GIR Colloquium Series | Developmental Mindset: The Revival of Financial Activism in South Korea

8 November, 2018
1:00pm - 2:30pm


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, largely unremarked by analysts, 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. I argue that an ideational analysis can help explain this renewed financial activism. I demonstrate the presence of a "developmental mindset" on the part of political leaders and policy elites in Korea. This mindset involves shared ways of thinking about the purpose of finance and its relationship to the productive economy. The developmental mindset has a long history in Korea but is subject to the vicissitudes of political and economic circumstances. I trace the structural, institutional, political, and ideational factors that have strengthened and at times weakened the developmental consensus, culminating in the revival of financial activism in Korea. In doing so, I offer a novel defense of the developmental state idea and a new framework for investigating the emergence and evolution of developmental states. I also canvasses the implications of the Korean experience for wider debates concerning the future of financial activism in an era of financialization, energy insecurity, and climate change.


About the Speaker

Dr Elizabeth Thurbon is an Associate Professor in International Political Economy and Deputy Head of School (Research) in the School of Social Sciences at UNSW Sydney. She has also held visiting fellowships at Seoul National University and China Foreign Affairs University. Her research specialism is the political-economy of techno-industrial development and change, with a focus on the developmental role of the state in Australia and East Asia. Her most recent book - Developmental Mindset – was published by Cornell University Press in 2016. Elizabeth is also a regular contributor to scholarly and public debates on Australian trade and industry policy.

Location: Room 441 Social Sciences Building, Science Road, University of Sydney