Institutional Variety in East Asia

Institutional Variety in East Asia

Formal and Informal Patterns of Coordination

New Horizons in Institutional and Evolutionary Economics series

Edited by Werner Pascha, Cornelia Storz and Markus Taube

This illuminating book broadly addresses the emerging field of ‘diversity of capitalism’ from a comparative institutional approach. It explores the varied patterns for achieving coordination in different economic systems, applying them specifically to China, Japan and South Korea. These countries are of particular interest due to the fact that they are often considered to have developed their own peculiar blend of models of capitalism.

Chapter 2: Adaptive Efficiency and Pragmatic Flexibility: Characteristics of Institutional Change in Capitalism, Chinese-style

Joachim Ahrens and Patrick Jünemann

Subjects: asian studies, asian economics, economics and finance, asian economics, economics of innovation, institutional economics, innovation and technology, economics of innovation


Joachim Ahrens and Patrick Jünemann 2.1 INTRODUCTION Since the breakdown of the communist world, capitalism has been considered as the unrivalled model of economy and society – a conviction deeply rooted (not only) in Western culture (Miller 2005). The late 1980s and early 1990s saw a widespread ascendancy of neo-liberal thought indicating that a singular world of market unification and institutional convergence was about to emerge. In the debates about policy reforms this development was reflected by the prominence of the so-called Washington Consensus.1 But soon after this vision of a unitary and all-encompassing capitalism had been expressed, critics started to voice their concerns, pointing to ‘ostensibly resilient differences in the organization and trajectories of capitalist systems, regimes and models’ (Peck and Theodore 2007: 731). It is noteworthy that differentiated patterns of institutional matrices underlying market exchanges have not only emerged in advanced market economies, but also in emerging and transition economies. Even more remarkable is the observation that China, the fastest growing economy over the past 30 years, managed to grow, effectively fight poverty, and sustainably address the challenge of structural change without substantial external support and against the orthodox policy recommendations of mainstream economists and international organizations. Instead, the country pursued its own gradual and highly pragmatic approach. Moreover, the Chinese transition experience since 1978 has been an illustrative example that the state, that is, central as well as regional political authorities, can and need to play a key role in transformative institutional change and innovation. State guidance...

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