Governing the market in a globalizing era: Developmental states, global production networks and inter-firm dynamics in East Asia

Wai Chung Henry Yeung

Review of International Political Economy, 2014, vol. 21, issue 1, 70-101

Abstract: This paper focuses on the changing governance of economic development in a globalizing era in relation to the dynamics of global value chains and global production networks. Based on recent development in such East Asian economies as South Korea, Taiwan and Singapore, I examine how, since the 1990s, the embedded relation between one variant of state institutions, known as the developmental state, and national firms, well integrated into global chains and networks spanning different territories and regions, has evolved. Because of the deepening strategic coupling of these national firms with lead firms in global industries, the developmental state's attempt to govern the market and to steer industrial transformation through direct policy interventions has become increasingly difficult and problematic. Through this process of strategic coupling, national firms have been gradually disembedded from state apparatuses and re-embedded in different global production networks that are governed by competitive inter-firm dynamics. While the state in these East Asian economies has actively repositioned its role in this changing governance, it can no longer be conceived as the dominant actor in steering domestic firms and industrial transformation. The developmental trajectory of these national economies becomes equally, if not more, dependent on the successful articulation of their domestic firms in global production networks spearheaded by lead firms. In short, inter-firm dynamics in global production networks tend to trump state-led initiatives as one of the most critical conditions for economic development. This paper theorizes further this significant role of global value chains and global production networks in the changing international political economy of development.

Date: 2014
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DOI: 10.1080/09692290.2012.756415

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