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


• What is Asia?

• What is capitalism?

• The three faces of capitalism in Asia

- Economic

- Political and institutional

- Global


• 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


• What is “capitalism”?

- Capitalism and the Worldly Philosophers


• 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


• The trimurti (three faces) of Asian capitalism

- Economic

- Political and institutional

- Global


• The economic face of Asian capitalism

- Rich Asia

- Middle Asia

- Poor Asia


• Stages of growth

- Catch-up, input-led growth (“perspiration”)

- Innovation, output-led growth (“inspiration”)

• Growth challenges for Poor, Middle and Rich Asia


• 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


• 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


• Asia’s productivity challenge for Schumpeteriancapitalism

- Different and more complex challenges to those of the last 50-60 years of catch-up growth


• The political and institutional face of Asian capitalism

- Asia’s institutional mixes and how they shape economicperformance

Thinking about Asian Varieties of Capitalism


• Hard questions

- Productivity coalitions for institutional reform: how politicallyfeasible?

- Political economy of factor-market reforms

- And political systems


• 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


• 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


• 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?


• 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


• Conclusions

- A battle of power, interests and ideas, in Asia and the West

capitalism in asia: a schumpeterian …...the pax americana, though modified 2) mercantilism redux...

Documents