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KOREAN & LATIN AMER. ECONOMICS.   Term Paper ID:24860 Click to get this paper

Essay Subject: Examines & compares development, industrialization, history, role of govt., politics, theory, liberalization, exports, culture, future.... More...

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Paper Abstract: Examines & compares development, industrialization, history, role of govt., politics, theory, liberalization, exports, culture, future. Paper Introduction: The most fundamental global social and economic issue of the 21st century is likely to be the same as it has been for much of the 20th century, namely how the world's poor nations and regions can match the general level of economic development that characterizes the world's rich nations. In the 19th century and the the first half of the 20th, a profound gulf opened between the industrialized societies, all of which were at that time European or settled by Europeans, and the rest of the world's peoples, who remained in a largely agrarian, premodern economic regime. Japan was the first nonwestern society to become first a political Great Power, and by the 1960s an emergent economic Great Power as well. In the course of the 20th century, several Latin American countries also reached an intermediate level of 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 Kincaid, A.D., and Portes, A., ComparativeNational Development: Society and Economy in the New Global Order.Chapel Hill: University of North Carolina, pp. InSouth Korea, as in Taiwan, land reform in the 195 s had eliminated theinfluence of the class of large landowners (Haggard, 199 , p. In Meller, P., ed., The Latin AmericanDevelopment Debate: Neostructuralism, Neomonetarism, and AdjustmentProcesses. The interaction among such weak states and dominant elites in LatinAmerica has been shaped by the particular development history of theregion. However, itis precisely Korea's rapid growth that fundamentally underminedauthoritarian government itself: The remarkable economic growth in South Korea under the authoritarian regimes brought about a Lipset phenomenon. The phrase "Japan, Inc.," often used to characterize Japaneseeconomic strategy and structures, could thus equally well be used tocharacterize that of South Korea. In both regions ... Asian Perspectives, 12, pp. 47). In the neoliberal view,the only sound strategic decision in the long run is for the state to forgothe "discipline" of subsidy rewards and punishments entirely, and insteadsubject the economy to the discipline of the marketplace. The same author goes on toclarify what is meant by discipline: poor performers have been punished byremoval of their subsidies--an action often tantamount to signing theireventual death-warrant as firms or whole industries. 27-39.Mommen, A. Whenthese expansionist policies began to falter, the technocrats offered anexit (Haggard, 199 , p. Korea in the 196 s faced global markets that wereeager for its products, an opportunity not open to, say, Chile in the193 s. In sharp contrast, though, to the export-oriented strategy of SouthKorea, which centered on industrial products, the Chilean export strategycentered on natural resource-intensive exports from the agricultural andmining sectors. This discussion will consider initially the first of these neoliberalcriticisms, and aspects of the third, leaving aside for the time being thevery important question of whether and how state economic managers canarrive at correct strategic decisions. 47). 26-51.Haggard, S. More importantly in terms of high-speed growth,both the Confucian and Ibero-Catholic traditions have existed forcenturies. H. 24). New York: Oxford.Gereffi, G. Japan was the first nonwestern society to become first a politicalGreat Power, and by the 196 s an emergent economic Great Power as well. As it turned out, though,they lacked any definite agenda of their own. Only successfulperformers qualify for the continuation of favored treatment (Amsden, 1989,p. The economic strategies followed by South Korea and other East Asianemergent industrial powers have shown a fairly consistant pattern ofdifference from those followed in Latin America. 93). In Mexico and Brazil, for example, "a large, protected domesticmarket shaped the political demands of the domestic private sector, whichdisplayed greater political independence than its counterparts in Taiwan,Singapore, and Korea" (Haggard, 199 , p. 147-48). Armonk, NY: M.E. 74). The neoliberal critic will immediately identify at least three basic,theoretical problems with the assumption that the state's ability to rewardor punish by the granting or withdrawing of subsidies is a reliable key toeconomic development, in East Asia or anywhere else. In other words, the South Korean military leadership of the late195 s and early 196 s began with a program of buying patronage support fromfavored groups, only to discover quickly that this program failed to securethe overall economic progress needed to secure social stability. "And in a society hungry to catch up, with a steadfast faith in thevalue of education, the practical knowledge that [technical experts]wielded went a long way toward winning them influence and esteem" (Amsden,1989, p. How do they gainsuch prestige? 79-96.Pyo, H.K. In Latin America, a divergent set of culturalnorms based upon an Ibero-Catholic heritage has been identified asimpeding the economic advancement of the region (Gereffi, 1994, p. A policy of market-orientedliberalization, as much as any other development policy, requires a statestrong enough to resist pressures from influence sectors and interestgroups to distort the market structure in their favor. This,however, only underlines the strength of the state taken as a whole: theeconomic planners were free to follow their own strategic program, ratherthan being subject to the personalistic whim of a leader. 162). More will be said about this inclination towardtheory below. On the other hand ... 35-65.Lin, Ching-yuan (1989). "In Korea, Japan, and Taiwan ... 74). 29). changes in the internal balance of power within the bureaucracies played a role in the ability of the chaebol to gain leverage vis-a-vis the politicalcenter (Hwang, 1996, p. If they aresubject to extraneous pressures, the chosen strategy will become distortedin practice, whether the pressure is to grant favors to a leader's familymembers, to powerful industrialists, to unions or other representatives ofthe interests of urban workers, to peasants or landowners, or to any othergroup or sector. The paradox is not a real one, however, because it ispredicated on the assumption that the state is the only social actor withan interest in interfering with the market. 39). The chiefpotentially independent actors were the large industrial conglomerates, thechaebol. 71). 28-47.Nam, C. 65). "The economic thinking ofthe military was vague, however. In much of this period, and especially the keyeconomic growth period of the 197 s and 198 s, the major Latin Americanindustrializing countries were also characterized by authoritariangovernment. 51-93.Hwang, K.K. Inthe course of the 2 th century, several Latin American countries alsoreached an intermediate level of development, not yet quite rich andmodern, but no longer entirely poor and backward. It is true that all such interests seek to use the state machinery,capturing it and turning it to their own ends. Nor does the markedly good performanceof Latin America in the 199 s. Animplicit moral contrast is drawn between dour, virtuous Protestants, orConfucians, working long hours, and ne'er-do-well Latin Catholics takinglong lunches in sidewalk cafes. Ithaca, NY: Cornell, pp. the state has usurped the domain of the traditional private entrepreneur by making milestonedecisions about what, when, and how much to produce. Deindustrialization and industrial restructuring inLatin America: the examples of Argentina, Brazil, and Chile. This constitutes not a failure of development strategy, however, butan inevitable consequence of success. State planners made the key decisions,and these were carried out by a corps of professional managers who wereessentially in step with those planners. What is required is for the economicpolicymaking apparatus to be insulated from short-term political pressures,and for the democratic institutions to enjoy sufficient public prestige tosustain that independence (Haggard, 199 , pp. East Asia: A ComparativeDevelopment Perspective. The world's most advanced economies,such as that of the United States, do not sustain growth levels of 1 percent, or even 5 percent, and it is not to be expected that maturing lateindustrializers would do so either. Latin American development policy, like itsdevelopment thought, has been markedly ideological, to the point ofstressing formal consistancy and ideological purity above practicalresults: In Chile and Argentina, liberalization "failed partly because ofthe lack of pragmatism in the management of economic policies ... It is arguable that import-substitution is an inevitablestrategy in the earlier stages of industry formation. It is tempting to find an element of pessimism in dependency theory.It is after all a theory not so much of how countries develop as of howtheir development may be limited by external constraints against which theystruggle largely in vain. 8 ). If theKorean development experience is an example, this achievement may be ofmore consequence than the specific strategy chosen. In practice, however, the chaebol themselves were in a dependentrelationship with government. While important common threads can be identified among Asiandevelopment strategies, it is by no means certain that these common threadsare by themselves a sufficient explanation of Asian success. In South Korea, through most of its period of rapid growth, asuccession of rightist authoritarian governments successfully repressedurban labor interests, while a combination of prior land reforms andgovernment-controlled farmer groups kept rural interests at bay. Industries capableof challenging world competition, even from a competitive advantage of lowwages, cannot spring into being without some prior industrialinfrastructure and experience, and this initial experience can most readilybe gained by catering to local markets through import substitution. Instead, the latter may indicate that,having moved beyond the political turmoil and authoritarianism of the 197 sand 198 s, Latin American democracies have reached a level of strength andautonomy from client-like relations with powerful internal sectors thatthey can pursue development strategies free from interference. 82). The economic policy managers thus gained autonomy by default: Theauthoritarian government, largely free of outside pressures and lacking anyeconomic strategy of its own, consigned economic management to thetechnocrats, who found themselves with great freedom to act as they sawfit. In no part of the developing world, perhaps, has more persistantattention been paid to the theory of development than in Latin America;dependency theory, for example, is a distinctively Latin Americanconceptual invention. Instead, as they reach maturity, theirgrowth levels will drop off to a level comparable to that of the developedworld as a whole. The state, politics, and economicdevelopment in postwar South Korea. Through the period in question,South Korean development was consistantly dirigiste: "Every major shift inindustrial diversification in the decades of the 196 s and 197 s wasinstigated by the state" (Amsden, 1989, p. This discussion will return below to the respective roles of ideologyin Latin American and East Asian development. objective of the neoliberal offensive was to put an end to the historical alliance among the industrial bourgeoisies,government technocracy, and the associated working classes--in otherwords, to break with the form of overall regulation built on the basis of industrializationprocesses (Ominami, 1991, p. That is, the power and autonomy of the economic planners was suchthat they not only could assign rewards and punishments among firms andindustries in the private sector, but could also exercise mediation betweenthe private sector and the central authority of the presidency. 47). Sharpe.Lustig, N. 43). "During South Korea's remarkable economicgrowth period, the relationship between the state and big business leadershas been comparable to that between a domineering patron and an obedientclient" (Nam, 1996, p. Boulder, CO: Westview, pp. Latin American interest in neoliberal theory was directly related tothis historical consciousness. Only in retrospect was it obvious that the Sovietshad guessed wrong, and that steel mills would not equate to economicleadership in the 196 s, 197 s, and 198 s. We have seenthat the relationship does not apply in the other direction--authoritarianregimes are not necessarily autonomous from interest groups--but aredemocratic regimes precluded from such autonomy? 18.) The suggestion that a strong state is a prerequisite even for aneoliberal development is at first glance paradoxical, since the rhetoricof neoliberal theory usually treats the state as a threat, ever ready tointerfere with the actions of the free market, and needing to be restrainedfrom doing so. In general, an import-substitution strategy favors urbansectors and disadvantages rural sectors; import substitution produces asheltered market for urban products on the one hand, and on the other handimplies high tariffs and consequent disadvantaging of agricultural exports. (1995, April). Even Mexico, long protectionist and oriented toward importsubstitution to a greater degree even than other Latin American countries,has in the 198 s and 199 s embarked upon an export strategy (Haggard, 199 ,p. The rapid growth of the East Asian NICs has refocused attention onthe role of cultural factors [author's emphasis] in national development.Various writers have recently argued that Confucianism confers certain advantages over other traditions in the quest for economic development. It is fair to observe that when Latin American countries chose tocontinue an import-substitution model past the initial stage, in the 193 s,the export option was then much less open to them in the depressed globaleconomy of the time. (1993, Winter). Boulder, CO: Westview, pp. Three historical patterns of developing-country growth can be distinguished: an import-substitution trajectory,characteristic of Mexico and Brazil and several other large LDCs; an export-led growth trajectory, of which Korea and Taiwan and the most successful cases; and a relatedentrepot path, of which Singapore and Hong Kong are examples (Haggard, 199 , p. However, around 196 , declining aid from the United States pushedSouth Korea in the direction of an export strategy, as substitution for theforeign exchange previously supplied by aid (Haggard, 199 , p. One was the nearbyexample of Japan, which was just at that time establishing itself as amajor, first-class industrial power through an export-led strategy. What, however, comes next? On the one hand ... Industrial value added percapita was lower in the Chilean economy in 1981 than it had been in 197 ,and six percent below that of 1973 (Kim and Geisse, 1988, p. For example, there is astriking difference between the styles of literature on economicdevelopment that come out of the two regions. South Korea's big business clientelism indemocratic reform. However, it is onething to speak of a degree of de-industrialization in a very advancedcountry, as resources are shifted into post-industrial, modern service andinformation sectors, and quite another in Chile of the 197 s, where de-industrialization meant at least some reversion to raw-goods exports. (1991). Rural interests may seek to setagricultural prices artificially high, or urban interests to set themartificially low. All too often the state, even ifauthoritarian, has been a captive of other social groups. Because Confucian beliefs place a highvalue on hard work, loyalty, respect for authority, and punctuality, these characteristics are thought to have facilitated the national consensus around high-speedeconomic growth ... The Asian Miracle: a critical reassessment. The sudden Asian economic downturn in thefall of 1997 has cast at least a temporary pall on the "Asian miracle."The possibility of at least a slowdown had in fact been foreseen:"Enthusiasm about Asia's booming economy deserves to be criticized, becausethis achievement was reached in large part through an astonishingmobilization of resources and nowadays their growth may run intodiminishing returns" (Mommen, 1996, p. By the 197 s, the growth of Korea's export sector had reached thepoint at which the government's economic planners chose to adopt a policyof outward liberalization (however constrained by "hidden" barriers toimports). Theoutward appearance of strong government--even authoritarianism--is in andof itself no indicator of a strong state. Whether the Chilean state was really so autonomous with respect topowerful interest groups within Chile is perhaps open to question; whilethe authoritarian Pinochet regime was effective in repressing laborinterests, it had extensive ties to Chile's conservative economic elite. That is, the newly industrializedcountries do not need to discover the industrial and technologicalrevolutions; instead, their need is to learn from and master previousexamples. The most fundamental global social and economic issue of the 21stcentury is likely to be the same as it has been for much of the 2 thcentury, namely how the world's poor nations and regions can match thegeneral level of economic development that characterizes the world's richnations. For now, however, attentionwill be shifted to specific historical factors that distinguished thedevelopment experience of the two regions. In contrast, Korean economic development policy, and East Asiandevelopment policy in general, has been markedly indifferent to ideologicalconsiderations per se; even market liberalization, when followed, seems tohave been adopted as a path of convenience rather than out of belief infree-market theory. (1994). 44).Indeed, the position of the technocrats gave them a crucial role ofleverage. The economic bureaucracies often acted as the nexus between the political policy of the presidency--and rising monopolistic capital in the form of the chaebol(conglomerates) ... Failedstates are no models of economic development. The political economyof outward liberalization: Chile and South Korea in comparativeperspective. This argument is strikingly suggestive of the long-standing beliefthat a "Protestant ethic" lay at the root of the original capitalist andindustrial revolutions in Britain, Germany, and the United States. Whether Latin America will, in the coming decade or two, match thedevelopment experience of East Asia in the past couple of decades andachieve "takeoff" to fully developed status remains to be seen. The ... (199 ). It has been observed that "industrialization" in the narrow sense isno longer synonymous with economic development and modernity. From structuralism to neostructuralism: the searchfor a heterodox paradigm. In the 21st century, the transition to development may be marked bycomputer networks rather than steel mills, but the themes of learning andadopting will remain essentially unchanged. It may be, though, that less broad-brush cultural factors can beidentified, perhaps indirectly rooted in deeper cultural traditions but notin themselves identical with such traditions. As a result, instead of stimulating further industrialdevelopment, the effect of the Chilean liberalization and export strategywas to cause a degree of de-industrialization. A frequent characteristic of Latin America has been the absence of astrong state, that is, an autonomous one. In the case ofrightist-authoritarian regimes, this has typically meant an alliance oftraditional elites--landowners and the military--with a newer elite ofindustrialists, all of whom had a common interest in suppressing labor andpeasant movements, and formed a coalition to that end. In the 195 s, Korea followed an import-substitution industrializationstrategy, as Latin American countries had at a similar stage ofdevelopment. Rethinking development theory: insights from EastAsia and Latin America. South Korea's bureaucracy and theinformal politics of economic development. Asia's Next Giant: South Korea and LateIndustrialization. The major Latin American countries had entered nascent industrialdevelopment by the 192 s or even earlier, but the depression of the 193 slimited their raw-materials and agricultural exports, and thus limitedtheir access to foreign exchange. A strong state means anautonomous state, one resistant to capture by other groups in society. 36). Of these, the entrepot path can be ruled out as a general developmentstrategy; it is applicable only to city-states without a significant ruralsector, the opposite of the situation in most of the developing world. Liberalization in the Developing World:Institutional and Economic Changes in Latin America, Africa, and Asia.New York: Routledge, pp. The newChilean strategy centered not on export substitution, as previous policiesin that country had for more than a generation, but on liberalization oftrade and encouragement of exports. Embarrassingly, early policies seemed tomirror the Rhee pattern of building support by dispensing largesse. Asian Survey, 36, pp. 36). In rising degree oftheoretical generality, these problems are as follows: 1) How does one ensure that the state's discipline, its power ofreward or punishment through subsidies, is exercised according to rational,objective criteria, and not according to extra-economic factors rangingfrom the purely personal, such as outright nepotism (as in contemporaryIndonesia), to the political, such as rewards to groups or sectors that areviewed as reliable friends of the regime. The question thus arises whether the Korean and other East Asianexperience from the 196 s on is a model that can be adopted by otherdeveloping regions, or whether that experience was a special case, due toeither historical accidents or cultural factors that cannot be readilyreplicated. One school of thought regarding Asian development identifies a commoncultural heritage, often refered to in shorthand as Confucian, and arguesthat this cultural heritage was the crucial--and implicitly unique--factorin rapid East Asian development. 357-66.Ominami, C. 188). Even more fundamentally, though, dependency theory--and indeed allthe "intellectual efforts" that Lustig speaks of--are doctrinal,ideological, and almost philosophical in nature. in Taiwan and South Korea, for example, Taoism and Buddhism aswell as Confucianism have important followings .... 4). (1996, March). This is in sharp contrastto Korean and other East Asian writing on development. K., and Geisse, G. This policy choice was made almost contemporaneously with asimilar choice in Chile, and under rather similar political conditions: A common feature of Chile's and South Korea's outwardliberalization reforms was their associatio with highly centralized andrepressive state structures, and with a high degree of insulation of the economic policy-making elitefrom interest groups in society" (Kim and Geisse, 1988, p. The other factor was the global economy, which was booming in the196 s. From the 195 s through the late 198 s, South Korea had anauthoritarian government. A strong state asas much needed to provide the market the freedom to get prices (including,for example, interest rates) "right," as much as to deliberately get prices"wrong" (Amsden, 1989, pp. WhileLatin American growth has been exemplary in recent years, mass poverty anduneven development continue to plague the region. The argument will be made that theability of state economic managers to make rational and disinteresteddecisions depends fundamentally on the strength of the state--and that thisis as true of a state decision to adopt neoliberal policies as of anydecision to adopt and carry out an explicit industrial policy. Certainly nothinghas come out of East Asia to compare with the somber elegance of dependencytheory. In South Korea, outward liberalization accompanied a furtheracceleration of industrialization and rapid growth of industrial exports.Indeed, it was the Korean experience of the 197 s, and the similarexperience of Taiwan, that would lead the international economic policyworld to coin such expressions as NIC (Newly Industrialized Country) andthe more colloquial "Asian Tiger." In Chile, however, as noted earlier,liberalization was actually accompanied by a degree of de-industrialization, and economic growth there was far more speculative andfrothy in character. Thus, therural sector as a whole lacked influence in Korea -- in sharp contrast tothe Latin American situation, where concern for political conditions in thecountryside were a frequent preoccupation of governments. ReferencesAmsden, A. Dependency theory was formulated by, and wonadherence from, people who expected the worst from the global economy. However, an import substitution strategy, though bad for agriculturalproducers in general, can be favorable for large landowners, who can gainpreferential access to manufactures and push the costs of the strategylargely onto the peasants (Haggard, 199 , p. "Theeffectiveness of the Asian NICs depends on sophisticated industrialpolicies and selective protectionism, but, because of the extremely diverseinstitutions and policies of the Asian NICs, a common 'Asian system' cannotbe denominated" (Mommen, 1996, p. What matters is that pragmatism seems on the whole tohave paid off in better results than has ideological consistancy. Such a drop-off thus does not demonstrate a failure of the Korean orother Asian models of development. In the 195 s, Sovieteconomic managers made a rational-seeming guess that heavy industrialproduction would be the key to development, as it had been in the firsthalf of the century, and indeed the growth of Soviet steel production wasonce widely heralded as a sign that the USSR was overtaking the West ineconomic development. The growth of the emergent developed nations differs in a fundamentalway from that of the original developed world; whereas the latter weregoing into uncharted terrain, the newly industrialized countries arefollowing an established model:"If industrialization first occurred in England on the basis of invention,and if it occurred in Germany and the United States on the basis ofinnovation, then it occurs now among 'backward' countries on the basis oflearning" (Amsden, 1989, p. the state has exercised disciplineover subsidy recipients" (Amsden, 1989, p. Tariff protection and importsubstitution became characteristic development strategies, and the resultby the 196 s was the formation of industrial sectors, particularly in lightindustry and consumer goods, that had become an established part of theelite coalition, and were strongly motivated to protect themselves fromforeign competition. The transition in the political economy ofSouth Korean development. It is appropriate here to turn to another question raised byimplication earlier in this discussion, namely whether a strong, i.e.autonomous state necessarily requires an authoritarian one. However, it was in EastAsia, most notably South Korea, that the most remarkable developmenttransition was seen; countries that had been among the world's poorest asrecently as the 195 s were by the 198 s approaching full parity with thedeveloped world. Elites of all sorts may try to enhance their rents, orcoalitions among different sectors to divide the pie among themselves. Whatever economic strategy a state adopts, the ability to carry outthe chosen strategy--again, whether dirigiste or neoliberal--dependsfundamentally on the autonomy of economic policymakers. Even apart from its quasi-racialovertones, this theory has been criticized on historical grounds: Simplistic cultural arguments run into a variety of problems.First, regions are not cultural homogenous ... Much the same could be saidof Chile, Argentina, and other Latin American countries. The core's emphasis on the service sector and on the most productive, high-value-added segments of manufacturing [means that] ironically, as more and more countries in the world are becoming industrialized,industrialization itself is losing the key status it once had as an ultimate hallmark of national development ... Journal of Northeast Asian Studies, 12, pp.74-86.----------------------- 25 As was noted earlier in this discussion, industrialization per se isno longer to be regarded as an index of development. (1988, Fall-Winter). If, then, Confucianism is somehow at the root of East Asian success,why did that success not become manifest until the 196 s and 197 s.Contrariwise, if a deep-rooted Ibero-Catholic tradition is somehow to blamefor Latin America's ills, why has the region made such considerableprogress in the 198 s and 199 s? The private entrepreneur of lateindustrialization is a pale reflection of the heroic figure of the past (Amsden, 1989, p.112). It is difficult,indeed, to identify any Asian tradition of development theory as such.While we can identify common elements of East Asian development strategy,and find a large body of work by Asians discussing strategy and experience,this work tends to offer a praxis rather than a theory. Thus the chaebol were not in a position toescape discipline at the hands of government economic planners. The linchpin of this success, as suggested earlier, was the scope ofstate planners' independence from interest groups (Haggard, 199 , p. Inany case, as suggested by Haggard, this path is closely related to theexport-led strategy typified by Korea. What is meant by a strong state, then, is not simply one that has thepotential to wield its police powers--all states have such powers, with thesole and unhappy exception of "failed states," where civil war prevails andeconomic predation of the most blatant sort is the operative rule. the salaried managers have carried the burdenof implementing investment decisions because it is they who hold thetechnical expertise. 3 6-319.Kim, H. (1989). As a result of late but rapid industrialization, thereemerged a balance of class power between the capitalist group and the working and the middle classes that is the core of democratic transition (Pyo, 1993, p. industrialization and development are not synonymous(Gereffi, 1994, p. The significant point here is that the different Latin American andEast Asian styles of thinking about development seem to mirror differentapproaches to policy. Ithaca, NY: Cornell.________, and Moon, C (1993). It is accordingly these countries that have attractedgreat attention for their development experience and the lessons it mayoffer for other developing regions. Asian Survey, 35, pp. At thesame time, government control of peasant organizations in South Koreaeffectively limited peasant influence as a political factor. Whether the choice of ideological consistancy or pragmatism is insome way rooted in "Ibero-Catholic" or "Confucian" culture of philosophy isperhaps irrelevant. Only astrong state can persist in a strategy, including neoliberalism, in theface of internal social and political pressures. It is sufficient to note here that, by the 197 s, LatinAmerican economic thinkers were acutely aware of the failure of thetraditional import-substitution strategy, and particularly of its role inmaking economic policy a captive of established interests. State willingness or unwillingness to exert strategic and independent direction over the private sector, and especiallyover large economic conglomerates, has been an important factor in the pro-industrial character of outwardliberalization policies in South Korea and in the financial-speculative character of economic liberalizationpolicies in Chile (Kim and Geisse, 1988, p. In Meller,P., ed., The Latin American Development Debate: Neostructuralism,Neomonetarism, and Adjustment Processes. 15). But just as authoritarian statesare not always strong or autonomous, it is possible for a democratic regimeto be both strong and autonomous. 8). 3) From this consideration, the neoliberal goes on to make a basicargument that rewards and punishments, however rational and even well-guessed, can hardly outperform the market itself. (1991). Nora Lustig speaks of "thenumerous intellectual efforts undertaken by Latin American authors tounderstand the economic phenomena of the region" (Lustig, 1991, p. such adoctrinaire attitude to economic policy management contrasted sharplywith the highly pragmatic attitude displayed by the authorities in Taiwan and South Korea" (Lin, 1989, p. That South Korea was successful in this enterprise, and in fact wentin a generation from one of the world's poorest countries to a place amongthe world's rich ones is, in the eyes of the critics of neoliberalism, themost powerful emperical argument that neoliberal theory is incorrect, or atleast incomplete. InJilberto, A.E.F., and Mommen, A. In any case, the outcomes of the liberalization programs were quitedifferent. Pathways from the Periphery: The Politics of Growthin the Newly Industrializing Countries. Put more simply, as South Korea became a largely middle-classsociety, pressure for democratization grew to the point whereauthoritarianism was no longer viable. 27).For example, dependency theory originated in Latin America, though itsvocabulary of core, periphery, dependent development, and the like havebecome part of the international language of development theory. The following discussion will bedevoted to an evaluation of the Korean development experience, inparticular comparison to that of Latin America. Established business groups may seek to cartelize, fixingprices and barring competition. 3 7). In fact, numerous social actors have an interest in shieldingthemselves from market forces, or in positioning themselves to captureeconomic rents. Thiswas nearly the opposite strategy to that adopted by Latin Americancountries in the 193 s, when their access to foreign exchange was cut offby the depression. South Korean economic planners thus found themselves almost entirelyfree to define the conditions of industrial development, exercisingdiscipline--the reward of success and the penalizing of failure--withoutreference to interest-group constraints. 23). The question, then, is how best to do so. In the words of one writer, "growth has been faster inKorea not because markets have been allowed to operate more freely butbecause the subsidization procss has been qualitatively superior:reciprocal in Korea, unidirectional in most other cases" (Amsden, 1989, p.145). The question is, then, whatinstitutional structures and strategies most effectively foster thelearning and adopting process. 2) Even if the exercise of discipline is not corrupted (or, to use amore neutral term, simply distorted) by such personal or politicalconsiderations as are suggested above, how are even rational economicmanagers to reliably foresee what will actually be the most effectiveassignment of rewards and punishments? Themilitary was then left scrambling for an effective strategy--and theeconomic technocrats were able to step forward and offer one. It will be suggested here that the common thread among the East Asiannewly industrialized countries, as well as their exemplar, Japan, has beenthe effective political strength of the state, and the readiness of thestate to use its power not only to subsidize favored industries or sectors,but, more important, to withhold such subsidies at will as a means ofenforcing discipline. That, however, left the economic planners potentially subject to theinterests of the military leaders themselves. 44-45). Economic policy insuch a country is formed by a negotiation among these elite groups. Certainly much of South Korea's rapid industrialization took placeunder authoritarian rule, and observers have asked "whether South Koreaneconomic policymaking can break the government's reliance on anauthoritarian style of rule" (Haggard and Moon, 1993, p. In Chile, "as ISI[import-substitution industrialization] progressed along successive phases,and as new sectors were incorporated into the political system, strong anddiverse social interests were developed in the continuation and deepeningof ISI policies (Kim and Geisse, 1988, p. Latin America vs. In the 19th century and the the first half of the 2 th, aprofound gulf opened between the industrialized societies, all of whichwere at that time European or settled by Europeans, and the rest of theworld's peoples, who remained in a largely agrarian, premodern economicregime. In considering aspects of the Latin American development experience,however, it is important to emphasize and develop a general point madeearlier: that market-oriented strategies are ultimately as dependent onstrong government as are explicitly government-directed strategies. "Even getting relativeprices 'right' according to textbook theory would require a state strongenough to battle whoever stood to suffer from a loss of government support"(Amsden, 1989, p. In more recent years, much of Latin America has embarked a moresystematic policy of liberalization and pursuit of export-drivendevelopment. Such a strategy lent itself to a coalition among traditional andnewer elites. 357). In contrast to the South Korean dirigiste model, however,Latin American countries, particularly Chile, were much more inclinedtoward a neoliberal model of development. Tothe degree that the industrial sector in Chile had been artificiallyprotected and thus was unequal to world standards, some liquidation of itwas perhaps necessary, but it is far from clear that theory-driven economicliberalization in the 197 s was in itself an effective strategy; in fact,by the 198 s the government had backed away from the practice of thestrategy, though not from its ideology. In Koo, H., ed., State and Societyin Contemporary Korea. (1996). If historical factors had contributed to shaping Latin Americandevelopment strategy, the same must be said of the effect of historicalfactors on East Asian and specifically Korean development strategy. 95).Particularly in Chile, a new neoliberal strategy was thus put into place,drawing in the case of Chile on the sharp break from traditional coalitionpolitics resulting from the Pinochet military coup of 1973. however, the dynamic shifts in economicperformance have occurred primarily in recent decades (Gereffi, 1994, p.31). Precisely, it may be suggested, by demonstrating aneffective development experience. 44).However, it is doubtful that this consideration effects the broader issues. It is perfectly possible, after all, for even a rational,disinterested economic planner to guess wrong. Two factors perhaps contributed to presenting an exportstrategy as a viable option for Korea at this time. 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