[ARI Working Paper Seires No. 12]



Choosing Coalition Partners: 

Politics Economy of Central Banking Independence in Korea, Thailand, and Taiwan



by Young Hark Byun

(Professor, Catholic University of Daegu)

Notes on Contributor

Young Hark Byun earned Ph.D. in the Dept. of Government of the Univ. of Texas at Austin, M.A. in the Korea University, and B.A. in the Kyunpook National University. His interest is comparative political economy of East Asia, especially on finance, central banking politics, and trade issues. He is working on financial supervision systems in developed and developing countries, and electoral politics and its impacts on agricultural liberalization in Korea. He currently teaches at the Dept. of International Administration of the Catholic Univ. of Daegu. Korea.

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Abstract

Why do some countries in East Asia have independent central banks while others don‟t when they used to be called “East Asian model” en bloc? This article explores how and why a specific coalition of governing elites and social interests during economic development affects varying degrees of CBI in South Korea, Taiwan, and Thailand. I argue there will be a low level of central bank independence, 1) if politicians choose capital-intensive industries as a major coalition partner for economic growth (Korean case); or 2) if government elites select financial sector as their major development partner (Thai case). On the other hand, there will be a higher probability for central bankers‟ independent authority, if a government chooses a „balanced‟ economic development strategy avoiding excessive dependence on two strong social interests (Taiwanese case).