Political mediation of global economic forces: The politics of corporate restructuring in Japan, France, and South Korea

Why have state-led economies engaged in rapid corporate structural reforms in the late 1990s when these reforms seem to undermine the post-war social contract? What explains the variation in the reform process between countries that have been considered as similar in terms of the role of the state in the economy?; While these reforms may appear to be technical measures, their cumulative effect amounts to a major transformation of the post-1945 social contract. Corporate structural reforms are measures instigated by the state to modernize corporate governance, facilitate the process of corporate restructuring, and make the industrial structure more flexible. They aim at increasing the competitiveness of the economy and ensuring long-term growth. In most cases, structural reforms are discrete and are not the object of electoral debates.; This study examines three cases of state-led economies: Japan, Korea, and France. All three have engaged in an active process of structural reforms between 1996 and 2000, albeit at different speed and with varying intensity. While reforms in Korea and France have been rapid and have relied upon direct state involvement, reforms in Japan have been slower and indirect.; I argue that the process of structural reforms in state-led economies has been the result of state mediation of global financial forces. The rise of global financial flows and the intrusion of global investors onto the domestic chessboard provide the impetus for change. However, elite bureaucrats and reformist politicians mediate these forces. Their ability to finesse the political constraints is determined by the degree of bureaucratic control over the legislative agenda. Globalization provides the impetus for change, but elite bureaucrats mediate global constraints and determine the actual mix of reforms.; The study relies upon temporal comparisons within each country and cross-country comparisons. In each country, both overall data on capital flows and structural reforms and specific corporate governance reforms are examined. The evidence includes quantitative data, government documents, and legislative records. In addition, over 150 interviews with bureaucrats, politicians, business leaders, labor leaders, and other actors in the three countries have been conducted in 1999 and 2000.