Responding to Globalization The new challenges and opportunities created by the spread of globalization have reshaped both institutional and individual responses to this phenomenon. This comprehensive analysis of the way in which governments and firms have responded to globalization examines closely the options available to both, and the historical and institutional contexts to the strategic decisions made. Responding to Globalization draws together a panel of international experts in a conceptually rigorous examination of the profound impact of globalization. Subjects covered include: • The international monetary system after the euro • The response of the Japanese software industry to globalization • The dynamics of globalization strategy in South Korea • Australian integration into the global economy • The impact on China and Russia in their move towards a market economy • Institutional transitions in Yugoslavia and Bulgaria • Latin American corporate strategies This rigorous survey focuses on political, ideational and economic factors lying behind these responses to globalization. It is essential reading for all those interested in globalization, international business and international political economy. Aseem Prakash is Assistant Professor, Department of Strategic Management and Public Policy at the School of Business and Public Management; Department of Political Science; The Elliott School of International Affairs, The George Washington University. He is the author of Greening the Firm: The Politics of Corporate Environmentalism and co-editor of both Globalization and Governance and Coping with Globalization. Jeffrey A.Hart is Professor of Political Science at Indiana University, Bloomington. His publications include The New International Economic Order, Rival Capitalists, Globalization and Governance (co-edited with Aseem Prakash) and Coping with Globalization (co-edited with Aseem Prakash). Routledge advances in international political economy 1 The future of the nation-state Essays on cultural pluralism and political integration Edited by Sverker Gustavsson and Leif Lewin Co-publication with Nerenius and Santérus Publisher AB, Sweden 2 Classical liberalism and international economic order Studies in theory and intellectual history Razeen Sally 3 Coping with globalization Edited by Aseem Prakash and Jeffrey A.Hart 4 Responding to globalization Edited by Aseem Prakash and Jeffrey A.Hart Responding to Globalization Edited by Aseem Prakash and Jeffrey A.Hart London and New York First published 2000 by Routledge 11 Fetter Lane, London EC4P 4EE Simultaneously published in the USA and Canada by Routledge 29 West 35th Street, New York, NY 10001 Routledge is an imprint of the Taylor & Francis Group This edition published in the Taylor & Francis e-Library, 2004. © 2000 edited by Aseem Prakash and Jeffrey A.Hart All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloguing in Publication Data Responding to globalization/edited by Aseem Prakash and Jeffrey A.Hart. p. cm.—(Routledge advances in international political economy) Includes bibliographical references and index. 1. International economic relations. 2. International economic integration. 3. Technological innovations. 4. International finance. 5. International business enterprises. I. Hart, Jeffrey A. II. Prakash, Aseem. III. Series. HF1359.R47 2000 337—dc21 99–046955 CIP ISBN 0-203-46617-9 Master e-book ISBN ISBN 0-203-77441-8 (Adobe eReader Format) ISBN 0-415-22865-4 (Print Edition) To our colleagues at the International Studies Association Contents List of tables and figures ix List of contributors x Preface xi Responding to globalization: an introduction 1 ASEEM PRAKASH AND JEFFREY A. HART PART I 29 1 Taming the market: China and the forces of globalization 33 DALI L.YANG AND FUBING SU 2 In the shadow of broken cheers: the dynamics of globalization in South Korea 65 CHUNG-IN MOON 3 Grappling with globalization: the case of Japan’s software industry 95 MARIE ANCHORDOGUY 4 Aiming to secure a piece of the action: interests, ideas, institutions, and individuals in Australian integration into the global economy 118 JOHN RAVENHILL PART II 149 5 The international monetary system after the euro 151 MICHELE FRATIANNI 6 Latin American corporate strategy under the new regionalism 171 FERNANDO ROBLES viii Contents PART III 205 7 Russia between states and markets: transnational and subnational pressures in the transition 207 STEVEN SOLNICK 8 Mediating globalization and social integration in post- Communist societies: a comparison of Yugoslavia and Bulgaria 235 BEVERLY K.CRAWFORD Responding to globalization: a conclusion 264 JEFFREY A.HART AND ASEEM PRAKASH Index 283 Tables and figures Tables 2.1 Trends of export, import and ratio to GDP 72 2.2 Capital inflows and outflows 73 2.3 Selected indicators of financial and foreign exchange profile under the Kim Young Sam government 77 2.4 Exports, imports and total external liabilities 79 2.5 Total external liabilities 81 4.1 Share of manufactures in Australian merchandise exports (%) 125 4.2 Australia’s share in world imports of elaborately transformed manufactures (%) 138 4.3 Growth of exports 1986–1996 140 5.1 Size of financial markets in EMU, US and Japan (billions of US dollars, 1995) 155 6.1 Selected Latin American regional corporate strategies 184 7.1 Net foreign direct investment as percentage of GDP 212 Figures 0.1 A framework for globalization processes 4 4.1 Average effective rates of assistance for the manufacturing sector; 1968–69 to 2000–01 119 4.2 Australia’s trade in manufactures (A$m) 137 4.3 Change in manufacturing share of GDP 1970–90 139 5.1 Kenen’s classification of money 153 6.1 Global and regional integration-responsiveness framework 182 Contributors Marie Anchordoguy, Associate Professor, Henry M.Jackson School of International Studies, University of Washington. Beverley K.Crawford, Lecturer and Acting Director, Center for German and European Studies, University of California, Berkeley. Michele Fratianni, W.George Pinnell Professor of Business Economics and Public Policy, Kelley School of Business, Indiana University, Bloomington. Jeffrey A.Hart, Professor, Department of Political Science, Indiana University, Bloomington. Chung-in Moon, Professor of Political Science and Diplomacy, Yonsei University, Seoul, South Korea. Aseem Prakash, Assistant Professor, Department of Strategic Management and Public Policy, School of Business and Public Management; Department of Political Science; and The Elliott School of International Affairs, The George Washington University. John Ravenhill, Professor, Department of Politics, University of Edinburgh. Formerly Professor of International Relations in the Research School of Pacific and Asian Studies at the Australian National University. Fernando Robles, Associate Professor of International Business, The George Washington University. Steven Solnick, Associate Professor, Department of Political Science, Columbia University. Fubing Su, Doctoral Student, Department of Political Science, University of Chicago. Dali L.Yang, Associate Professor of Political Science, Chair, Committee on International Relations, University of Chicago. Preface Economic globalization—the processes leading to the integration of final products, intermediate goods and factor markets across countries, coupled with the increased salience of cross-border value-chains in international economic flows—has generated much debate about its causes, extent and impact on business and public policy. This volume is the third in a series of three that examines its implications for governance structures across countries and issues areas. We have been interested in understanding the changing nature of international political economy of which economic globalization is both a cause and a consequence. We began preliminary discussions on this subject in the Spring of 1995 focusing on four key questions: is economic globalization a fad, how best to conceptualize it, how did it originate, and what may be its implications? Subsequently, we added a fifth question: how to cope with globalization? To systematically examine these questions, we organized two joint panels, “Governance Structures for the Twenty-First Century,” at the San Diego convention of the International Studies Association, April 16–20, 1996, a workshop at Indianapolis, Indiana October 12–13, 1996, and another workshop in Alexandria, Virginia July 31–August 1, 1998. Three edited volumes have emerged from these deliberations: the first volume, Globalization and Governance, from the San Diego conference and the Indianapolis workshop; the second and the third volumes, Coping with Globalization and Responding to Globalization, from the Alexandria workshop. These volume are multi-disciplinary, with the authors representing the disciplines of political science, economics, law, international business, and business strategy. Globalization and Governance focuses on how economic globalization impacts the extant governance institutions at multiple levels of aggregation. Coping with Globalization seeks to understand how governments and firms can cope with globalization