Lost Decades in Growth Performance (eBook)

Yun-Peng Chu, ex-Minister without Portfolio, is Professor of Economics at the National Central University, Taiwan. He has published articles in journals such as the American Economic Review and Journal of Development Economics, and co-edited many books including The Political Economy of Comparative Development into the 21st Century and The East Asia High-Tech Drive.

Cover 1
Half-Title 2
Title 4
Copyright 5
Dedication 6
Contents 8
List of Figures 11
List of Tables 14
Preface 16
Notes on Contributors 18
1 Excessive Credits and the “Lost Decades” in Growth Performance 20
1.1 Introduction 20
1.2 The growth equation: expanded to include economic crises and credit growth 21
1.3 The result: balanced growth of domestic credit and nominal GDP matters 24
1.4 The “lost decades” as residuals in the growth equation 27
1.5 Concluding remarks and structure of the book 32
Appendix: list of right-hand side variables with their instruments and sources 35
2 A Third Decade of Low Growth? Lessons from Japan on Financial Management and Economic Growth 2 39
2.1 Introduction 39
2.2 Demand management policies: the puzzle of their failure 40
2.3 The failure of supply-side policies 45
2.4 The link between money and the economy 56
2.5 The Quantity Theory of Credit and its policy implications 63
2.6 Conclusion 68
3 It’s not Structural Change, but Domestic Demand: Japan’s Productivity Growth 72
3.1 Introduction 72
3.2 Background 74
3.3 Methodology and dataset 76
3.4 Intra-industry productivity growth vs. inter-industry reallocation of labor 78
3.5 Inter-industry reallocation of labor 79
3.6 Intra-industry productivity growth 82
3.7 Concluding remarks: it’s not structural change, but domestic demand 88
4 Long Waves of Prosperity and Decline: What Makes Financial-Led Capitalism Different? 94
4.1 Introduction 94
4.2 The real side of the economy and the problem of effective demand driving sectors and stabilizing fiscal policies 95
4.3 The balance of payments constraint and deflationary forces in the international economy 98
4.4 The financial side: from credit explosion to credit crunch, debt traps, and speculative bubbles 101
4.5 The dual role of banks and the need to differentiate credit regulation according to the borrower and the use of loans 105
4.6 Conclusions 110
5 The Korean Economy: Structural Changes and Challenges 116
5.1 Introduction 116
5.2 The Korean economy today: two contrasting views 117
5.3 Industrial and business landscape 121
5.4 Core tasks to resume the virtuous circle 127
Appendix: recent policy initiatives to promote the service sector 129
6 Taiwan’s Lost Decades: Populism and Internal Contradiction 132
6.1 Taiwan’s lost decade 132
6.2 The mutinous mutation of the developmental state 133
6.3 Failures in collective action caused by populism 136
6.4 Other revealed failures in collective action caused by populism 138
6.5 The anomalous growth equations 140
6.6 Clash between nationalisms 145
6.7 Clash between the economy and politics 149
6.8 Possible remedies? 159
6.9 Concluding remarks 161
Appendix 6.1: results of an Experiment of Delegated Deliberation 165
7 Paradigmatic Shifts in Policies, Evolution of the Political Economy, and the Lost Decade in Growth Performance 183
7.1 Introduction 183
7.2 Paradigmatic shifts in economic policies 183
7.3 The lost decade in Brazil, India, Indonesia, Mexico, Thailand, and Turkey 205
7.4 The dynamic evolution of the political economy and the lost decades: Taiwan and South Korea 216
7.5 Concluding remarks 252
Index 259