Two Different Export-Oriented Growth Strategies: Accumulation and Distribution in Turkey and South Korea

The aim of the paper is to compare the relationship between distribution, growth, accumulation, and employment in Turkey and in South Korea. These countries represent two different cases of export-oriented growth. The results of the structural adjustment experiences of both countries are in striking contrast to orthodox theory; however, they also present counterexamples to each other in terms of policies of economic integration. The paper tests whether accumulation and employment are profit-led in these two countries by means of a post-Keynesian open economy model, which includes a demand-driven labor market and a reserve army effect in the Marxian sense. The model is estimated in a structural vector autoregression (SVAR) 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 for this difference is found in the field of institutions, power structures, and state policies.