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

  • Özlem Onaran
  • Engelbert Stockhammer

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.

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Paper provided by Political Economy Research Institute, University of Massachusetts at Amherst in its series Working Papers with number wp38.

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Date of creation: 2002
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Handle: RePEc:uma:periwp:wp38
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  1. Singh, Ajit, 1997. "Savings, investment and the corporation in the East Asian miracle," MPRA Paper 53884, University Library of Munich, Germany.
  2. 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.
  3. 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.
  4. Ben S. Bernanke, 1986. "Alternative Explanations of the Money-Income Correlation," NBER Working Papers 1842, National Bureau of Economic Research, Inc.
  5. 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.
  6. You, Jong-Il & Chang, Ha-Joon, 1993. "The Myth of Free Labour Market in Korea," Contributions to Political Economy, Oxford University Press, vol. 12(0), pages 29-46.
  7. Bhaduri, Amit & Marglin, Stephen, 1990. "Unemployment and the Real Wage: The Economic Basis for Contesting Political Ideologies," Cambridge Journal of Economics, Oxford University Press, vol. 14(4), pages 375-93, December.
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