Political Economy of East Asia: A Business Model (review)

ASEAN Economic Bulletin Vol. 22, No. 2 (2005), pp. 240-50 ISSN 0217-4472 BOOK REVIEWS Political Economy of East Asia: A Business Model. By Linda Low. New York: Nova Science Publishers: 2004. Pp. 363. In the book's introduction, the author informs her readers that the task is to derive from both the literature on the East Asian economic "miracle" and on the post-financial crisis beginning in 1997 "a generic business model for East Asia in the context of the new economy . . . where (g)lobalisation, information communication technology, knowledge-based economy, deregulation and emerging new competition set the challenges for the new economy" (p. 1). Within her modelling exercise, the author accounts for challenges caused by "rapid technological change in the new globalised economy (and this) means greater creative destruction and risk of premature obsolescence to companies and workers of capital, job skills and earning power" (p. 1). The volume points out that East Asian companies are managed via business practices that are based upon business models that operate within the context of microeconomic structures and overall macroeconomic systems throughout the region. With these points in mind, Professor Low sets out on an imposing task by reminding readers that her business modelling exercise is based on a broad, qualitative macroeconomic environment rather than a narrow quantitative microeconomic focus on specific firms and industries. A "generic model" is developed mainly on the practices of companies in "first-generation" Northeast Asia (Japan, Korea, and Taiwan) economies. It is distinct from a "customized model" based upon business practices in "secondgeneration " Southeast Asian or ASEAN economies . However, the distinction is becoming less pronounced as globalization has the effect of "flattening out" differences between the regions' business practices and, therefore, business models based upon those practices. The book contains nine chapters, and they are linear in thematic content and continuous in terms of the linkages among a wide range of topics that are forged throughout the volume. The volume is literate and extremely well researched and documented. The chapters that cover the political economy part of the book integrate growth theories and models, East Asian development models before and after the financial crisis, macroeconomic policy in open economies, trade policy and Asian regionalism, and global economic, social and technological competitiveness. The volume concentrates on the concept of competitiveness and presents a discussion of findings contained in five measures of competitiveness. Two of them are highly quantitative: one is the World Competitive Yearbook featuring a World Competitiveness Scoreboard that in 2003 ranked the United States no. 1, Peoples' Republic of China no. 2, Thailand no. 7, Malaysia no. 8, Taiwan no. 11, and Japan no. 14. Another is the Global Competitive Report, which ranks Finland no. 1, the United States no. 2, Taiwan no. 5, Singapore no. 6, Japan no. 11, and South Korea no. 18. Three more qualitative ASEAN Economic Bulletin 240 Vol. 22, No. 2, August 2005 measures, A. T. Kearney's Globalisation Index, the United Nation's Human Development Index, and the Corruption Perception Index of Transparency International, are also analysed. The findings of the five competitiveness measures show that East Asian business models and practices, in association with the political economy of well-managed economic systems, have resulted in solid national economic performances measured by income, output, employment growth, and price level stability. The analyses of competitiveness and other political economy factors provide the intellectual foundation from which the author constructs a modelling exercise that explains how and why the business models work. The emphasis is on the two previously mentioned East Asian business models — generic and customized. The author constructs a culturally based East Asian generic model where, "Unlike market theory, ... a cultural approach deems an economic system as a product of social order ... (wherein) society produces economy ... Culturalists reject structuralism and materialism of political economy and market theory, but see economy as a subjective product of social action" (p. 259). The culturally based generic model is one in which business operations take place within a state-centred development environment wherein social action is taken to support business activities. In effect, the government's actions are proactive and culturally based and centre on fostering and supporting the concentration of...