Values, Culture, and Democracy: a Korean Perspective

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Values, Culture, and Democracy: a Korean Perspective U" .2hemocracy, 'l/ar/et pW 6 conomicj &5leuelopment12 Public Disclosure Authorized J: In 4jian /erJpective Editedby FarrukhIqbal and Jong-itYou ¢ t~4 =l | 122241 May 2001 Public Disclosure Authorized Public Disclosure Authorized ff.,*; LD,,-B' N"k .,,TWEfWaRLD 1Ar-R _ &!_ j 9 ~~~~~~a Public Disclosure Authorized Democracy, Market Economics, and Development An Asian Perspective Farrukh Iqbal and Jong-Il You Editors The WorldBank Washington,D.C. Copyright (D2001 The International Bank for Reconstruction and Development / THE WORLD BANK 1818 H Street, N.W. Washington, D.C. 20433, USA All rights reserved Manufactured in the United States of America First printing May 2001 1234 0504030201 The findings, interpretations, and conclusions expressed in this book are entirely those of the authors and should not be attributed in any manner to the World Bank, to its affil- iated organizations, or to members of its Board of Executive Directors or the countries they represent. The World Bank does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use. The boundaries, colors, denominations, and other information shown on any map in this volume do not imply on the part of the World Bank Group any judgment on the legal status of any territory or the endorsement or acceptance of such boundaries. The material in this publication is copyrighted. The World Bank encourages dis- semination of its work and will normally grant permission to reproduce portions of the work promptly. Permission to photocopy items for internal or personal use, for the internal or per- sonal use of specific clients, or for educational classroom use is granted by the World Bank, provided that the appropriate fee is paid directly to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA; telephone 978-750-8400, fax 978-750-4470.Please contact the Copyright Clearance Center before photocopying items. For permission to reprint individual articles or chapters, please fax a request with complete information to the Republication Department, Copyright Clearance Center, fax 978-750-4470. All other queries on rights and licenses should be addressed to the Office of the Pub- lisher, World Bank, at the address above or faxed to 202-522-2422. Cover design by UltraDesigns Library of Congress Cataloging-in-Publication Data Democracy, market economics, and development / edited by Farrukh Iqbal, Jong-Il You. p. cm. Includes bibliographical references. ISBN 0-8213-4862-0 1. Capitalism. 2. Democracy. 3. Economic development. I. Iqbal, Farrukh. II. You, Jong-Il, 1958- HB501 .D423 2001 338.9-dc2l 2001017950 CONTENTS Foreword ................................................. v Contributors ................................................ vii Overview ................................................ ix Farrukh Iqbal and fong-II You Chapter 1 Democracy and the Market Economy: Two Wheels of a Cart .................1 Kim Dae-jung Chapter 2 Democracy and Social Justice ................................................. 7 Amartya Sen Chapter 3 Political Institutions, Democracy, and Development ............................. 25 Minxin Pei Chapter 4 Participation and Development: Perspectives from the Comprehensive Development Paradigm ................................................ 49 Joseph Stiglitz Chapter 5 Corporate Governance and Economic Development: The Korean Experience ................................................ 73 Ha-sung Jang Chapter 6 Economic Adjustment, Equity, and Workers' Support .......................... 95 William A. Douglas iii iv DEMOCRACY, MARKET ECONOMICS, AND DEVELOPMENT Chapter 7 Political Economy of Reform: The Characteristics of Japanese Institutions .................................................. 119 Kuniko Inoguchi Chapter 8 The Politics of Governance: Lessons from the East Asian Crisis ...... 127 Stephan Haggard Chapter 9 Asian Values in the Wake of the Asian Crisis ....................................... 149 Francis Fukuyama Chapter 10 Values, Culture, and Democracy: A Korean Perspective ..................... 169 Jong-keun You FOREWORD This book contains a selection of papers which were originally presented at a conference held in Seoul, Korea in February 1999. The idea for the conference arose the year before in a meeting between Mr. Kim Dae-jung, President of the Republic of Korea and Mr. James Wolfensohn, President of the World Bank Group. Recognizing that the recent travails of the East Asian region provided an opportunity to review the links between styles of political governance, economic strategies and development, they agreed to sponsor a conference at which these issues could be discussed among development practitioners, political leaders, and members of civil society. This book is being published to bring some of this thinking to a larger audience. The conference revealed some common patterns in views and experi- ences. There was broad agreement on the need to conceive of develop- ment as a multi-faceted objective rather than one comprising solely of changes in income per capita. Regarding governance, it was noted that civil and political liberties were important in their own right as well as effective instruments with which to attack corruption and poverty. The need to achieve social consensus and support through participatory means was highlighted in discussions about the design and implementa- tion of market-oriented economic reforms. Good corporate governance, supported by sound and prudential regulations, was also thought neces- sary for markets to operate in the public interest. Finally, there was a broad consensus that developments in Asia reveal complex links running from values and culture through institutions to economic performance which suggest that it is inappropriate to ascribe the 1997-98 crisis in East Asia to a simple-minded conception of so-called Asian values. These ideas and others are discussed at length in the papers that have been selected for this book. The perspectives discussed in these papers were shaped in part by the comments and suggestions of several persons who served as moderators, discussants and panelists at the conference. In this connection, we grate- fully acknowledge the contributions of Sri-Ram Aiyer, Walden Bello, v vi DEMOCRACY, MARKET ECONOMICS, AND DEVELOPMENT Mark Malloch Brown, Yung Hee Choi, Yul Choi, Soo Bok Chung, Peter Geithner, Carolina Hernandez, Chul Kyu Kang, Moon Kyu Kang, Daniel Kaufmann, I1 Soo Kim, Choongsoo Kim, Keum Soo Kim, Robert Klit- gaard, Duk Seung Lee, Jin Soon Lee, Gill-Chin Lim, Ronald Maclean- Abaroa, Kamal Malhotra, Don Oberdorfer, Mari Pangestu, Funkoo Park, Won Soon Park, Young Hye Park, Hak-Yong Rhee, Shaha Riza, Jean- Michel Severino, Gunnar Stalsett, Laksamana Sukardi, Kari Tapiola, Vinod Thomas, Lisa Veneklasen, Vivienne Wee, Lynn Williams, William Witherell and Jung Sook Yoon. In addition, we would like to thank the following persons who rendered invaluable help in making the confer- ence a success: Byung-Goo Cho, Hun Choi, Kwang-Hai Choi, Ha-Won Jang, Mun-Soo Kang, Choon-Sun Kim, Ho-Shik Kim, Jin-Pyo Kim, Tae- Dong Kim, Joyce Rompass and Haruyuki Shimada. Migara de Silva ren- dered able assistance in preparing the manuscript for publication. Finally, we would like to acknowledge the financial support of the Government of Japan, the Government of Korea and the World Bank, and the organizational support of the Korea Development Institute and the World Bank Institute which enabled the conference to be held. Farrukh Iqbal Jong-II You CONTRIBUTORS William A. Douglas Adjunct Professorial Lecturer, School of Advanced International Studies, Johns Hopkins University, Washington, DC, USA FrancisFukuyama Omer L. and Nancy Hirst Professor of Public Policy, George Mason Uni- versity, Virginia, USA Stephan M. Haggard Professor, Graduate School of International Relations & Pacific Studies, University of California, San Diego, California, USA Kuniko Inoguchi Professor, Faculty of Law, Sophia University, Tokyo, Japan Farrukh Iqbal Lead Economist, World Bank Institute, The World Bank, Washington, DC, USA Ha-sung Jang Professor, College of Business Administration, Korea University, Seoul, Republic of Korea Kim Dae-jung Nobel Laureate and President, Republic of Korea Minxin Pei Senior Fellow, Carnegie Endowment for International Peace, Washing- ton, DC, USA Amartya Sen Nobel Laureate and Master of Trinity College, University of Cambridge, Cambridge, UK. Joseph Stiglitz Professor, Department of Economics, Stanford University, Palo Alto, California, USA vii viii DEMOCRACY, MARKET ECONOMICS AND DEVELOPMENT Jong-Il You Professor, School of Public Policy and Management, Korean Develop- ment Institute, Seoul, Republic of Korea Jong-keun You Governor, North Cholla Province, Republic of Korea OVERVIEW FarrukhIqbal and Jong-IIYou This book presents a selection from papers originally presented at a con- ference entitled Democracy, Market Economy and Development that was held in Seoul, Republic of Korea, in February 1999. The main objective of the conference was to examine the extent to which democracy is impor- tant to the achievement of sustainable development. While it is widely accepted that economic freedom, as ensured broadly by the operation of the economy according to market or laissez-faire principles, is a critical determinant of development, the role of political freedom, as ensured broadly by the practice of democracy, is less well understood. The scope of this overview is limited to the
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