Date: Mon, 15 Mar 1999 16:55:39 -0600 (CST)
From: email@example.com (Rich Winkel)
Subject: FINANCE: East Asians Eye Scandinavian Welfare Model
/** ips.english: 549.0 **/
** Topic: FINANCE: East Asians Eye Scandinavian Welfare Model **
** Written 3:36 PM Mar 14, 1999 by newsdesk in cdp:ips.english **
Copyright 1999 InterPress Service, all rights reserved.
Worldwide distribution via the APC networks.
East Asians Eye Scandinavian Welfare Model
By Dipankar De Sarkar, IPS
11 March 1999
COPENHAGEN, Mar 11 (IPS) - A group of South East Asian ministers,
business leaders and policymakers headed home Thursday after an
international meeting left them pondering whether their
devastated economies should be steered toward calmer,
They had reason to be in a quandary: whereas the Scandinavians
emphasise the role of the state, South East Asian countries
traditionally put stress on the market.
It was impossible to participate in any discussion on
international economic issues in Copenhagen without at least one
reference to the 'Danish model of government.'
Along with the Swedish and the Norwegian, the Danish system
forms part of what is known as the 'Scandinavian Welfare Model' -
a term used to describe the path taken by these three countries in
organising and financing their social security, health and
The problem for Asian delegates at the 'Asian Europe
Conference on States and Markets' held here this week were the
differences, rather than the similarities, that mark the countries
of Scandinavia and Asia.
These include the fact that most Scandinavian countries are
composed of small, tightly-knit and more or less homogenous
By contrast, Indonesia is the fourth most populous country in
the world and most countries in the South East Asian region are
home to large groups of linguistic, ethnic and religious
minorities - a mix that leads to frequent sectarian violence.
The Scandinavian model acts within a controlled capitalist
market, whereas South East Asia - except very recently for
Malaysia - has given up many controls.
And democracy forms the political bedrock of the welfare model
in Scandinavia, whereas dictatorships, rather than democracy, has
been the preferred model in South East Asia, with banking laws
shrouded in secrecy.
Despite these differences, Danish Prime Minister Poul Nyrup
Rasmussen was clear there were lessons to learn from the
The Scandinavian welfare model "has been evolving without
damaging our social security...and Europe has been protected from
the international financial crisis because it protects itself,"
In Denmark, "the state takes the responsibility of taking
care of those who cannot take care of themselves."
"For me, a very important litmus test for the value of an
economic system is the situation of the weakest member sof the
community, be it individuals, families, social classes or
nations," Danish Minister for Development Cooperation Poul
"The Asian financial crises in a dramatic way has
demonstrated the fragility of social progress associated with
global capitalism at least in the short term," Nilson added. He
pointed out that 20 million people in the region had fallen below
the poverty line in just the last 12 to 16 months.
"Inequality has also deepened in the economically advanced
countries during the last decade, with very few exceptions,
notably in small countries like Denmark with long welfare society
traditions," he said.
If the South East Asians were listening, it wasn't immediately
evident. South Korea's Minister of State for Trade, Han Duck Soo,
declared that East Asia was laying stronger emphasis on the
"market-principled approach" - unlike the West where government
activism is favoured.
"The Asian Crisis and the ensuing debate on the applicability
of the 'East Asian Model' has forced us to reevaluate - painfully -
our past experience with state-led economic development," Han
"A consensus is emerging on the need for reducing the ties
between the government and the market and making the market freer.
Therefore, it seems inevitable to find more efforts in seeking
market-based solutions, even with regard to the issues of social
protection and welfare," he added.
Subsequent remarks by the South Korean minister, however, made
clear that when he referred to his country's "painful
experience" with state-led economic development, he meant "bad
Han spoke of his government's failure to increase transparency,
which led to corruption, misplace intervention in the management
of banks and its inability to check some large business
conglomerates from expanding into "too many different sectors
without development core competence."
Freeing up the market forces, he indicated, could well mean an
end to the former situation, where the responsibility for social
protection was borne by business, which offering guaranteed
lifetime employment, housing and education.
"The new direction marks a paradign shift and finally puts an
end to the so-called 'Korean Model' of industrialisation," Han
Paradoxically, the way in which South Korea plans to introduce
market principles in "all possible segments of the society"
could see the South East Asian country emulating some of the key
aspects of the 'Danish Model.'
Han, for instance, emphasised the need to encourage the growth
of small and medium firms in high-value-added, high-technology
sectors, where more jobs and better pays are expected.
In addition, small and medium companies are expected to reduce
concentration of economic power in the hands of a few players and
help address "distribution and equity issues."
A large number of small and medium-size enterprises - rather
than a few large companies - are also key to the success of the so-
called Danish model. Under this system, the population is
guaranteed nearly continual employment through 'life-long
learning,' so that retrenchment is quickly followed by re-training
and possible relocation into another job.
Denmark, however, also has one of the highest taxation levels
in the world - but benefits are also more generous than, for
instance, in the case of Britain.
Prof Anthony Atkinson, President of Britain's Royal Economic
Society, and a leading speaker at the conference, pointed out that
the so-called European welfare state was actually quite diverse.
But in a reference to recent moves to dismantle welfare
provisions by European countries, Atkinson said, "I am not
persuaded that the European welfare state is an anachronism which
has to be scaled down. It is possible for national governments to
make choices - they have to balance costs and benefits."
Many South East Asians were doubtful about the need for any one
model; they pointed out that their own Asian Model, offered for
replication just two years ago, was now mired in crisis.
"Rather, we would prefer to consider many such models and pick
and choose what we like from them," said a delegate from
[c] 1999, InterPress Third World News Agency (IPS)
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