Article

‘Crony Capitalism’ in South Korea, Thailand and Taiwan: Myth and Reality

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Abstract

A new myth is in the making. Once held as a model of development by practitioners and theorists alike, East Asia's Newly Industrializing Countries (NICs) are now identified as an epitome of ‘crony capitalism,’ a perversely deformed system of political and economic exchange driven by rent seekers. The privileged few have allegedly captured the state to pillage banks and sabotage market forces in pursuit of rents. But imbued with Confucian norms, which Francis Fukuyama (1995) once characterized as limiting the ‘radius’ of trust to familial ties, society cannot weed out rent seekers. The emphasis on personal loyalty is held as breeding clientelistic networks, which easily degenerate into a collusion for monopoly profits. Hiding behind a profoundly opaque corporate governance structure and protected by dense political patronage networks, business firms engage in shady deals to share rents with party politicians and state bureaucrats. From this perspective, the 1997 financial crisis was a logical outcome of East Asia's exclusionary cultural proclivities, opaque institutional arrangements, and shady business practices.

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Han'gukui guk'ka inyomgwa hyonsil:jayu minjujuui inyomgwa gwonwijuuijok hyonsilganui galdeung (The State Ideology and Reality in Korea: The Conflict between Liberal Democracy and Authoritarian Reality)
  • Pak
Taekook bahthwa wigiui won'inkwa sisajeom (The Causes and Implications of the Thai Baht Crisis)
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Beyond Patronage: Tasks for the Thai State. A paper presented at the 1993 Year-End Conference on “Who Gets What and How?: Challenges for the Future
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  • Siamwalla Ammar
Saving Asia: It's Time to Get Radical, Fortune Investor
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Democracy without Equity?: The Institutions and Political Consequences of Bangkok-based Development. A paper presented at the 1993 Year-End Conference on “Who Gets What and How?: Challenges for the Future
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Japanese capital as a major engine of Thai economic growth. He defines Thai industrialization as essentially inefficient, ‘technologyless,’ and dependent
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1993: 163) finds political cleavages over democracy to be as significant as ethnic cleavages in determining electoral results
  • Hu Fu
Bujong chukjaeja cheori jeonmalseo (The final report on the illicit profiteers' court sentences)
  • Kim Jin-Hyun
195-215) calls this ‘liberal corporatism
  • Laothamatas Anek