"BIG BUSINESS, STRONG STATE" (E.M. KIM).   Term Paper ID:26314 Click to get this paper

Essay Subject: Summary & review of work on causes & effects of South Korea's economic growth, 1960-1990.... More...

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Paper Abstract: Summary & review of work on causes & effects of South Korea's economic growth, 1960-1990. Paper Introduction: E. M. KIM'S BIG BUSINESS STRONG STATE This review essay summarizes and evaluates the above entitled book in which Korean author Kim discusses the factors which explain the remarkable economic growth of South Korea during the period 1960-1990. His central theses are that: (i) rapid economic development was successfully launched in the 60s by the authoritarian government of former General Park Chung Hee (Park) which through its centralized planning and controls over capital, credit and labor guided large industrial firms or chaebols into export-oriented industries in favorable international markets; (ii) in the 70s the South Korean economy made a successful transition from light manufacturing to heavy industry and continued to grow rapidly. The relationship between the Park regime and the chaebols became more symbiotic and Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. In discussing South Korea's economic prospects nearthe end of the book, Kim expresses confidence that "the institutions of thestrong state and big businesses . He is not perfect, being a bit toounwilling to delve into the possible weak links between liberal politicaland social movements and economic stagnation in earlier stages of economicgrowth and in having a defective crystal ball. KIM'S BIG BUSINESS STRONG STATE This review essay summarizes and evaluates the above entitled book inwhich Korean author Kim discusses the factors which explain the remarkableeconomic growth of South Korea during the period 196 -199 . In the latter two chapters of the book, Kim deals at considerablelength with the evils associated with the growing wealth and politicalindependence and power of the large chaebols. . After his coup d'etat of May 1961, Parkargued that "political instability was a major cause of poverty and rampantcorruption" and "saw the establishment of an authoritarian regime . Summary The South Korean economic miracle can be summarized in a fewstatistics. According to Kim,"labor . After enduring the cruelties of Japanese colonialism, theravages of World War II and the catastrophic effects of the Korean War,South Korea's economic prospects in 196 appeared at best to beproblematical. Big Business Strong State State Collusion and Conflict in South Korean Economic Development, 196 -199 . Clearly, the suppression of the unions helpedlaunch the South Korean economic takeoff; yet he is equivocal as to whethersuch repression was a necessary sine qua non for that development. Kim cautions that the South Korean model of developmentmay be impossible to replicate elsewhere. . He says "the state isable to lead businesses into certain sectors, even when businesses arereluctant to do so" (31). South Korea enjoyed an unusualdegree of geopolitical importance to the United States which led to a greatdeal of foreign aid and other support. Also, while he diagnoses some of thepernicious effects of business corruption and crony capitalism in the early9 s, he failed to foresee the emerging relationship between those phenomenaand South Korea's later economic difficulties. Some obtained greater autonomy by expandingentrepreneurially abroad alone or in joint ventures with foreignmultinational corporations, many became more diversified as horizontalconglomerates and in a few cases simply defied the wishes of the state.Some chaebol CEOS even went into politics. The economies of scale achieved by utilizing large businessgroups enabled South Korea to jump-start its economy" (92); (2) "the statekept wages low to keep South Korean products competitive in the worldmarket" (2 4). Wage levels in South Korea did not approach those in othernewly industrializing countries in East Asia (NICs) until the mid-8 s. In Park's'comprehensive development state,' businesses were rewarded with credit,which the state completely controlled after all banks were nationalized inOctober 1961, and other incentives. will be forced to change and adapt tothe processes of democratic consolidation and possible unification withNorth Korea" (228). . Its principal shortcomings are the author's timidity whenit comes to recognizing that his own logic requires that he recognize thevirtues of authoritarian rule in breaking the cycle of economic andpolitical dependency in the initial stages of South Korea's economicdevelopment, despite the negative implications of those findings forpolitical democracy and labor rights. Conclusion This book delves into the governmental and business institutionalunderpinning of the South Korean economic miracle of the past four decadesand explains not only the fundamental factors explaining it but also howthose institutions changed dynamically in response to the challenges theyfaced in their external environments. Kim comments that in the 6 s foreign loan capital tofinance the development of such industries and growing, open internationalmarkets for their goods were available. . The keysentence is: "it is not clear whether more political freedom and democracyin the initial phase of economic development would have meant that economicdevelopment would have occurred or that it would have occurred at a slowerpace" (217). They did not, however,act in lockstep. The South Korean experience is very similar but notidentical to those of other East Asian societies which have achieved higheconomic growth rates, but very difficult to replicate elsewhere. It is difficult to accept the findings of the rest of the bookand come to any other conclusion but that authoritarian rule in the 6 s atleast helped speed economic development in South Korea. They were encouraged to make capitalinvestments in light labor-intensive manufacturing industries such astextiles, clothing, shoes, toys, wigs and plywood. Other East Asian NICs, notably Japan, Taiwan andSingapore, have used successfully a strong state and exportindustrialization strategies to develop their economies. exploded with discontent toward the end of the 198 s. Kim missed that point. Transformation of the developmental state in the 8 s. Nevertheless, the principal political andeconomic institutions of South Korea adapted sufficiently well to suchchanging conditions to permit a high rate of economic growth to continuewell into the 9 s. Works CitedKim, E. Industrialization in heavy industry and chemicals in the 7 s. . While capital called on the government to reduce its involvement inthe economy but at the same time to protect its interests, the labor unionsincreased their demands on the state during the 8 s. The average annual income per capita of a South Korean in 1961was $82, in 1993 $7,66 (213). Thegovernment combined a pervasive system of political repression with stepsto force-feed export-oriented economic development. Even though the decade as awhole generated high growth rates, social unrest rose toward its endresulting finally in Park's death at the hands of the Korean CIA. The number of strikes and lockouts rose from 276 in 1986 to 3,617 in1987 (2 5). Albany: State U of New York P, 1997.----------------------- 8 Kim points outthat the state in South Korea under Park regime was unusually strong andthat among other differences, the alliance between the state and bigbusiness was much more striking in South Korea than it was, say, in Taiwan.Taiwan was also less hostile than South Korea to foreign direct investment(FDI). The book is an outstanding contribution to the literature of economicdevelopment and is notable for its clarity of expression and its soliddocumentation. Despiteone of the most repressive regimes with regard to labor, South Korea haddeveloped one of the most militant labor movements in Asia's history"(167). Kim is inconsistentin his treatment of this important point. He mentions the corruptionwhich has been associated with real estate speculation and instances ofoutright bribery, which has been a recurrent theme of South Korean politicsand which only Park with his draconian methods appeared to have made muchprogress in curbing. E. Evaluation Kim is very persuasive when he describes how the Park regime was ableto cut through red tape and impose its developmental objectives on asometimes hesitant or risk averse private sector. M. Between 1965 and 199 , its average annualgrowth rate (GNP per capita) was 7.1 percent, one of the highest in theworld (1). Therelationship between the government and the chaebols, the five largest ofwhich by 1987 accounted for over 75 percent of manufacturing GDP, becamemore symbiotic, with the government becoming more dependent on big businessfor political support. . Also he points out that the absenceof a powerful capitalist class in 196 is not present in many areas such asLatin America and that international agencies such as the InternationalMonetary Fund pursue lending policies under which recipient nations are notpermitted to control FDI as South Korea did in the early stages ofdevelopment. The shift to heavyindustry and later to high technology industries increased the size ofcompanies and therefore the mass aggregates of laborers and their level ofeducation and training, which facilitated unionization. In the7 s the Park regime pressed the chaebols to invest in heavy industry, suchas autos, and shipbuilding, and chemicals. Park's central planners,his Economic Planning Board, chose such industries because they utilizedSouth Korea's principal asset, a populous and relatively well-trained andeducated workforce. Chunsucceeded in restoring order, but he was forced to move in the direction ofgreater economic and in the late 8 s political liberalization. The chaebols generally prospered and increasingly were able to fendfor themselves with less assistance from the state. His centraltheses are that: (i) rapid economic development was successfully launchedin the 6 s by the authoritarian government of former General Park Chung Hee(Park) which through its centralized planning and controls over capital,credit and labor guided large industrial firms or chaebols into export-oriented industries in favorable international markets; (ii) in the 7 s theSouth Korean economy made a successful transition from light manufacturingto heavy industry and continued to grow rapidly. According to Kim, two other factors helped speed development: (1)"the alliance formed between the strong developmental state and bigbusiness groups in South Korea helped bring about rapid economicdevelopment. Economic Takeoff in the 6 s. The relationship betweenthe Park regime and the chaebols became more symbiotic and coequal, theregime itself gradually losing legitimacy until finally Park wasassassinated in 1979; and (iii) the developmental nature of the SouthKorean state itself changed under its new military leader Chun Doo Hwan(Chun) (198 -1988), as pressures on the state from the chaebols for lessstate control over the economy and from labor and others for more democracyand welfare spending grew. Comparisons. The logical inference which he fails to draw and whichhas in fact been borne out by experience in the mid to late 9 s is thatcorruption and crony capitalism lead to economic excesses which in turncause the speculative bubble to burst and economic growth to slow andeventually come to a standstill. This leads Kim to make the point that "the changefrom a comprehensive to a limited developmental state in South Koreaentails that the state reduce the scope and content of its involvement inthe economy" (49). M. animportant first step in attaining economic development" (36). Theorganization of labor unions was discouraged and severely repressed,especially under the repressive Yushin system introduced by Park in 1972(2 4). If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.