Organizer: Alasdair Bowie, George Washington University
Chair: Donald K. Emmerson, University of Wisconsin, Madison
Discussant: T. J. Pempel, University of Washington
What is the nature of Southeast Asian capitalism today and what is the relationship between capitalist growth and the various kinds of clientelism and rent-seeking practiced in the region? This panel spans two sets of concerns dominating the study of Southeast Asian politics and economics: the more traditional issues of clientelism, rent-seeking and corruption (origins, longevity, impacts, etc.); and more recent political economy issues relating to high speed growth (why? how? where? how long?). The panel represents a synthetic treatment of two often separate literatures.
As scholars continue their quest for the holy grail of an integrated and coherent explanation for the sources of rapid economic growth in Southeast Asia they confront an obvious anomaly. High speed growth has occurred alongside clientelism and rent-seeking that is both pervasive and longstanding. Personal relations and the co-option of public authority to accumulate private wealth, far from impeding the process, appear in fact to be integral to capitalism as it has been practiced in Southeast Asia. Some have gone so far as to hypothesize a distinctive mode of Southeast Asian capitalism, distinguished from successful East Asian (Japanese, South Korean, Taiwanese) capitalism, where Robert Wade, Alice Amsden, Chalmers Johnson, and others cite the careful insulation of critical growth institutions from rent-seekers as a critical element in the growth story.
The panel papers address collectively three sets of related questions. The first concerns the varieties of clientelism and rent-seeking observed in the region, the sorts of conditions that have given rise to different kinds of clientelism, and how variations in culture, (economic) sectoral context (inward focussing vs. outward oriented; raw material processing vs. high tech), kinds of capitalist activities, political arrangements, international economic relations, etc., have affected the kinds of clientelism found.
The second concerns the impacts that clientelism, rent-seeking and corruption have had on capitalist development. Under which circumstances have they been negative, when have they been benign, and when have they actually been positive? How have the impacts of the various practices of clientelism and rent-seeking differed depending on context? E.g., when have clientelist practices subverted formal authority and undermined the efforts of important development institutions? Are there circumstances under which some rent-seeking practices have complemented or even enhanced the efforts of formal authority to achieve development goals (and do they have long term implications for the ability of the "ASEAN four" to follow in the NICs' footsteps)? Is a typology relating clientelism, rent-seeking, corruption and economic development possible?
The third set of questions explores the ways in which clientelist, rent-seeking and corrupt practices are being transformed by (or perhaps themselves transforming) economic development. What effect has a decade of high speed growth, with its attendant market and societal changes (e.g., the emergence of new social and economic forces including indigenous capitalists and a significant middle class), had on clientelist practices? Is clientelism the inevitable victim of secular, market-borne trends by which relations of a particular or personal character are increasingly supplanted by universal relations? Alternatively, are the kinds of successful capitalism observed in Southeast Asia an inherent reflection of long standing patterns of clientelism which are critical to continued economic success?
Related questions concern the influence of global and regional patterns of trade and investment (business networks, commodity chains, the Overseas Chinese) in shaping the domestic relationship between clientelism and capitalism in Southeast Asia. Are such regional ties rendering clientelism less important or more important as time goes on? Is increasing economic openness to the world economy necessitating increasing transparency in relations between business and government (the power of ideas)? What role does clientelism play in the domestic response to changes in this external (international) environment?
Southeast Asian Capitalism: Nature and Implications
K. S. Jomo, University of Malaya
This paper makes an argument for a distinctive mode of Southeast Asian capitalism in which clientelism, rents and rent-seeking are inherently a part of the Southeast Asian success story. It draws upon examples from throughout the region, but makes particular reference to the Malaysian case. Among the issues it explores are the ways in which rents have emerged or have been created by governments and other economic agents and the different ways in which Southeast Asian governments have allocated rents (to accelerate economic growth by favoring those most likely to invest rents in priority areas; to diversify the economy; and to redistribute wealth among ethnic, class, regional, etc. groups). The objectives of the paper are: (a) to advance the theoretical and analytical understanding of rents and rent-seeking; (b) to report and analyze the relative contribution to growth and distribution of specific rents in Southeast Asia; and (c) to examine the origin, distribution and deployment of rents as it relates to Southeast Asian states and their relations with societal groups.
Clientism and Economic Growth in Thailand
Richard F. Doner, Emory University
Ansil Ramsay, St. Lawrence University
One of the central puzzles in the study of rapid economic growth in Southeast Asia is explaining how this growth occurred along with pervasive clientelism. Prevailing explanations of East Asian economic success suggest that clientelism impedes growth. State-centered explanations attribute East Asian economic success to the ability of strong states to insulate officials from clientelist demands, while neo-classical explanations explain East Asian success through reliance upon markets to limit the distorting effects of clientelism and rent-seeking.
How then, has rapid, sustained growth occurred in Indonesia, Malaysia, and Thailand since clientelism is pervasive in all three countries? This paper proposes an answer for Thailand. Our thesis is that sustained economic development in Thailand has been supported by competitive clientelism operating in a macroeconomic context controlled by politically insulated economic agencies. The Ministry of Finance, Bank of Thailand, and Budget Bureau have been insulated from clientelist arrangements, and have been able to pursue careful, effective macroeconomic policies. Other government agencies have been permeated by clientelist relations, but because of Thailand's competitive clientelism these arrangements have not retarded growth. The economic and political vulnerability of Thai political patrons, and the competition among them, has made their relationship with Sino-Thai entrepreneurs more equal and dynamic than clientelism is usually conceived. The results have been lowered entry barriers for new firms and competitive businesses.
The paper will define "competitive clientelism," distinguish it from other forms of clientelism, and examine the enabling conditions which led to a combination of competitive clientelism and insulated macroeconomic agencies in Thailand. It will test the hypothesis that this combination of competitive clientelism and insulated macroeconomic agencies has been supportive of growth through a case study of the textile and garment complex in Thailand. The main mechanism through which competitive clientelism has supported growth has been through lowering entry barriers so that new firms have been able to enter the industry and force competition within the industry. Clientelistic relations also allowed competing firms to circumvent capacity restrictions which further increased competition in the domestic market and force some firms into the export market.
Indonesia and Thailand in the International Economy: Clientelism and National
Competitiveness
Alasdair Bowie, George Washington University; Danny Unger, Georgetown
University
It is commonly assumed that with modernization and increasing integration in the international economy, the incidence of clientelism and rent-seeking in developing countries declines. Transnational corporations establishing global production networks make investment decisions driven in part by their concern to invest in countries where legal bureaucratic norms prevail. As developing countries become conscious of the connection between trade, international competitiveness, direct foreign investment and economic wellbeing, their leaders are inclined to reduce the impact of clientelism and rent-seeking on economic decision-making. As countries experiencing rapid growth find the scale of investments they require growing even more rapidly, the floating of stock on international stock exchanges, and the attraction of portfolio investment capital to local bourses, necessitates greater attention to predictibility and transparency in both corporate affairs and those of government regulators and decision-makers. Furthermore, the growth in the number and types of enterprises and the increasing size and complexity of investments leads local capital to seek greater predictability, neutrality and transparency.
So the argument goes. But is there evidence for any of this? This paper takes Indonesia and Thailand, countries whose rapidly expanding economies are increasingly oriented toward producing manufactures for developed country markets, and explores the relationship between clientelism and rent-seeking on the one hand and the international competitiveness of their economies on the other. Among the questions it answers is: (i) how has clientelism shaped their national responses to external shocks and opportunities? (ii) have the demands of international competitiveness in fact changed the incidence, character and importance of clientelism and rent-seeking for private and public actors (and if so how)?
Corruption's Obstructions: Authority and Power in the Philippine Political
Economy
Paul D. Hutchcroft, University of Wisconsin, Madison
The prevalence of clientelism and corruption can be quite compatible with rapid capitalist development, as the experiences of many economies in Southeast Asia and elsewhere clearly demonstrate. In other settings, however, clientelistic networks and corruption within the state apparatus are commonly treated as major obstacles to the nurturing of more advanced forms of capitalism. A key factor in understanding the diverging impact of corruption and bribery on capitalist growth, Weber suggests, is the variability of the phenomena: they have the "least serious effect" when calculable, and become most onerous when fees are "highly variable" and "settled from case to case with every individual official." If correct, a major obstacle to the development of more sophisticated forms of capitalist accumulation is not corruption per se, but highly variable corruption.
This paper will seek, first, to show that the development of Philippine capitalism has long been obstructed by the highly variable nature of Philippine-style corruption. Second, it will attempt to explain the origins of such high degrees of variability. Drawing on the work of Lloyd and Susanne Rudolph, analysis will center on the key distinction between authority (the formal roles conferred upon individuals in their official capacities) and power (when incumbents pursue "values, interests, and goals of their own choosing that conflict with those of the administrative structure"). Structures of formal authority in the oligarchic-dominated Philippine state, I will argue, are much more weakly defined than in certain other Southeast Asian settings, in particular Indonesia and Thailand, where bureaucratic systems have historically dominated weak societies. Girling, for example, speaks of the Thai bureaucracy as combining elements of both "bureaucratized, formal hierarchy and personalized, informal clientship." In the history of Philippine state formation, one encounters far more of the latter than the former. As a result, the disjuncture between authority and power is far more pronounced in the Philippines than in either of the former "bureaucratic polities." In this loosely structured system, where patrons are as likely to be outside formal structures of authority as within them, businesspersons often find it very difficult to predict the cost, frequency, or results of their bribery of state officials. The basic "rules of the game" are far more arbitrary, and corruption has a more obstructive impact on the process of capitalist growth. Third, the paper will examine possibilities for transformation of the Philippine political economy to one that exhibits either less corruption or less obstructive, more predictable forms of corruption.