Introduction
The Asian Economic Crisis of 1997 significantly altered the developmental dynamics of countries in the region. Coupled with the end of the Cold War, the economic turmoil spurred political change and led to democratic reforms (Freedman, 2005, p. 235). This article uses South Korea, Thailand and Indonesia as empirical examples in East and Southeast Asia to examine how the crisis led to the end of the so-called developmental states, and the extent that the crisis’s legacy contributed to the further expansion of competitive authoritarianism.
This comparative study, aimed at examining the limits of the developmental state framework in economic development for these three Asian case studies, employs a political structural approach. It examines the clashes between political and civil society actors during the economic collapse and the subsequent shift in power dynamics in these three countries. Specifically, it considers the 1997 Constitutional Reform in Thailand, the election of South Korea’s first opposition president, Kim Jung, in the same year, and Suharto's resignation in Indonesia in 1998.
To synthesize the short- and long-run political effects of the crisis during the period from 1997 to the early 2010s, as well as the interplay between global trends of democratization and authoritarianism alongside the power struggles of national actors, this article addresses the following research questions: To what extent did the regional impact of the 1997 Asian Financial Crisis catalyze the decline of developmental states and facilitate democratization? To what extent is the relinquishment of the Developmental State after the 1997 crisis related to the subsequent resurgence of competitive authoritarianism?
Our hypothesis is that the economic recession sped up political changes towards democratization in Indonesia, Thailand, and South Korea, leading to the decline of the developmental state in favor of a fairer civil representation in political institutions. However, the global resurgence of competitive authoritarianism collided with existing powerful economic and political elites that reinforced undemocratic practices such as clientelism.
To what extent did the regional impact of the 1997 Asian Financial Crisis catalyze the decline of developmental states and facilitate democratization?
While the theoretical scope of developmental states is broadly defined, this article will focus on the rise, fall, and legacy of the developmental elite, the economic bureaucracy, and the uprising of civil society in Indonesia, Thailand, and South Korea in the context of the 1997 crisis, through the frame of political structuralism. This approach will be accompanied by the episteme of developmental states, as both concepts are founded in the institutionalising power from oligarchies while associating these groups’ interests with national economic development (Hague, Harrop, and McCormick, 2016, pp. 92-93). Considering that “developmental states are not static” (Leftwich, 1995, p. 421), the elites’ economic policies of our three examples evolved towards a major efficiency and competitiveness by adopting different strategies.
Suharto’s regime in Indonesia was consolidated by bribing the military and corrupted technocrats aligned with his leadership. Meanwhile, South Korea’s President Park was succeeded by Chun Doo Hwan after his assassination in 1997 (Leftwich, 1995, p. 406-407). Whereas he re-defined the modus operandi of the national economic system by deregulating businesses, the goal was to make Korean companies internationally competitive (Uttam, 2020, pp. 113-114). In the Thai case, financial liberalization also took place in the early 1990s after reformulating the system towards export-oriented industrialization under the umbrella of the World Bank. The responsible national economic technocrats became key public figures (Phongpaichit and Baker, 1999, pp. 193-208), while the military influence remained ingrained, affecting this economic governmental coalition (Leftwich, 1995, p. 407).
The relationship between economics and politics in the context of the developmental state and the financial collapse of 1997 contributed to the rise of a previously repressed civil society. This does not mean that social actors were entirely silent before 1997, rather, it highlights the connection between crises, the reinforcement of democratic values, and the more equitable representation of the people's will within institutions (Freedman, 2005, p. 234). From a political structural approach, democratic reforms in these empirical examples can be understood as stemming from the 1997 crisis as the image of economic equilibrium maintained by the developmental elites broke down (Hague, Harrop, and McCormick, 2016, p. 92). In Indonesia, Suharto's regime ultimately collapsed when peace and economic growth could no longer be sustained. His depoliticization strategy and developmental model, which had previously garnered support from local small entrepreneurs and the military, failed to counterbalance the growing momentum of student riots (Schwarz, 1997, pp. 120-121). In South Korea, thousands of workers and students were protesting against the financial turmoil, and how the short-debt crisis management was affecting the medium-low-income family units (Freedman, 2005, pp. 241-242). In Thailand, the strength of civil society was more pronounced, as the crisis catalyzed the ratification of a new constitution. This period saw widespread mobilization, leading to one of the most significant democratic shifts in the country's history (Freedman, 2006, pp. 186-187).
Therefore, from a political structuralism approach, there is a common thread on how civil groups mobilized against the developmental status quo, proving that democratic features were compatible with “Asian Values” (Schwarz, 1997, pp. 121). While these groups unified and mobilized against the failure result of authoritarian developmentalism, social actors from all three countries tended to prioritize economic growth over democracy (Freedman, 2006, pp. 192). When comparing macroeconomic data with the deconstruction of “Asian Values” promoted by leaders like Suharto to justify his regime, it becomes evident that inflation rates surged dramatically amid the currency and financial crisis. Regardless of whether the society was Confucian, Buddhist, or Islam-dominated, order and discipline could no longer suppress the growing demands for freedom and equality (Lee, 2002, pp. 825-827). Before the 1997 crisis, state dominance over the economy, driven by economic bureaucracy, presented an attractive image to foreign investors. However, in our three case studies, the immediate political changes following the crisis were not motivated by a push for democratization but rather by the need to project political stability to foreign investors. This was intended to position the countries as favorable environments for international capital. The Asian economic crisis severely impacted these countries due to their export-driven and capital-intensive exploitation models, which were deeply rooted in the developmental state framework (Englehart, 2003, pp. 265–268).
Hence, we determine that the 1997 Asian Financial Crisis marked a pivotal moment for the decline of developmental states and the facilitation of democratization in Indonesia, Thailand, and South Korea. However, the disruption of economic equilibrium and the adoption of more democratic practices proved to be short-term outcomes, as patronage and clientelism in politics and economic development remained deeply entrenched, as we will explore in the following section.
To what extent is the relinquishment of the Developmental State after the 1997 crisis related to the subsequent resurgence of competitive authoritarianism?
As we have explored in the previous section, the priorities and the linkages of the developmental states evolve alongside global-local dynamics. While the Asian Financial Crisis of 1997 did accelerate a democratic shift, the legacies of the developmental state in Thailand, South Korea and Indonesia were ingrained in their institutional structures (Leftwich, 1995, p. 421-422). In the dynamics of political economy, patronage and clientelism remained prevalent in national private enterprises, sustained by powerful oligarchies that re-emerged in the early 21st century (Englehart, 2003, pp. 270-271), often adopting either pro- or anti-globalization economic narratives, that can be framed within competitive authoritarianism. As such, countries without a solid tradition of liberal democracy, but yet institutionally composed by democratic features (multi-party system, freedom of media coverage, change of government, etc), are more likely to succumb to autocratic leaders characterized by corruption and control over the national private sector (Levitsky and Way, 2020, pp. 56-57). In this regard, we shall consider that bureaucratic authoritarianism is founded on political structuralism’s epistemology, as it considers power linkages to address the rise of hybrid regimes (Hague, Harrop, and McCormick, 2016, pp. 91-92).
To illustrate this theoretical framework, we will delve deeper into the patronage relationships between private companies, policymakers, and local and national politicians. On the one hand, some scholars argue that democracy in South Korea was solidified in 2008 with the conservatives' return to power. However, progressive leaders maintained influential power linkages. For example, Roh Moo Hyun, a progressive leader, formed a political pact with Chung Mong Jun, the son of Hyundai’s founder. This alliance underscores the enduring ties between South Korea’s political and economic elites, even during its democratic transition. Despite progress toward democratization, such connections reveal how entrenched authoritarian practices, including clientelism and elite pact-making, continued to shape South Korean society and governance well after 1997 (Chaibong, 2008, 135-136). In contrast, Thaksin’s rise in power in Thailand, while democratically elected, was supported by a strong patronage network in rural areas, with his anti-globalization and pro-developmental discourse (even if Thailand’s economic system remained very dependent on Foreign Direct Investment). Meanwhile, bank holdings were 25% in both military and foreign holdings, creating a complex financial situation that further collapsed the government, as a consequence of this struggle for power (Freedman, 2006, pp. 190-192). Prabowo Subianto's rise to power in Indonesia bears a strong resemblance to that of Thaksin in Thailand. He was also a populist leader who blamed Indonesia’s poor economic development to neoliberal globalization while engaging in widespread patronage politics and corruption. Prabowo’s legacy was built over the exploitation of economic resources (mostly primary commodities) that allowed his government to capitalize on relationships with regional authorities and grassroots brokers (Aspinall, 2015, pp. 3-16).
These empirical examples reveal a common thread: the persistence of practices that reinforced oligarchic structures, even after the 1997 crisis, and accelerated democratization and promoted fairer civil representation in institutions. The massive economic shock of the crisis did not significantly disrupt the political dominance of powerful elites. Additionally, global institutions like the IMF did not challenge the rise of populist leaders in these countries, as long as their economic policies prioritized liberalizing international trade barriers as a key driver of economic growth. In the eyes of global public and private institutions (who conceived them as structures shaping national policies), monopoly and corruption would be undenounced if countries were following these economic directives (Freedman, 2005, pp. 240-242). Therefore, we have aimed to demonstrate that the relinquishment of the developmental state after the 1997 crisis did not eradicate competitive authoritarianism but instead patronage politics and clientelism continued to be perpetuated. Economic growth has historically been closely tied to oligarchic structures that continued to dominate political and economic systems after 1997.
Conclusion
In conclusion, the 1997 Asian Financial Crisis marked a turning point for Indonesia, Thailand, and South Korea, catalyzing the decline of developmental states and facilitating a shift towards democratization. The economic turmoil exposed the vulnerabilities of authoritarian developmentalism, prompting civil society to mobilize against entrenched elites and demand political reform. This resulted in significant democratic gains, such as constitutional reform in Thailand, Suharto’s resignation in Indonesia, and the election of South Korea’s first opposition president. However, these democratizing trends proved to be short-lived as patronage politics, clientelism, and oligarchic dominance persisted within the political and economic systems of these nations.
The crisis disrupted the façade of economic stability maintained by developmental elites, but the underlying institutional structures, shaped by decades of oligarchic rule, adapted rather than disappeared. As globalization intensified, political and economic elites leveraged their entrenched power to reassert control, often under the guise of populist or nationalist rhetoric. Leaders such as Thaksin in Thailand and Prabowo in Indonesia exemplify how competitive authoritarianism emerged, blending democratic features with autocratic practices to maintain elite dominance.
Despite the initial momentum toward democratization, the legacy of the developmental state endured in the form of institutionalized corruption and elite alliances, often aligned with global economic directives. The 1997 crisis revealed that democratization and equitable governance remain precarious when power structures are deeply embedded in patronage networks. True democratic transformation requires sustained efforts to dismantle entrenched oligarchies and promote greater accountability in governance.
Editor: Shan Hei Anna Ting
Copy Editor: Anahita Poursafir
Chief Editor: Anahita Poursafir
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