Thursday, April 14, 2016
Rhapsody (DoubleTree by Hilton Philadelphia Center City)
The 2008 crisis highlighted the need to re-examine Southern Europe’s economic models and develop strategies that will generate sustainable economic growth. But what are the possible strategies can Southern economies pursue? And who can to articulate these strategies? The crisis undermined the neoliberal belief that markets know best. The statist literature does not fully take into consideration the state’s limitations in terms of information and self-organisation capacity. The varieties of capitalism approach, with its emphasis on path dependence and stable equilibria offers limited tools to understand processes of change that require correcting significant flaws in national industrial structures. This paper explores alternative strategies for economic transformation through a comparison between Spain and Korea from the mid-1980s to 2009. Industrialisation in both countries in the 1960s and 1970s emphasized heavy manufacturing sectors. However, facing a changing competitive environment in the 1980s and 1990s, each country adopted a different strategy. Spain undertook a “horizontal or cross-sector approach under which firms in complex service sectors such as banking overcame historical competitive disadvantages and gained global stature but manufacturing declined. Meanwhile, Korea pursued a “vertical” strategy consisting of moving upwards within the same value chains of existing manufacturing sectors such as automotive and electronics but service sectors remained underperforming. The paper acknowledges the presence of proactive states and symbiotic state-firm relationships and in both countries. However, it also shows that path dependent differences in the distribution of capabilities and resources of states and large firms fostered unique coordination structures that favoured alternative transformational strategies.
