Democratization, globalization, and institutional adaptation: the developmental states of South Korea and Taiwan

Abstract

This paper concurs with Hamilton-Hart and Yeung that in South Korea and Taiwan, the predominance of global production networks, growth of private enterprises, and democratization have placed developmental state institutions under pressure. However, despite the reorganization of the pilot agency and state bureaucracy, new institutions have emerged to take on the functions of policy consultation and coordination. These institutions continue to control ample financial and regulatory resources, which allow state elites to coordinate industrial transformation and mediate global engagement. South Korea and Taiwan, however, differ in their ability to appease sociopolitical conflict and find common ground to defy neoliberal tendency. Moreover, they differ in their preexisting industrial structures, modes of engaging with the global market, and security considerations with respect to mainland China. Given path dependency, the two cases differ in their success in launching new industries and facilitating defensive globalization. Due to this divergence, the two economies hold disparate positions in the global division of labor: lead firms in South Korea, contract manufacturers in Taiwan, and aspiring platform leaders in both cases. Enterprises from these two economies also weave disparate types of production networks, with those from South Korea exhibiting a higher level of functional diversity and geographical expansion.