Capital mobility and distributional conflict in Chile, South Korea, and Turkey

Description

"Why did many emerging countries pursue risky financial opening policies in a reckless manner, even after the painful example of the Latin American debt crisis? Unlike trade liberalization, which has mostly been beneficial in emerging countries, the removal of capital controls has led to boom-bust patterns in many countries. It is not simply driven by class or sectoral interests, nor is it just a result of ideational changes in policy-making circles, or international pressure. Gemici argues that to fully understand the motivation for these policies, we need to take into account distributional struggles prior to their enactment. In this book, Gemici shows that conflictual distributional relations significantly increase the likelihood of capital account liberalization. Through in-depth comparative case studies, he also demonstrates that countries which liberalize in the most comprehensive manner tend to be the countries characterized by a high degree of distributional conflict. The case studies - Argentina, Chile, South Korea, and Turkey - have been chosen to maximise variation in distributional relations and to escape regional clustering, showing quite different trajectories of capital account liberalization. This will be of great interest to readers in sociology, international political economy and heterodox economics, as well as specialists in the countries examined"-- Cover Half Title Series Page Title Page Copyright Page Dedication Table of Contents List of Figures 1.1 Average Capital Account Openness in 24 Emerging Countries, 1973–2005 1.2 Trajectory of Capital Account Liberalization in 24 Emerging Countries, 1973–2005 1.3 Average Income Before and After Financial Opening 1.4 Financial Opening and Capital Accumulation 1.5 Trajectory of Capital Account Liberalization by Region, 1973–2005 2.1 Distributional Dynamics, 1964–82 2.2 Growth Dynamics, 1964–82 2.3 Real Exchange Rate, 1979–82 2.4 Real Exchange Rate, 1983–91 2.5 Distributional Dynamics, 1983–98 2.6 Growth Dynamics, 1983–98 2.7 Gross Fixed Investment, 1985–91 2.8 Unemployment Rate, 1980–91 2.9 Share of Exports in GDP, 1974–91 2.10 Share of Copper in Total Exports, 1974–91 2.11 Real Exchange Rate Index, 1989–92 3.1 Distributional Dynamics, 1970–98 3.2 Growth Dynamics, 1970–98 3.3 Non-defense Expenditure as Percent of GNP, 1953–60 3.4 Domestic and Foreign Credit as Percent of GNP, 1965–75 3.5 Exports and Imports as Percent of GDP, 1965–79 3.6 Top 30 Chaebols’ Share in Value-Added GNP, 1985–95 3.7 Nominal Exchange Rate, 1989–96 3.8 Korean Banks’ Foreign Exchange Liabilities, 1992–97 3.9 Bank Credit to Private Sector (% GDP), 1992–97 4.1 Distributional Dynamics, 1970–98 4.2 Growth Dynamics, 1970–98 4.3 Real Exchange Rate, 1979–90 4.4 Exports and Imports, 1980–93 4.5 Treasury Bills and Government Bonds as a Percentage of GNP, 1980–90 4.6 External Debt–Exports Ratio, 1983–96 4.7 Inflation Rate, 1982–93 4.8 Wage Growth, 1984–92 4.9 Personnel Expenditure’s Share in Total Consolidated Budget Expenditures, 1982–93 4.10 Short-Term Debt, 1983–96 C.1 Risks and Adverse Consequences Associated with Financial Opening D.1 Average Capital Account Openness, Miniane Index D.2 Average Capital Account Openness, Chinn-Ito Index D.3 Capital Account Liberalization in 12 Emerging Countries, Miniane Index D.4 Capital Account Liberalization in 24 Emerging Countries, Chinn-Ito Index List of Tables 1.1 Mechanisms and Sources of Institutionalization 2.1 Foreign Debt, 1978–82 2.2 Financial Expansion, 1978–82 2.3 Boom and Crash, 1977–83 2.4 Export Growth Rates by Types of Goods, 1974–95 2.5 Nonfinancial Public Sector, 1985–91 2.6 Net Capital Inflows, 1985–91 2.7 Private and Public Sectors’ Use of Capital Inflows, 1985–91 3.1 Select Macroeconomic Indicators, 1961–72 3.2 HCI Drive 3.3 GDP Growth and Balance of Payments, 1987–97 3.4 Capital Inflows and Outflows, 1990–97 4.1 Economic Growth, 1981–87 4.2 Economic Slowdown, 1988–89 4.3 Domestic Debt and Its Components as percentage of GNP, 1990–2000 B.1 Stylized Facts on Capital Inflows B.2 The Impact of Capital Mobility on Social Classes Preface 1 Introduction: Distribution Relations and Capital Mobility Which Type of Capital Mobility? Explaining Capital Account Liberalization Currency Convertibility in Argentina Capital Flows, Growth, and Distribution Theories of Institutional Change Distribution and Institutional Change The Logic of the Comparative-Historical Analysis Case Selection and Data Sources 2 Boom, Crash, Restraint: The Politics of Taming Capital Flows in Chile Distributional Conflict and Neoliberal Economic Transformation Financial Opening: Boom and Crash under Unrestricted Openness The Reordering of Political and Economic Power Recovery, Export Miracle, and its Political Consequences Capital Mobility Restrained Conclusion 3 Embracing Hot Money, Rejecting Cold Money in South Korea Distribution, Finance, and Korean Development The Historical Origins of the Developmental Alliance The Developmental Alliance under Strain The Politics of Embracing Hot Money Conclusion 4 Premature Financial Opening and Boom-Bust Cycles in Turkey Background: Distribution Relations and Recurring Balance of Payments Problems External Liberalization Unorthodox Liberalization, Uneven Growth, and the Restructuring of the State 1989: Capital Account Liberalization Epilogue: Neoliberal Rent Distribution Conclusion 5 Conclusion Interests, Ideas, and Diffusion Distribution Relations, Neoliberalism, and Institutional Change Concluding Words Appendix A: Distribution and Economic Growth Appendix B: Capital Mobility and Social Interests Appendix C: Perils of Capital Account Liberalization Appendix D: Measuring Capital Account Openness Appendix E: List of Interviewees Bibliography Index