Rethinking Spain and Korea through a State–Firm Coordination Perspective

This chapter retells the story of Spain’s and Korea’s upgrading from the perspective of state–firm coordination. The larger purpose is to showcase the book’s argument and its explanatory power. The chapter consists of six sections. After the chapter’s introduction, section 2.2 situates large Spanish and Korean firms and discusses their limitations. Section 2.3 defines upgrading as a coordination problem and explains why states were necessary for upgrading. Section 2.4 characterizes Spain’s and Korea’s pathways to upgrading and analyzes the factors that led each country to choose a particular strategy. Section 2.5 evaluates the outcomes of upgrading and discusses their broader socioeconomic implications. The final section concludes and makes a transition to the case studies discussed in the next chapters.

State-Firm Coordination and Upgrading

Since the 1980s, Spain and South Korea have experienced a dramatic transformation from middle-income to advanced economies. How did Spain and South Korea upgrade? While market liberalization and globalization were important forces for change, and states continue to be central in the organization of the Spanish and Korean economies, the liberal and the developmental state perspectives do not provide an comprehensive explanation of these transformations. Building on a combination of historical institutionalism and international business literatures, this book argues that upgrading was underpinned by cooperative models based on interdependencies and quid pro quo exchanges between national governments and large firms. The negotiated nature of these arrangements opened the door to institutional variation and enabled Spain and Korea to pursue different strategies. Spain adopted an integrational approach based on foreign direct investment, technological outsourcing, and regional integration. Korea pursued a techno-industrial strategy that prioritized self-sufficiency and the development of local technological capacity. These strategies enabled Spanish and Korean firms across multiple complex sectors to reach the efficiency frontier, but resulted in different productive specializations in complex services and manufacturing respectively. Through this comparative study of transformation in Spain and Korea, this book shifts our perspective on the political economy of economic transformation from markets or states to state–firm coordination as a driver for economic transformation, from one to at least two different pathways to upgrading, and from a world divided into emerging economies and world leaders to a more nuanced perspective that recognizes the perspective of new advanced economies.

Against Analogy

This article asks whether the analogy between state and firm is a promising strategy for promoting workplace democracy and provides a negative answer, explaining why analogical arguments are not a good strategy for justifying workplace democracy. The article contends that the state-firm analogy is misguided for at least three reasons: (1) it is structurally inconclusive, (2) it is based on a category mistake, and (3) it leads us away from the central question we should ask, which is: What would concretely imply, and what is required, in order to democratize the workplace? I begin by offering an interpretation of the state-firm analogy which shows that use of the analogical argument in Dahl’s justification of workplace democracy engenders excessive and unnecessary theoretical costs which bear negatively on his conclusion. I then proceed to examine more recent contributions to the debate and show that supporters and critics of the state-firm analogy alike do not advance our understanding of the analogical argument. In the last part of the article I provide a general theoretical explanation of why arguments based on the state-firm analogy are not good candidates for defending workplace democracy.

Rosneft cedes Venezuela assets to Russian state

Headline RUSSIA/VENEZUELA: Rosneft cedes assets to state firm

The Fall of Icarus: the Paradox of the Ottoman Centralization and the Abstraction of Timars

In the decades following the conquest of Constantinople the Ottoman administrative and military system underwent a major reorganization in the direction of centralization. The effort to some degree assured the state control over the feudal-like timar system and gave it its exceptional characteristic. However, the same endeavour in the long run made the state lose control over vast agricultural production. It was a paradox of centralization which made the Ottoman state firm but fragile.