An East Asian Model of Economic Development: Japan, Taiwan, and South Korea

The use of public resources and powers for particularistic purposes and interests serves as a useful (though not all encompassing) starting point for the definition of corruption.1 This definition ...

Korean Abstract: 남북한과 러시아는 극동지역을 중심으로 지역산업협력에 대한 잠재력이 크 다. 한국의 경우 성장동력을 담당하던 제조업의 위기에 직면하였고 이는 직접 적으로 지역산업의 어려움으로 연결되고 있다. 이에 따라 각 지방자치단체와 지역산업단지는 북한과의 경제협력을 위한 자체 사업을 구상 및 이행함으로써 현재의 위기를 돌파하고자 하고 있다. 북한의 경우 제재와 경제난으로 구체적 성과를 거두지는 못하고 있지만 남북ㆍ북중 접경지역에서 내륙 및 연해지역으로까지 지방공업개발구를 확대하고 있 으며 산업분야도 지역별 비교우위에 따라 배치하여 균형적 산업발전을 도모하 고 있다. 러시아의 경우 오랫동안 극동지역의 산업화와 경제성장을 추진해왔는 데 이를 위해서 동아시아 경제권으로의 효과적인 편입을 핵심 과제로 삼고 있 다. 이는 1990년대 시장경제 도입 이후 러시아 정부가 극동지역에서 추진해온 제조업 육성 정책과 동일한 의미를 가진 것으로 이해해야 한다. English Abstract: This research focuses on the need for South and North Korea and Russia to actively promote regional industrial development policies in the Far East area. From this perspective, the purpose of this study is to suggest the direction and measures of industrial cooperation between the three countries through connecting their regional development policies with industrial policies. To realize this goal, this research analyzes and assesses the current situation of regional industrial development policies by each country, and suggests measures for mutual connection between their regional industrial development policies, also proposing the future direction of this triangular cooperation. The focus of this discussion is to explore promising approaches to constructing an industrial cluster in Northeast Asia based on the regional development policies of each nation. In this sense, preparation for triangular linkage is a basic task for constructing the industrial cluster. In particular, triangular cooperation could support North Korea’s economic development, and also secure the effectiveness of Russia’s Far East policies and South Korea’s industrial competitiveness in the Northeast part of North Korea.

This article hypothesizes that economic reforms become sustainable when the discursive conditions prevailing in society tip against the existing paradigm under exceptional circumstances. Thus, unless the pro-liberalization constituencies dominate the development discourse, economic reforms, initiated under the exigencies of crisis and conditionalities, or carried out by a convinced executive with or without the stimulus of a crisis, will be reversed. The discursive conditions are determined based on eight factors: the dominant view of international intellectuals, illustrative country cases, executive orientations, political will, the degree and the perceived causes of economic crisis, attitudes on the part of donor agencies, and the perceived outcomes of economic reforms. The paper seeks to prove this “discursive dominance” hypothesis for the Indian case through a cross-temporal, comparative review of the evolution of economic policy in India over six different phases.

The paper argues that an economy's industry/technology structure is endogenously determined by the economy's endowment structure. For the convergence to occur, the government of an LDC should target the upgrading of endowment structure instead of the industry/technology structure in its development strategy. If the government chooses to pursue an industry/technology structure, which is inconsistent with the comparative advantage determined by the economy's endowment structure, the firms in the government's priority sectors will be nonviable and the government needs to suppress the function of market and distort all kinds of prices as a way to protect the nonviable firms. Convergence will fail to occur as a result. Regression results from cross-country panel data are consistent with the predictions of the above arguments.

“Climb up” the global division of labour ladder or upgrading the economic structure is a very hard job, requiring a smart industrial policy with the capability of choosing key sectors suitably and having appropriate and effective policy to allocate resources to these sectors. When climbing up, some countries may skip several levels with the support of appropriate industrial policy, but they can slip if they try to jump too many steps at once with the rush of industrialization. Based on an analysis of the academic perspectives related to industrial policy and evidences from the sector selection process as well as the mechanism for allocating resources for the development of key South Korean industries, the paper will draw some important lessons for developing countries, including Vietnam, in order to bridge the gap with leading nations.
 Keywords
 Resource allocation, industrial policy, South Korea
 References
 [1] Lin, J.Y., 2012. New structural economics: A framework for rethinking development and policy. The World Bank.[2] Kuznets, S, Murphy, J. T. 1966. Modern economic growth: Rate, structure, and spread, Yale University Press New Haven.[3] Mah, J. S. 2007. Industrial policy and economic development: Korea’s experience. Journal of Economic issues, 41, 77-92.[4] Njue, N. 2010. The Role of the Government in Resource Allocation: Korea vs. Kenya. Master, KDI School of Public Policy and Management.[5] Stiglitz, J. E., Lin, J. Y., Monga, C. 2013. Introduction: the rejuvenation of industrial policy. The Industrial Policy Revolution I. Springer.[6] Lin, J. Y., Monga, C. 2014. The evolving paradigms of structural change. International Development: Ideas, Experience, and Prospects.[7] Winters, L. A., Lim, W., Hanmer, L., Augustin, S. 2010. Economic growth in low income countries: How the G20 can help to raise and sustain it. University of Sussex, Brighton.[8] Ohno, K. 2009. Avoiding the middle-income trap: renovating industrial policy formulation in Vietnam. ASEAN Economic Bulletin, 26, 25-43.[9] Lin, Y. J. 2013. The industrial policy revolution I: The role of government beyond ideology, Springer.[10] Baldwin, R. E. 1969. The case against infant-industry tariff protection. Journal of political economy, 77, 295-305.[11] Saure, P. 2007. Revisiting the infant industry argument. Journal of Development Economics, 84, 104-117.[12] Westphal, L. E. 1990. Industrial policy in an export propelled economy: lessons from South Korea's experience. The Journal of Economic Perspectives, 4, 41-59.[13] IMF DataMapper, 2018. GDP per capita, current prices, [Online], Available at: https://www.imf.org/external/datamapper/NGDPDPC@WEO/ADVEC/WEOWORLD/KOR; Accessed 21/11/2018. [14] AHN, S. 2013. Evolution of Industrial Policy and Green Growth in Korea. World Trade Organization. March, 12.[15] Cooper, R. 1970. Fiscal policy in Korea. Macroeconomic policy and adjustment in Korea, 1990, 111-144.

Although policy priority has always been on economic development in East Asian countries, these countries have also experienced some state intervention in environmental issues. However, explanations for the development of environmental policies in these countries have been relatively sparse compared with those of their industrial policies, The author attempts to widen our understanding of environmental-policy development in East Asia by examining one notable state intervention in pollution issues in South Korea—the evacuation of the pollution victims of Ulsan and Onsan in the mid 1980s under the authoritarian Chun Doo-Hwan regime. This Korean case study shows a pattern of policy development primarily driven by particular ‘interests' (the perceived political-survival needs of state elites), with changes in external conditions, policy legacies, and policy efforts playing supplementary roles. In particular, the state intervention is interpreted as an anticipatory concession to the pollution victims by the state elites who aimed to stabilize their regime by alienating the victims from antiregime activists. The author also indicates the possibility of applying the theories established in the context of liberal democracy to authoritarian political regimes, and draws attention to the change and continuity in the development of environmental politics and policy in East Asia.

Industrial policy has moved into the center of debates on climate policy, as the EU’s Green Deal, China’s green industrial strategy, President Biden’s climate agenda, and green stimulus packages such as South Korea’s reflect. This represents a shift away from climate policy as we know it—as classic environmental policy. Industrial policy and environmental policy differ in their policy goals, policy instruments, and distributional effects. One primarily concerned with economic development, the other with cutting greenhouse gas emissions. This raises questions about policy interactions between industrial and environmental policy in broader climate policy mixes, and how these effect global decarbonization. This paper identifies complementary and conflictual dynamics between industrial policy and environmental policy in both domestic and international climate politics. It shows how green industrial policy can advance climate goals and cooperation, but can also present challenges to deepening climate cooperation and reducing greenhouse gas emissions. Developing an understanding of policy interactions is central to leveraging the potential of industrial policy to accelerate global decarbonization.

Kim and Lee (2015) presume that the difference of government science and technology policies between East Asian and Latin American countries is attributed to the contrasted patterns of economic performance between the two regions, that is the Asian miracle versus the middle income trap in Latin American countries. It is shown that a relatively greater performance in scientific output, measured by Science Citation Index journal intensity, is found in Latin American countries, but that this does not lead to higher technological output as measured by patents and industrial research and development compared with East Asian countries. Kim and Lee (2015) provide detailed information on the science, technology, and innovation policies of the two regions (focusing on Korea and Mexico), and explain the difference in the scientific and technological performance of the two regions. That is, public support for scientific activities is strong, but policies promoting the innovation capability of indigenous firms are relatively weak in Latin American countries, while public research institutions, such as the Korean Advanced Institute of Science and Technology (KAIST) in Korea, play a significant role in enhancing the technological capacity of the private sector in East Asian countries. Finally, Kim and Lee (2015) empirically investigate the role of scientific and technological knowledge in economic growth by using a panel dataset of 58 countries. Uncovering the source of economic growth empirically is a subject attracting a large number of scholars. As well as regular factor inputs, such as physical and human capital (including the quality of these factors), various factors related to political, legal, and economic institutions, such as the degree of legal enforcement, political stability, and financial market development, are shown to be explanatory variables of the economic growth of nations. However, the economic growth rate of East Asian countries is found to be significantly higher than the other countries, even after controlling for these factors (Barro & Sala-i-Martin, 2003). Kim and Lee (2015) is highly valuable in the sense of shedding new light on the issue of the East Asian model of economic growth from the perspective of national innovation systems. Their main argument is that universities and public research institutes play an important role in the technological catching up of domestic firms to their competitors in developed countries. In Japan, the Agency for Industrial Science and Technology, affiliated with the Ministry of Economy, Trade and Industry (METI), is one of the government agencies playing a key role in the industrial technology development in electronics, machinery, and chemical industries. In addition, the public research institute can be a body to spin out its industrial innovation in Taiwan and China as well. Adding them to the example of Korea, such as KAIST in Kim and Lee (2015), I would agree with the authors' argument. In fact, this paper is a great contribution by creating a new horizon of academic research on the Asian economic model. However, it opens up a substantial number of questions at the same time. First, the role of government policy in technological catching up in East Asian countries is still under discussion. For example, in Japan, there are mixed towards the role of METI's industrial policy in economic development (pros by Johnson, 1983; cons by Friedman, 1988). The anti-industrial policy school stresses the ability of Japanese firms to cope with stiff market competition by assimilating foreign technologies effectively. Without firms' capacity for absorbing technology, their rapid catching up to their Western competitors could not have happened. Second, technological innovation does matter for manufacturing competitiveness, while the share of manufacturing outputs goes down to less than 30% in Japan and Korea. It is true that manufacturing competitiveness explains export-led economic growth in East Asian countries, but in Kim and Lee (2015) there is still a missing link on how technological development in the manufacturing sector contributes to overall economic growth. Finally, a more relevant question to be posed for us is how the “Asian model” copes with the globalization era in the 21st century. Since Japan and Korea have developed to become Organisation for Economic Cooperation and Development countries, the question is not how they catch up to the front-runners, but how they shift out their frontier curve as front-runners. Of course, this question is outside the scope of Kim and Lee (2015), but it would be nice if any implications for the future of East Asian economy could be drawn out of their paper. I would argue that it will be difficult to deal with the “science-based economy” in the 21st century using the current “Asian model” based on manufacturing.

PART I: INTRODUCTION AND OVERVIEW 1. Strategies for African Development PART II: GOVERNANCE, INSTITUTIONS AND THE STATE 2. Governance and Growth: History, Ideology and Methods of Proof 3. Institutional Monocroping and Monotasking in Africa 4. Governance and Growth Challenges for Africa 5. States and Markets: Neoliberal Limitations and the Case for a Developmental State 6. The African Economic Growth Record, and the Roles of Policy Syndromes and Governance PART III: TECHNOLOGY, INDUSTRIAL AND TRADE POLICIES 7. Dynamic Capacity Development: What Africa Can Learn from Industrial Policy Formulation in East Asia 8. How can Low-Income Countries Accelerate their Catch-up with High-Income Countries? The Case for Open-Economy Industrial Policy 9. Institutional Capacity and Policy Choices for Latecomer Technology Development 10. State-Business Relations, Investment Climate Reform and Economic Growth in Sub-Saharan Africa 11. Africa, Industrial Policy and Export Processing Zones: Lessons from Asia 12. South African Post-Apartheid Policies Towards Industrialization: Tentative Implications for Other African Countries 13. Issues in Africa's Industrial Policy Process 14. Tiger, Tiger Burning Bright? Industrial Policy Lessons from Ireland for Small African Economies PART IV: EMPLOYMENT AND HUMAN CAPITAL 15. Employment in Sub-Saharan Africa: Lessons to be Learnt from the East Asian Experience 16. Skills Development for Economic Growth in Sub-Saharan Africa: A Pragmatic Perspective PART V: INTERNATIONAL CONTEXT 17. Economic Liberalization and Constraints to Development in Sub-Saharan Africa 18. The Emerging Asian Giants and Economic Development in Africa

PurposeThe purpose of this paper is to determine whether the evolution of industry structure in the World Bank’s eight high performing Asian economies (HPAEs) displays the U-shaped relationship between manufacturing concentration and per capita income widely held to foster economic development. Increasingly prosperous HPAEs have long been hailed as models for success by other emerging economies. Focusing on a regional group of high performing economies enables us to relate policies used by successful HPAEs directly to observed patterns of manufacturing diversification and provide policy guidance to emerging economies.Design/methodology/approachA robust locally weighted scatterplot smoothing procedure is employed to generate the U-shaped relationship between manufacturing concentration and level of economic development. Policies used by the most successful HPAEs are discussed.FindingsThe relationship between manufacturing concentration and level of economic development is found to be U-shaped. Diversification of manufacturing is a prerequisite for successful economic development. Countries further along the economic development path such as Japan, South Korea, and Taiwan made extensive use of active and selective interventionist policies to diversify manufacturing before eventually specializing in a narrower range of export activities.Practical implicationsEmerging economies should follow examples set by the most successful HPAEs that demonstrated significant government assistance is required to foster economic development.Originality/valueThe paper is the first to investigate the evolution of manufacturing concentration over the economic development path HPAEs. Success enjoyed by HPAEs holds important lessons for developing and emerging economies.

This book applies and develops the concept of “ersatz capitalism” in the analysis of industrial policy blockades to economic development in Malaysia and Indonesia. Drawing on insights from international political economy, development studies, industrial and innovation policy, and new institutionalism to refer to a specific type of capitalism, the book analyzes different paths and institutions of economic development within the entire East Asian region. Comprehensive theoretical insights are complemented by empirical case studies that relate to country and sectoral studies – the automotive and ICT industries – in Malaysia and Indonesia. Applying contemporary research on international political economy to refer to a specific type of capitalism, the author examines how conflicts of interest between factions of state apparatus, associations, and companies contribute to the failure of developmental policies. The unique combination of theory formation and empirical analysis provides a novel approach to international comparative research on capitalism. The book will be of interest to researchers in the fields of international political economy, development studies, new institutionalism, East Asian and Southeast Asian studies, and industrial and innovation policy.

Enthusiasm for industrial policy as a means of sure and rapid economic development needs to be tempered by a careful study of events. Upon scrutiny, the experience of rapid economic development of South Korea in the 1960s and 1970s reveals that the oft-cited anecdotal evidence for the efficacy of industrial policy is open to more sobering interpretations, that the framework of economic development in Korea was created not so much by planning but as a result of political processes which created the ruling elites whose interests were not inconsistent with economic development, that the political changes coincided with many favorable circumstances, that when industrial policy was tried in earnest it failed miserably, that Korean economic development is not particularly spectacular when compared to other Pacific Rim countries that had a less heavy-handed approach, and that increasing numbers of Koreans realize that a free market approach may be the most effective ‘industrial policy’.

tractor and the use of mechanical irrigation is increasing in the countryside. The significant policy issue is the role of government in encouraging or discouraging continued labor-saving mechanization. Present policy substantially encourages mechanization; diesel oil is available at prices considerably lower than those in many other countries; village banks provide farmers with equipment loans at rates below commercial levels; machinery is imported at favorable foreign exchange rates and is exempted from import duties. The most telling impact of these policies has been on the rapidly growing use of tractors and irrigation pumps, both of which are believed to displace labor, especially that of children. This article addresses the question of whether such changes have indeed had the desired effect on child employment and family size. Recent developments in the Egyptian agricultural sector also reveal significant changes in crop patterns. These favor fruit and vegeta

Katharina Pistor and Philip A. Wellons, The Role of and Legal Institutions in Asian Economic Development, 1960-1995. New York: Oxford University Press, 1999. Pp. xi + 294 pages. $39.95 cloth. Kanishka jayasuriya, ed., Law, Capitalism, and Power in Asia: The Rule of and Legal Institutions. New York: Routledge, 1999. Pp. xiii + 345 pages. $99.99 cloth; $32.99 paper. Robert S. Brown and Alan Gutterman, Asian Economic and Legal Development. Uncertainty, Risk, and Legal Efficiency. Boston: Kluwer International, 1998. Pp. xv + 477 pages. $148.00 cloth. The relationship between law and economic development has been a central concern of modern social theory, providing a focal point for the analyses of Marx, Durkheim, and Weber. In the 1970s, law and society scholars drew on these traditions to inform international development policy in what was then called the Law and Development Movement. These scholars, who focused primarily on Latin America and who were informed by an activist vision of law as a tool for social change, sought to export U.S. models of law and legal education, suggesting the possibility of a theoretically informed development policy focused on law (Tamanaha 1995). The and Development Movement ultimately fizzled (Gardner 1980; Trubek and Galanter 1974), and with it went the budgets for legal policy reform in developing countries. Donors turned their attention elsewhere. However, new theoretical developments, as well as the lingering importance of the underlying questions, have given momentum to a new wave of law and development activities on a far larger scale than ever before (deLisle 1999). Today, the relationship of law and economic development is again at the very forefront of development policymaking, as government agencies, international organizations, and the non-profit sector advocate the need for strengthening the rule of law in developing countries. Although it is probably a mischaracterization to assert that the new activity is institutionally and intellectually cohesive enough to form a movement, it is clear that legal institutions occupy a central place in development assistance again (deLisle 1999:212-15). The resurgence of law and development corresponds with renewed interest in the rapid postwar growth of economies in East and Southeast Asia. By most accounts, law has not played a major role in Asian economic growth. Scholars have placed more emphasis on particular policies, institutions, and cultural underpinnings rather than on law per se (Upham 1994). For example, in its monumental study, The East Asian Miracle, the World Bank (1993) does not discuss the legal system. Preliminary evidence from Chinese economic reforms indicates that, for the most part, increased reliance on legal ordering has not displaced a system of economic organization based on connections, or guanxi (Lubman 1996; Jones 1994). Having drawn on evidence from Asia, some have claimed that the rule of law is dispensable in the pursuit of economic growth (see Davis 1998:304). There is clearly a tension between the centrality of law in theories of development and existing evidence from Asia. There are at least two possible resolutions of this tension, one empirical and the other theoretical. One possibility is that existing evidence is insufficient and that a more detailed study of Asian legal institutions would elucidate their central importance in Asian growth. The other possibility is that theoretical assumptions of donors and scholars about the universal importance of legal institutions are mistaken and that there is a need to adjust conceptual frameworks accordingly. At the broadest level, then, the questions of whether and how law matters for economic growth in Asia are of great importance for both theory and practice. Three recent studies address these questions in different ways. Together, they expand the empirical base for the study of Asian economic law and suggest new directions for policymakers concerned with the role of law in development. …

The development of low-carbon economy was a common choice under the situation of environmental pollution and energy shortages. Industrial policy was an effective policy to promote the development of low-carbon economy. Based on energy intensity and the relationship between energy intensity and industrial policy, had an empirical analysis between the relationship of Chinese industrial structure and development of low-carbon economy. Learned from Japanese industrial policy in promoting the development of low-carbon economy, come to the result that adjusting the industrial structure, technological innovation and the development of tertiary industry were important industrial policies of Chinese development of low-carbon economy.