasek” what provoked the protests and calls for the military coup. However, as J.D. Schmidt had demonstrated, the social-economic policy of Thaksin, very contradictory in itself, destroyed the intra-elite balances and, thereby, contested the interests of many influential circles which were close to the royal court. It was the genuine cause of coup d’état, according to the speaker. Nevertheless, fluctuations of Thaksin-led government between two extremities, pro-globalisation and inward-looking development policies, were used as reasons to accuse him in many mistakes and sins.
The main conclusion, in the opinion of J.D. Schmidt, that can be made observing the aftermath of the crisis in Thailand and East/Southeast Asia as a whole, is concerned with the rise of various anti-globalisation political currents in the region. The attempts to implement the neo-liberal projects in peripheral and semi-peripheral countries are in deep problems and in some instances they turn into protests against modernity and the West.
Allen Surla, De La Salle University, Manila, devoted his presentation to such concrete issue as the problem of skilled labour drain from the Philippines with focus on the post-crisis situation. One of the character features of the Filipino labour has been a relatively good qualification and high graduation of many labourers who searched a job abroad. These people cannot find occupation in the country where labour productivity is low and new jobs have not been created. As the speaker noted, the Filipinos were practically deprived of the East Asian ‘miracle’ yields. The country remained pertaining to the Third World whereas the neighbours were rapidly moving on the path of fast industrialisation. This circumstance made the Philippine economy particularly vulnerable to fluctuations of the external trade or financial markets. Therefore, it was not surprising that the average unemployment rate in the Philippines was higher than in Southeast Asia as a whole and stood at 9 per cent. In 2001-02, already after the regional crisis, the unemployment rate exceeded 13 per cent with subsequent moderate decrease by 1-1.5 percent points to 2004-05.
The labour emigration as social-economic phenomenon has been contradictory in itself, and A. Surla scrutinised its main contradictions in details. On the one hand, this phenomenon deprives the national economy of skilled workers and specialists. A shortage of qualified labour impedes to the country’s development. On the other hand, it allows softening negative consequences of unemployment and, in addition, provides the overseas workers’ remittances to the homeland. These remittances (about 8 billion US dollars annually) propped up the weak economy during the financial meltdown of 1997-98.
The author had told about the Overseas Workers Welfare Administration (OWWA), the special authority body established by the government to assist to the Filipino workers who found their job abroad. These people underwent and continue experiencing various kinds of discrimination, feeling themselves estranged from their families that have been left at home. Staying in the crisis-affected countries, the overseas Filipinos suffered a lot of inconveniences and losses, being afflicted in the conditions of financial storms in more acute and painful forms than the local workers experienced.
In fact, all efforts of the government and its agencies responsible for contacts with the Filipino overseas workers are aimed at palliative resolution of the unemployment and low wages problems. Unless the Philippines State will become the developmental state, these problems will remain to be extremely significant for the nation. Such conclusion could be extracted as the most essential idea of the presented paper.
The discussion that had evolved around the case studies papers was, respectively, focused on the concrete issues considered in presentations. Considering the case of Thailand, A.K. Bagchi had drawn attention to the ambiguity or duplicity of the western governments and international institutions’ policies. Whereas they recommend to developing countries to implement the neoliberal, monetarist project, they do not entirely reject Keynesianism for themselves. This ambiguity was reflected in the policies of the dismissed government headed by Thaksin. At the same time, as A.K. Bagchi reminded, there were the structural constraints in Thai economy that allowed it to follow neither self-sufficiency nor unbridled pro-globalisation policies. The country is deeply integrated into the world market, and the best choice should consist in optimal combination of the both approaches. In his reply to these comments, J.D. Schmidt noted that Thaksin, coming to power in 2001, used the mass disappointment in neoliberal globalisation. At the same time, he had done a little realising the self-sufficiency, self-reliance strategy, though it cannot be said that his government did nothing for poor people and revival of the domestic market. J.D. Schmidt told how the controversies between Thaksin, on the one hand, and the royalist-military circles were intensifying while the government popularity increased, particularly, among the poorest strata. Simultaneously, as the speaker said, it would be worth to note that Thaksin was overthrown by the forces which were always interested in inclusion of the Thai economy into the world market but after the crisis those forces began acting under the slogans of self-sufficiency. They criticised Thaksin and his TRT-led government for deviations from the policy proclaimed by the King. Meanwhile, it cannot be forgotten, and all participants of discussion shared this attitude, what is the real size of shadow economy sector in Thailand. A co-existence of this sector oriented mainly to the external demand (including foreigners who come to the country) with legal outward-looking sector of industry and one looking to the domestic market should attribute a contradictory character to any economic policy. K. Raffer, joining discussion about the aftermath of the crisis in Thailand, touched an issue of agricultural production of the nation. He remarked that neither liberalisation nor the capital control policy could affect a big part of the Thai agriculture because the latter is partially isolated from the global markets, so the commitments imposed on Thailand by the BWIs in 1997 did not substantially destroyed the national agricultural production. It made up the social base for self-sufficiency strategy in countryside.
V. Krasilshchikov proposed comparing the rise of populism in Latin American countries at the stage of import substitution industrialisation, in 1930s-50s, on the one hand, and the revival of populism, or quasi-populism, in the conditions of globalisation, on the other hand. Indeed, sunsets have been similar to sunrises not only in nature but also in social history. However, such phenomenon as the rule of Thaksin can hardly be treated as populism. Rather, we deal with some forms, or elements of populism, the populist rhetoric. Populism presupposed a search for compromise between opposing social-political forces; meanwhile, under Thaksin many social and regional disparities continued widening. Seemingly, the social strata that supported the coup d’état in September 2006, in particular, the new middle class of Bangkok and vicinities, were interested in gradual, soft inclusion into globalisation, without shocks, but they had not objections to globalisation as a whole. In this connection, A.K. Bagchi cautioned the scholars not to ignore the significant role of the local Chinese business community: since significance of collaboration with China increases for Thailand, obviously, this role will increase, too.
K. Küblböck asked to specify the changes in social-economic policy that began occurring in Thailand after the coup. However, it is difficult to clarify what these changes are because the recent, after the coup government is temporary; it has to introduce the new constitution and to organise the new elections. Meanwhile, as J.D. Schmidt reminded, the political life in Thailand is conservative being controlled by the King. The King is the main centre of power, guarantor of stability and supreme arbiter over all conflicts and controversies.
Another paper (by A. Surla) that dealt with the concrete case studies stimulated putting attention to verifiability of the statistical data as well as the labour market regulation. Such issues as the Philippines government assistance to the Filipino overseas workers, illegal emigration (including one of female labour force), integration of the Filipinos working abroad into the local communities, etc. were touched in discussion. According to the speaker’s remark, a good knowledge of English is a comparative advantage of the Filipino workers, although many of them work in Malaysia (“semi-English speaking country”) and Korea where only few people know English fluently. In addition, the education system in the Philippines, at least, at the tertiary level, is of good quality. It facilitates to many qualified Filipino specialists to find good job abroad, some discrimination notwithstanding. Moreover, there is a special kind of business, which links the national education system to recruiting offices.
Scrutinising an issue of qualification of the Filipinos who search for jobs in other countries, A.K. Bagchi mentioned strong competition between qualified specialists from India and Southeast Asian countries in the labour markets of Britain or the USA, for example. When the governments of the countries of migrants try to facilitate their migration, it becomes a case of the governments’ intervention in the process of labour force migration. At the same time, as discussion about Surla’s presentation revealed, the post-crisis development in other countries of the region, in particular, in Malaysia, intensified demand for qualified specialists (as well as domestic servants, nurses, and so on) from the Philippines. It aggravates a shortage of skilled labour in the Philippines and, hence, impedes endogenous development of the country. Meanwhile, a spread of new technologies broadens the practice of outsourcing services. After the crisis of 1997-98, the Philippines has become the second largest location for these services in the world, just after India.
In the course of workshop, the participants came to conclusion that the aftermath of the crisis in East Asia did not yet allow abolishing or, at least, reducing, an acuteness of the problems, which were favouring to the rise of crisis ten years ago.
On behalf of the working groups, Victor Krasilshchikov, Imre Lévai, conveners.
