Organizer and Chair: Paul Hutchcroft, University of Wisconsin, Madison

Wongi Choe, University of Oklahoma

Korea and Thailand have been commonly described as having close government-business relationship that provided a backdrop for both the Asian financial crisis in 1997 and comparatively high economic growth during the pre-crisis period. I argue that while the two countries were similar in that both exhibited an entrenched patronage network between politicians and private industrial and financial actors, the internal dynamic of patronage politics between the two countries are radically different. One of the main factors that differentiate them in their patronage politics is the ways in which political institutions constrain politicians and the nature of political exchanges between politicians and private businesses. This paper shows that electoral and party institutional constraints generate quite different patterns of patronage politics in the two countries. This paper explains how institutionally different patronage politics generate different political dynamic in financial policies of the post-Asian financial crisis period in the two countries. I argue that variations in the political institutional constraints are critically important in explaining the seemingly similar but radically different national trajectories of financial politics between the two countries.

Jonathan London, Nanyang Technological University, Singapore

The economic growth that Viet Nam has experienced since the early 1990s has been associated with significant -- if spatially and temporally uneven - improvements in the health status of large segments of the population. Viet Nam's state has always professed a commitment to providing fair access to health services, and in recent years has indeed improved the coverage of the state-financed health system. At the same time, however, Viet Nam's state has, since 1989, undertaken a series of policies that have shifted the lion's share of health costs onto households, and in so doing has severely disadvantaged the poor. Viewed in regional terms, Viet Nam's government invests comparatively little in health (in per capita terms). Importantly, Viet Nam's long-term current and long-term health strategy is to achieve a universal health insurance system by 2010. However, the first steps in this direction are being severely challenged by conditions on the ground. Efforts to distribute health insurance cards to the poor have been undermined by the grass-roots conditions. In particular, the an ambitious financial decentralization scheme, known as Decree 10, has introduced incentives in health governance that challenge efforts to extend health coverage to the poor. Importantly, Decree 10 extends financial discretion to local health units (at the provinical and district level) to autonomously set user fees, adjust wages for health workers (within. state limits), and exercise greater discretion over health finance at the local level more generally. Despite the popularity of Decree 10 within the Ministry of Finance and among local health officials, there is growing concern about how Decree 10 is and will continue to affect access to health services, particularly among the poor and near poor. This paper is based on a comparative study of health policy governance in six Viet Nam provinces. It addresses an important gap about the current institutional dynamics of health provision in Viet Nam. At a more general level, the paper will contribute to ongoing efforts to understand and theorize state society relations in Viet Nam and may raise a number of fruitful pan-Asian questions.

Centralization of Taxing Power, Political Control, and Tax Collection in China since 1994

Eun Kyong Choi, Princeton University

China launched tax reform in 1994 to increase the central government’s tax revenues by centralizing taxation. Central tax collection, however, was poor during first few years, but significantly increased thereafter. This study explores causes of this change. I claim that the conventional explanations of tax collection, such as quality of tax administration and level of economic development, are incomplete. As an alternative, I argue that fiscal centralization demands increased political control from the center and that the effectiveness of fiscal centralization depends on the center’s political control. This is because fiscal centralization results in a divergence of central and local interests. Since tax revenues from the local economy are claimed by the central government, the local governments have an incentive to collude with local firms at the expense of central interests.

My empirical analysis of exploring longitudinal and cross-provincial variations in the efficiency of central tax collection supports this argument. Central tax collection has improved with the center’s increasing political control over local governments. The central government changed its previous pattern of appointing native and insider provincial leaders and replaced them with non-native and outsider provincial leaders. The degree of change is greater in wealthy regions where the tax base is concentrated. The replacement of provincial leadership with non-natives and outsiders led to better tax collection in most coastal provinces. Provincial leaders who achieved better collection of central taxes, in turn, were rewarded by promotion.

Yoshinori Nishizaki, National University of Singapore, Singapore

Thailand’s democracy, hailed as the most robust in Southeast Asia, actually continues to be fundamentally patrimonial. The division between public and private is persistently weak, as evidenced by perennial political corruption. Scholars generally regard this type of democracy as defective and illegitimate. By using the case of Suphanburi province, I question this view. I show that the seemingly illegitimate patrimonial democratic state enjoys a good deal of legitimacy at the local level.

I argue that Suphanburians view patrimonial democracy as a good (if not perfect) system that has allowed their allegedly corrupt yet influential politician Banharn Silpa-archa to give them one collective benefit they had not enjoyed in the authoritarian past: development funds. Precisely because the current democratic state remains patrimonial, Banharn has been able to gain personalistic access to the coffers of the state and use his public power in particularistic ways that facilitate the infusion of massive development funds into a formerly backward Suphanburi. Consequently, Suphanburi has acquired many high-quality public development goods. For Suphanburians, this represents an emotionally gratifying redressing of historical injustice that had been done by the callous and negligent authoritarian state. Many Suphanburians therefore eagerly support Banharn, a corrupt politician who personifies patrimonial democracy and impedes the institutionalization of the putatively superior, transparent liberal democratic state.

Analyzing democratization from the margins in the historical context of state-periphery relations, this paper unravels the hitherto mischaracterized preferences of local people, and shows how the move toward much-touted liberal democracy is frustrated far from the capital city.

Mynug-Koo Kang, University of California, Berkeley

This paper explores why Japan and South Korea have responded to the similar banking problem since the mid-1990s with different strategies in terms of restructuring sequence and speed, and how the adopted strategies in both countries have resulted in different economic outcomes. A puzzling aspect of the financial restructuring in Japan and Korea is why Korea could have achieved more rapid transformation, while Japan has been suffering from a lack of institutional leadership for change for more than a decade. A key analytic focus is why different types of institutional leadership for financial restructuring have been formed, and how it is affecting the future direction of the reforms. This paper adopts a policy network framework that focuses on the strategic interaction among politicians, bureaucrats, bankers, and business elite regarding the resolution method of the Non-Performing Loan problem. It argues that the peculiar state intervention pattern that had been consolidated during the past economic development produced different characteristics of policy networks, and that the nature of preexisting policy networks has influenced on forming different type of institutional leadership for change—specifically, different type of state intervention on the sequence and pace of financial restructuring. This paper characterizes the Japanese institutional leadership pattern as "deliberative conservatism" that puts more emphasis on economic and political stability instead of short-term economic efficiency. In contrast, it characterizes the Korean leadership pattern as "radical situationalism" in the sense it puts more emphasis on short-term symptomatic policy measures to social stability or cohesion.

Jui-Chang Jao, University of Kentucky

In contrast to traditional models of voting behavior employed by modernization theorists when analyzing democratic transitions in post-authoritarian polities, "death of class" theorists argue that class politics – especially the focus on middle class and working class voting blocs – has become less useful for understanding voting behavior in democratizing societies like Taiwan. This paper challenges both perspectives by arguing that, due to economic globalization processes, the Taiwanese middle class is becoming increasingly differentiated and is now the pivotal "swing" group in recent Taiwanese elections.

In the paper, the authors first explore how economic restructuring, especially the off-shoring of many middle class jobs to mainland China, has destabilized the Taiwanese middle class, producing differentiation within this class category. Then, the authors analyze recent survey data to show how this differentiation has impacted political attitudes and voting behavior, with special attention played to the importance of this middle class differentiation process for the deepening of Taiwanese nationalism, the consequent emergence of pro-Taiwan campaigns, and recent electoral outcomes.

The paper employs both qualitative and quantitative research techniques. In-depth interviews from a sample of Taiwanese citizens about the impacts of economic restructuring on their class position and political attitudes are used to generate a typology of middle class differentiation. This typology is operationalized using sociodemograhic indicators widely employed in recent surveys of Taiwanese political attitudes and voting behavior. Several waves of this survey data are then analyzed using multivariate analysis techniques to explore how middle class differentiation is impacting political attitudes and electoral politics.