Economics of Converging Theoretical Paradigms: Evidence from Indo-Korean Bilateral Economic Cooperation

Abstract

This paper examines economic consequences of converging theoretical paradigms affecting regimes of economic cooperation (RECs). In the past, theoretical paradigms such as capitalism vs. socialism or Keynesianism vs. monetarism clearly diverged on structural, organizational and operational levels, however in the recent times there are ample evidences showing greater theoretical convergence. Literature available on the issue primarily focuses on multilateral/bilateral free trade agreements and largely ignores the deeper theoretical realignments causing fundamental shift in the structure and reach of RECs. It argues that converging theoretical paradigms (CTPs) are affecting basic rationale and structure of cooperative arrangements. Theoretically, the second coming of liberal international economic order (LIEO) indicates that the CTPs have evolved around neo-liberal economic ideas. Empirically, a critical turn around in Indo-Korean RECs in the post-Cold War period – from market-seeking (1960s~1980s) to production-seeking (1990s~2000s), and cluster-seeking phase (2000~2007) – demonstrates the positive impact of CTPs.