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Two Different Export-Oriented Growth Strategies under a Wage-led Accumulation Regime: à la Turca and à la South Korea

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  • Özlem Onaran
  • Engelbert Stockhammer

Abstract

The aim of the paper is to compare the relationship between distribution, growth, accumulation and employment in Turkey and South Korea. These countries represent two different export-oriented growth experiences. The results of the adjustment experiences of both countries are in striking contrast to orthodox theory, however they also present counterexamples to each other in terms of their ways of integrating into the world economy. Thereby they provide examples for comparing different economic policies. The paper tests whether accumulation and employment are wage-led in these two countries by means of a post- Keynesian open economy model, that includes a demand-driven labor market and a reserve army effect in the Marxian sense. The model is estimated in a structural vector autoregression form, in order to capture the complex simultaneous interaction between distribution, accumulation, growth and employment within a systems approach. This model, and the method of estimation are the two innovations of this paper in addressing the crucial policy issues related with structural adjustment problems in developing countries. The results show that decreasing the wage share does not stimulate accumulation, growth and employment. Interestingly, the relation between wage share, investment, growth and employment is similar in both Turkey and South Korea; however the former experienced low and the latter high growth rates due to different export-oriented growth strategies. The explanation of this difference is found in the field of institutions, power structures, and state policies.

Suggested Citation

  • Özlem Onaran & Engelbert Stockhammer, 2002. "Two Different Export-Oriented Growth Strategies under a Wage-led Accumulation Regime: à la Turca and à la South Korea," Working Papers wp38, Political Economy Research Institute, University of Massachusetts at Amherst.
    • Handle: RePEc:uma:periwp:wp38
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    References listed on IDEAS

    as
    1. Ajit Singh, 1998. "Savings, investment and the corporation in the East Asian miracle," Journal of Development Studies, Taylor & Francis Journals, vol. 34(6), pages 112-137.
    2. Ozlem Onaran & Nurhan Yenturk, 2001. "Do Low Wages Stimulate Investment? An analysis of the relationship between distribution and investment in Turkish private manufacturing industry," International Review of Applied Economics, Taylor & Francis Journals, vol. 15(4), pages 359-374.
    3. Bhaduri, Amit & Marglin, Stephen, 1990. "Unemployment and the Real Wage: The Economic Basis for Contesting Political Ideologies," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 14(4), pages 375-393, December.
    4. Horton, Susan & Kanbur, Ravi & Mazumdar, Dipak, 1991. "Labor markets in an era of adjustment : an overview," Policy Research Working Paper Series 694, The World Bank.
    5. Bernanke, Ben S., 1986. "Alternative explanations of the money-income correlation," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 25(1), pages 49-99, January.
    6. You, Jong-Il & Chang, Ha-Joon, 1993. "The Myth of Free Labour Market in Korea," Contributions to Political Economy, Cambridge Political Economy Society, vol. 12(0), pages 29-46.
    7. Adelman, Irma & Yeldan, Erinc, 2000. "The Minimal Conditions for a Financial Crisis: A Multiregional Intertemporal CGE Model of the Asian Crisis," World Development, Elsevier, vol. 28(6), pages 1087-1100, June.
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    Cited by:

    1. Özlem Onaran & Nursel Aydiner-Avsar, 2006. "The controversy over employment policy: Low labor costs and openness, or demand policy? A sectoral analysis for Turkey," Department of Economics Working Papers wuwp097, Vienna University of Economics and Business, Department of Economics.
    2. Adriana Moreira Amado & Maria de Lourdes Rollemberg Mollo, 2015. "The 'developmentalism' debate in Brazil: some economic and political issues," Review of Keynesian Economics, Edward Elgar Publishing, vol. 3(1), pages 77-89, January.
    3. Nursel AYDINER‐AVSAR & ÖZlem ONARAN, 2010. "The Determinants Of Employment: A Sectoral Analysis For Turkey," The Developing Economies, Institute of Developing Economies, vol. 48(2), pages 203-231, June.
    4. Alfredo Saad-Filho, 2007. "Life beyond the Washington Consensus: An Introduction to Pro-poor Macroeconomic Policies," Review of Political Economy, Taylor & Francis Journals, vol. 19(4), pages 513-537.

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    Keywords

    Accumulation; distribution; export-oriented growth; structural adjustment; post-Keynesian economics;
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