south korea & taiwan aaron kratzat. south korea syngman rhee economy under rhee based on import...
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South Korea & Taiwan
Aaron Kratzat
South Korea
Syngman Rhee Economy under Rhee based on import
substitution Heavy reliance on US aid Land reform Political concerns drive economy Growth in industrial private sector
Park Chung Hee Military rule beginning in 1961 Movement away from agriculture Consolidation of power & decision-making Normalization of trade with Japan
1970’s Heavy industrialization Dependency on external borrowing Balance of payment difficulties Incentive system
1980’s Return to democracy Trade liberalization Decentralization
Haggard’s summary of Korea Combined import substitution “deepening”
with upgrade of exports in “big push” (128) Financial systems and foreign borrowing,
protection Limited foreign direct investment
Shafer’s summary of Korea Centralization necessary to compete with
multinational corporations Focus on high/high sectors could have
inadvertently helped opposition to military rule
Big industry “supplemented, not supplanted” existing small manufacturing
Taiwan
Taiwan versus South Korea Taiwan had primarily small firms. Less interaction between government and
business in Taiwan Division of government and business
between mainland Chinese and local Taiwanese
Military threat of China for Taiwan
Chiang Kai-Shek KMT retreat to Taiwan in 1949 There face no significant opposition parties Land reform US uses aid as leverage, Taiwan more
receptive than Korea Focus on import substitution
The impetus of export-led growth In 1959, US AID gives $30mil loan to
Taiwan in exchange for small decreases in trade barriers and sale of state businesses to private sector
Haggard’s summary of Taiwan State-owned companies took lead due to
lack of private investment Six year plan of 1976 focused on
technology Government created non-profit
organizations to conduct R&D
Wang’s summary of Taiwan Small firm sizes favor hi-tech industry
rather than heavy industry Strong relationship between information
technology and pre-existing industries IT mitigates deficiencies of single-minded
export-led growth
Questions What are the similarities between South
Korea and Taiwan’s routes to development? How much can these traits be generalized?
What are the effects of the differences in firm sizes between the two countries?
How much did government action and the type of government affect growth?
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