CAPITALISM IN ASIA: A SCHUMPETERIAN …...the Pax Americana, though modified 2) Mercantilism redux...
Transcript of CAPITALISM IN ASIA: A SCHUMPETERIAN …...the Pax Americana, though modified 2) Mercantilism redux...
CAPITALISM IN ASIA: A SCHUMPETERIAN PERSPECTIVE
RAZEEN SALLY
SCHUMPETER CENTRE,
UNIVERSITY OF JENA
21st June 2019
CAPITALISM IN ASIA: A SCHUMPETERIAN PERSPECTIVE
• What is Asia?
• What is capitalism?
• The three faces of capitalism in Asia
- Economic
- Political and institutional
- Global
CAPITALISM IN ASIA: A SCHUMPETERIAN PERSPECTIVE
• What is Asia?
- Focus on East, Southeast and South Asia
- Asia’s economic reemergence
World Bank Development Indicators 2018 http://datatopics.worldbank.org/sdgatlas/the-world-by-income.html
(Million 1990 international $) Source: Maddison and OECD
Share of Global GDP
for Asia and ROWShare of Global GDP per World Region
0
10
20
30
40
50
60
70
80
90
1820 1870 1913 1950 1973 1998 2001 2030
Asia
Rest of the World
Share of Global GDP
for parts of AsiaShare of Global GDP per World Region
0
5
10
15
20
25
30
35
1820 1870 1913 1950 1973 1998 2001 2030
Other Asia
Japan
China
India
(Million 1990 international $) Source: Maddison and OECD
CAPITALISM IN ASIA: A SCHUMPETERIAN PERSPECTIVE
• What is “capitalism”?
- Capitalism and the Worldly Philosophers
CAPITALISM IN ASIA: A SCHUMPETERIAN PERSPECTIVE
• Schumpeterian capitalism
- Dynamic, not static
- The entrepreneur as central agent
- From inventions to innovations
- “Perennial gales of creative destruction”
• Is Asia moving to Schumpeterian capitalism? Why it’simportant for Asia and the West
CAPITALISM IN ASIA: A SCHUMPETERIAN PERSPECTIVE
• The trimurti (three faces) of Asian capitalism
- Economic
- Political and institutional
- Global
CAPITALISM IN ASIA: A SCHUMPETERIAN PERSPECTIVE
• The economic face of Asian capitalism
- Rich Asia
- Middle Asia
- Poor Asia
CAPITALISM IN ASIA: A SCHUMPETERIAN PERSPECTIVE
• Stages of growth
- Catch-up, input-led growth (“perspiration”)
- Innovation, output-led growth (“inspiration”)
• Growth challenges for Poor, Middle and Rich Asia
CAPITALISM IN ASIA: A SCHUMPETERIAN PERSPECTIVE
• Policies and institutions
- “1st-generation” reforms for catch-up growth- “2nd-generation” reforms for innovation-led growth – when
institutions matter more
• Big variation in levels of development, policies andinstitutions
- Policy and institutional challenges for Poor, Middle and RichAsia
World Ranking in Ease of Doing Business (2019)
EconomyOverall Rank
Starting a business
Dealing with Construction Permits
Getting Electricity
Registering Property
Getting Credit
Protecting Minority Investors
Paying Taxes
Trading Across Borders
Enforcing Contracts
Resolving Insolvency
Singapore 2 3 8 16 21 32 7 8 45 1 27
Hong Kong 4 5 1 3 53 32 11 1 27 30 44
Korea 5 11 10 2 40 60 23 24 33 2 11
Taiwan 13 20 2 8 19 99 15 29 58 11 23
Malaysia 15 122 3 4 29 32 2 72 48 33 41
Japan 39 93 44 22 48 85 64 97 56 52 1
Thailand 27 39 67 6 66 44 15 59 59 35 24
Brunei 55 16 55 31 142 1 48 84 149 67 64
China 46 28 121 14 27 73 64 114 65 6 61
Vietnam 69 104 21 27 60 32 89 131 100 62 133
Indonesia 73 134 112 33 100 44 51 112 116 146 36
Philippines 124 166 94 29 116 184 132 94 104 151 63
Nepal 110 107 148 137 88 99 72 158 82 154 83
Sri Lanka 100 83 65 84 140 124 38 141 93 164 92
India 77 137 52 24 166 22 7 121 80 163 108
Cambodia 138 185 179 141 124 22 110 137 115 182 79
Lao PDR 154 180 99 156 85 73 174 155 76 162 168
Pakistan 136 130 166 167 161 112 26 173 142 156 53
Myanmar 171 152 81 144 136 178 185 126 168 188 164
Bangladesh 176 138 138 179 183 161 89 151 176 189 153
World Bank, Doing Business Indicators Database - 2019
CAPITALISM IN ASIA: A SCHUMPETERIAN PERSPECTIVE
• How innovative is Asia?
- Impressionistic pluses and minuses
“Productivity isn’t everything, but, in the long-run, it is almosteverything. A country’s ability to improve its state of being overtime depends almost entirely on its ability to raise its output perworker.”
Paul Krugman
- Productivity growth: a mixed story
Global Innovation Index 2018 Rankings
Global Innovation Index 2018 Rankings
CAPITALISM IN ASIA: A SCHUMPETERIAN PERSPECTIVE
• Asia’s productivity challenge for Schumpeteriancapitalism
- Different and more complex challenges to those of the last 50-60 years of catch-up growth
CAPITALISM IN ASIA: A SCHUMPETERIAN PERSPECTIVE
• The political and institutional face of Asian capitalism
- Asia’s institutional mixes and how they shape economicperformance
Thinking about Asian Varieties of Capitalism
CAPITALISM IN ASIA: A SCHUMPETERIAN PERSPECTIVE
• Hard questions
- Productivity coalitions for institutional reform: how politicallyfeasible?
- Political economy of factor-market reforms
- And political systems
CAPITALISM IN ASIA: A SCHUMPETERIAN PERSPECTIVE
• The global face of Asian capitalism
• 70 years of Pax Americana in Asia
A stable Security Asia: the US as the “balancing power”
A stable and open Economic Asia: US-led provision of globalpublic goods
Both enabling conditions for the Asian Economic Miracle
CAPITALISM IN ASIA: A SCHUMPETERIAN PERSPECTIVE
• Now much more uncertainty and instability
Declining hegemony: diminished US security and economicleadership since the early 2000s
Rising China, economically and militarily, at the same time
Back to mercantilism: how Chinese power in Asia differs fromthat of the US
CAPITALISM IN ASIA: A SCHUMPETERIAN PERSPECTIVE
• Three geopolitical scenarios
1) Liberal Leviathan, Liberal Internationalism: continuation ofthe Pax Americana, though modified
2) Mercantilism redux and regional blocs: a new Pax Sinica
3) A hegemonic vacuum: no leadership, little institutionalisedcooperation, potential for disorder and breakdown; ormultipolar leadership?
CAPITALISM IN ASIA: A SCHUMPETERIAN PERSPECTIVE
• Conclusions
Beware of linear extrapolation: too much optimism aboutAsia’s future based on its recent past
My doubts about China – domestically, and its ability to leadabroad
Schumpeterian capitalism, liberal institutions, open societiesand a Pax Americana hang together – or fall apart
A new systemic competition- Between the US and China geopolitically
- Between Western varieties of liberal-democratic capitalism, and China-ledauthoritarian capitalism
CAPITALISM IN ASIA: A SCHUMPETERIAN PERSPECTIVE
• Conclusions
- A battle of power, interests and ideas, in Asia and the West