21st Century Competition: State & Conglomeration-Driven Capitalism
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Keywords:
Comparative Political-Economy, Conglomerate-Driven Capitalism, FDI, State Capitalism
Abstract
Indonesia needs to choose an economic model in order to realise its target of 8% GDP growth under Prabowo Subianto’s incoming administration. This paper compares both China’s state capitalism and South Korea’s conglomerate-driven capitalism for their relevance to Indonesia. China’s model, with a significant state intervention and SOEs prominent role, greatly driven industrialisation and average of 9% GDP growth over 30 years. Whilst South Korea’s model, dominated by conglomeration, focuses more on innovation in tech and exports, thus achieving a stable 4% average GDP growth. Employing data from the World Bank on FDI, exports, and GDP in constant 2015 USD, this paper examines both of these models using the Comparative Political-Economy framework. The findings showed that the China’s state capitalism to be more suitable for Indonesia due to capability of managing a large scale economy and the need of centralisation of resource control, infrastructure development and economic transitions. The blending of state control and market dynamics offers flexibility to tackle challenges in the economy. Nevertheless, the issues of inefficiencies must be in concern.
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Chang, H. J. (2003). Globalisation, economic development and the role of the state. Zed Books.
Hall, P. A., & Soskice, D. (Eds.). (2001). Varieties of capitalism: The institutional foundations of comparative advantage. Oxford University Press.
Heilmann, S., & Shih, L. (2013). The rise of industrial policy in China, 1978-2012. Harvard-Yenching Institute Working Paper Series.
Helleiner, E., & Lundblad, T. (2008). States, markets, and sovereign wealth funds. German Policy Studies, 4(3), 59-82.
Hsing, Y. (2010). The great urban transformation: Politics of land and property in China. Oxford University Press.
Huang, Y. (2008). Capitalism with Chinese characteristics: Entrepreneurship and the state. Cambridge University Press.
Hyundai Motor Company. (2022). Annual report 2021.
Jin, D. Y. (2016). New Korean wave: Transnational cultural power in the age of social media. University of Illinois Press.
Kalinowski, T. (2009). The politics of market reforms: Korea's path from Chaebol Republic to market democracy and back. Contemporary Politics, 15(3), 287-304.
Kang, D. C. (2010). East Asia before the West: Five centuries of trade and tribute. Columbia University Press.
Kim, E. M. (1997). Big business, strong state: Collusion and conflict in South Korean development, 1960-1990. SUNY Press.
Kim, Y. T., & Park, K. J. (2011). The Chaebol. In The Oxford handbook of business groups. Oxford University Press.
Kurlantzick, J. (2016). State capitalism: How the return of statism is transforming the world. Oxford University Press.
Kwon, S. H., & O'Donnell, M. (2001). The Chaebol and labour in Korea: The development of management strategy in Hyundai. Routledge.
Lardy, N. R. (2012). Sustaining China's economic growth after the global financial crisis. Peterson Institute for International Economics.
Lardy, N. R. (2014). Markets over Mao: The rise of private business in China. Peterson Institute for International Economics.
Lee, K. (2002). Economic development and the world trade organization in the 21st century. Journal of International Economic Law, 5(4), 821-835.
Lee, C. H., & Lee, K. (1992). Sustaining economic development in South Korea: Lessons from Japan. The Pacific Review, 5(1), 1-13.
LG Corporation. (2022). Sustainability report 2021.
Li, X., & Shaw, T. M. (2013). The political economy of Chinese state capitalism. Journal of China and International Relations, 1(1), 88-113.
Lim, W. (2021). The evolution of Korea's industrial policy. Journal of Economic Policy Reform, 24(1), 15-33.
Lin, L. W., & Milhaupt, C. J. (2013). We are the (national) champions: Understanding the mechanisms of state capitalism in China. Stanford Law Review, 65(4), 697-759.
McGregor, R. (2010). The party: The secret world of China's communist rulers. Harper Collins.
Musacchio, A., & Lazzarini, S. G. (2014). Reinventing state capitalism: Leviathan in business, Brazil and beyond. Harvard University Press.
Naughton, B. (2018). The Chinese economy: Adaptation and growth (2nd ed.). MIT Press.
Nölke, A. (Ed.). (2014). Multinational corporations from emerging markets: State capitalism 3.0. Palgrave Macmillan.
Pei, M. (2016). China's crony capitalism: The dynamics of regime decay. Harvard University Press.
Ragin, C. C. (2014). The comparative method: Moving beyond qualitative and quantitative strategies. University of California Press.
Samsung Electronics. (2022). Annual report 2021.
Sanderson, H., & Forsythe, M. (2013). China's superbank: Debt, oil and influence - How China Development Bank is rewriting the rules of finance. John Wiley & Sons.
Scissors, D. (2020). China's economic reform is dead: Long live economic reform. AEI Paper & Studies.
Schreier, M. (2012). Qualitative content analysis in practice. SAGE Publications.
Shambaugh, D. (2013). China goes global: The partial power. Oxford University Press.
Shin, J. S., & Chang, H. J. (2003). Restructuring Korea Inc. Routledge.
Wang, J. H. (2007). From technological catch-up to innovation-based economic growth: South Korea and Taiwan compared. The Journal of Development Studies, 43(6), 1084-1104.
Woo-Cumings, M. (1999). The developmental state. Cornell University Press.
Yin, R. K. (2018). Case study research and applications: Design and methods (6th ed.). SAGE Publications.
Zhang, X. (2015). The "Belt and Road Initiative" from the perspective of rising state capitalism. Social Outlook.
Zhou, Y., Lazonick, W., & Sun, Y. (Eds.). (2016). China as an innovation nation. Oxford University Press.
Published
2025-06-09
Section
Original Articles
