The Developing Economies

Volume 40, Number 3 (September 2002)

■ The Developing Economies Volume 40, Number 3 (September 2002)
■ B5
■ 105pp
■ September 2002

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Yukihito Sato, "Democratization and Financial Reform in Taiwan: The Political Economy of Bad-Loan Creation," pp. 226-51.

This study shows that many bad loans now burdening Taiwan's financial institutions are interrelated with the society's democratization which started in the late 1980s. Democratization made the local factions and business groups more independent from the Kuomintang government. They acquired more political influence than under the authoritarian regime. These changes induced them to manage their owned financial institutions more arbitrarily and to intervene more frequently in the state-affiliated financial institutions. Moreover they interfered in financial reform and compelled the government to allow many more new banks than it had originally planned. As a result the financial system became more competitive and the qualities of loans deteriorated. Some local factions and business groups exacerbated the situation by establishing banks in order to funnel funds to themselves, sometimes illegally. Thus many bad loans were created as the side effect of democratization.

Lu-Lin Cheng, "Strategy and Structure of Market Competition: The Taiwanese Cable TV Industry in the 1990s," pp. 252-83.

Cable TV has a dominant role in the media environment of Taiwanese society. Before the passing of the Cable TV Law in 1993, the industry was a vibrant informal sector that was highly differentiated and was a democratic alternative to the formal media. The 1993 Cable TV Law designed a competitive market with five licenses issued in each area and was touted as a victory of democracy by the opposition parties. In less than a decade, however, drastic merger movements formed a monopolistic structure. The abuse of monopolistic power is now pervasive. This article studies the unexpected historical twists by examining the industry's market dynamics during the country's democratization in the 1990s. A sociological approach that emphasizes firms' competitive strategies in controlling the multiple dimensions of uncertainties and rules that induce these competitions is applied to show the path-dependent mechanisms in the nonlinear development trajectory of the market.

Tadayoshi Terao, "An Institutional Analysis of Environmental Pollution Disputes in Taiwan: Cases of 'Self-Relief,'" pp. 284-304.

During the late 1980s and early 1990s in Taiwan, people's protests against environmental pollution often took the form of "self-relief," meaning that they attempted to fight polluters using their own resources, without relying on legal or administrative procedures. Why did such an extreme form of disputes become so widespread? What institutional changes did these movements bring about? These questions are analyzed using the analytical framework of "law and economics." Our research shows that "self-relief" functioned to a certain extent as a means of realizing quick compensation for victims, and for reflecting the opinions of local people concerning development projects; in addition, it served to promote the formulation of law and administrative systems. However, as it was based on direct negotiations between the parties concerned, the outcome of each dispute only reflected the transient balance of forces, and the experience gained in negotiations was not accumulated as a social norm.

Chang-Ling Huang, "The Politics of Reregulation: Globalization, Democratization, and the Taiwanese Labor Movement," pp. 305-26.

Since the early 1990s, Taiwanese workers have faced two simultaneous trends: democratization and globalization. These two trends have different, if not exactly opposite, implications for the labor movement. Democratization has empowered the working class and made its members more effective in the political process. Globalization, however, has led to an increase in the flexibility of the labor market and made workers more vulnerable to changes in the economic environment. This paper begins with a discussion of the general characteristics of Taiwan's labor movement and the general impact of globalization on labor institutions. Then, by examining the transformation of Taiwan's labor institutions in recent years, and specifically the process of union reorganization and the revisions of the Labor Standards Law, the paper shows how, against the background of globalization, Taiwanese workers have used their newly acquired political power to maneuver between different political forces and set the development course for the labor movement.

Lin Chen-Wei, "The Policymaking Process for the Social Security System in Taiwan: The National Health Insurance and National Pension Program," pp. 327-58.

This paper examines the policymaking process and contents of the two major social security policies of Taiwan in the 1990s. The National Health Insurance (NHI), which was introduced in 1995, was a mixture of success and failure. While it brought about universal health insurance, part of the original objective of creating a comprehensive welfare system through the NHI initiative was not realized. The attempt to introduce a National Pension Program (NPP) in 2000 went through dramatic turns in both policy contents and the prospects for implementation. Though it was originally designed as a modified form of social insurance, a general tax revenue-funded defined-benefit scheme was added as an alternative when a new government came into power. The bill, however, was withdrawn before the actual deliberations began. The author argues that policy legacies and actors, and the interactions of these variables within different policy phases, determined the policy contents and changes.

Mitsutoyo Matsumoto, "Political Democratization and KMT Party-Owned Enterprises in Taiwan," pp. 359-80.

This article will study how the existence of KMT party-owned enterprises (POEs) and their development are related to Taiwan's democratization. POEs are profit-making enterprises managed by the KMT, the former ruling party. All previous studies about the relationship between democratization and POEs only draw attention to the economic resource aspects of POEs. But the POEs were also KMT political resources in the form of enterprises and became policy tools to the ruling party. This study will argue that the existence of POEs was a factor that maintained the KMT government and supported its stable management during the process of democratization. Moreover, POEs as political resources enabled Lee Teng-hui as KMT chairman to demonstrate strong leadership and push ahead with the completion of democratization. But Lee's political mobilization of POEs expanded money politics and perpetuated these enterprises as one of the "authoritarian legacies" in Taiwan's democratic politics.