State and Market
Karl Ho
School of Economic, Political and Policy Sciences
University of Texas at Dallas
Political Economy of Technology in East Asia
Overview
- What is the State?
- Public goods
- Debate of Government (size)
- What is the Market?
- The State and the Market
Comparative Political Economy and International Political Economy
- Comparative Politics and International Relations
- Common issue: how power and wealth are related?
- All about Development: Economic and Political
- Sequence
Comparative Political Economy and International Political Economy
Examples:
- Comparing US and China (unit of analysis?)
- Comparing provinces in China?
- Inter-level studies (e.g. how state government policies affect federal practices, how US actions affect IGO’s decisions)
- International currency system after WWII (unit of analysis?)
- Relationship between Trade and Exchange rates (unit of analysis?)
Comparative Political Economy and International Political Economy
Examples:
- Side note: determination of unit of analysis is dependent on method we use also. Case studies and global studies are very different study approaches
Comparative Political Economy and International Political Economy
- The line is getting blurred
- Common Goals:
- Development
- How is development driven by interactions of politics and economics (political economy)?
What is the State?
- “a complex apparatus of centralized and institutionalized power that concentrates violence, establishes property rights, and regulates society within a given territory while being formally recognized as a state by international forums”
– Margaret Levi
What is the State?
- “a set of institutions that possess the means of legitimate coercion, exercised over a defined territory and its population, referred to as society”
- WDR 1997
What is the State?
- Providing Public Goods
- Protection/security
- Law and order
- Infrastructure
- Property rights
- Question: Is the internet a public good?
- Debate of Government (size)
What is the State?
- Debate of Government (size)
What is the Market?
- Meeting place, system, institution
- Trading goods and services with or without using currencies (barter)
- Must involve at least three parties
- Competition
- What about one seller and one buyer?
- One seller and multiple buyers?
- “Monopoly”
- One buyer and multiple sellers?
- “Monopsony”
What is the Market?
- Prices are set
- Competition is determined by market size, on both buyers and sellers
What is the Market?
- Market failure
- Refers to the insufficient supply of public goods and institutions to maintain a competitive market.
- Rationality vs. free rides
- Leading to the relationship between the State and the Market
The State and the Market
- What role the State plays versus the Market?
- Why we need the Market, or an efficient Market?
- Economic development vs. Political development (Lipset vs. Huntington)
- Lipset: Economic development vs. Democracy
- Huntington: Economic development vs. political instability
The State and the Market
- More questions
- Relationship between the State and the Market
- How to develop/what models to adopt?
- National vs. regional or local developments
-
China
-
Japan
-
North Korea
-
South Korea
-
Taiwan
-
Singapore
-
Hong Kong
-
Macau
East Asia
Differences?
Cultural:
- Generally Confucianism, Buddhism, local worshipping, British, Portuguese and American influences
Economic:
- (GDPPC): $1,700 to $110k
- Growth rate: 2.8% to 10.5%
Political:
- communist
- dictatorship
- authoritarian
- democracy
- semi-democracy
East Asia
| Indicator (Unit) | China | Hong Kong | Japan | Macau | North Korea | South Korea | Taiwan | Singapore |
|---|---|---|---|---|---|---|---|---|
| Population (pop in mill.) | 1,385 | 7.2 | 126.2 | 0.6 | 25.4 | 51.4 | 23.5 | 6 |
| Life expectancy (yrs) | 75.8 | 83.1 | 85.5 | 84.6 | 71 | 77 | 80.4 | 85.5 |
| Literacy rate (%) | 96.4 | 93.5 | 99.0 | 96.5 | 100 | 82.5 | 98.5 | 97 |
| Unemployment rate (%) | 3.9 | 3.1 | 2.9 | 2 | 25.6 | 3.7 | 3.8 | 2.2 |
Sourcess: CIA World Factbook, Census Bureau
Why study East Asia?
Why study East Asia?
- Economics
- trade
- production
- Politics
- Allies
- Regional order
- International order
- High risk of war
- Thucydides Trap
East Asia economies: GDP (PPP) in billions
Sources: IMF 2021
East Asia economies: GDP per capita (PPP)
Sources: IMF 2021, North Korea data from Heritage.org
Approaches in studying institutions
- Rational Choice Approach
- Historical Institutionalism
- Sociological approach
Approaches in studying institutions
1. Rational Choice Approach
- Individual based
- “All individuals are goal-oriented, rational actors seeking maximization of gains and minimization of losses in a strategic environment”
- What happens if all people are irrational?
- Institution is established to facilitate cooperation (mutual benefits), which could be impossible otherwise.
Approaches in studying institutions
1. Rational Choice Approach
- Individual based
- “All individuals are goal-oriented, rational actors seeking maximization of gains and minimization of losses in a strategic environment”
- What happens if all people are irrational?
- Institution is established to facilitate cooperation (mutual benefits), which could be impossible otherwise.
Approaches in studying institutions
- Rational Choice Approach (continued)
- Institutions be in place to coordinate and facilitate cooperation so individual parties can benefit or benefit more than otherwise
- National policies can be followed
- Effective institutions explain success of economies
- International organizations can be functional
- MNCs and IGOs can work across borders
Questions to ask
US breaking diplomatic ties with China?
What is the chance of US going into war with China?
What's at stake?
- US citizens in China and Hong Kong
- Taiwan and Japan
- South China Sea
- Chinese businesses in US
- US businesses in China