The developmental mindset and the revival of financial activism -- Developmental states : bringing ideas back in -- Makings of a mindset and emergence of strategy mark I -- Rise of financial activism -- Fracturing consensus and the abandonment of financial activism -- Return of the state -- Emergence of strategy mark II -- Return of development bankers -- Full flowering of financial activism -- What future for financial activism in Korea and beyond?
Summary
The Asian financial crisis of 1997-1998 was supposed to be the death knell for the developmental state. The International Monetary Fund supplied emergency funds for shattered economies but demanded that states liberalize financial markets and withdraw from direct involvement in the economy. Financial liberalization was meant to spell the end of strategic industry policy and the state-directed 'policy lending' it involved. Yet, South Korea has since seen a striking revival of financial activism. Policy lending by state-owned development banks has returned the state to the core of the financial system. Korean development banks now account for one quarter of all loans and take the lead in providing low-cost finance to local manufacturing firms in strategic industries. This work argues that an ideational analysis can help explain this renewed financial activism
