Friday, March 5, 2010

Korea Inc., more on Korea's economic development


South Korean President and former CEO of Hyundai Engineering and Construction Lee Myung Bak talking at a recent strategy meeting to promote the Korean IT industry.

Here is another quote from the Economic and Social Modernization of the Republic of Korea.

"Students of the Japanese growth "miracle" have frequently attributed importance to the close cooperation of government and business in that country, and, to emphasize the closeness, have referred to as "Japan Incorporated." The term is, in fact, much more applicable in Korea, but in Korea there is little doubt that the chief party in the corporation is government, This may come as a surprise to those who have been accustomed to think of Korea as a free-enterprise economy. It is free in the sense that private enterprise has flourished, and the role of market considerations looms large in the formulation of both private and public economic policy. But there is no denying that it is government that establishes the framework within which firms operate, sers the rules, and excercises a close oversight of performance."

For development economists who like to champion a small-government and market orientated approach to economic growth, such as Bill Easterly (with whom I usually agree) this is not welcome news. In the West we tend to think of government as a restraining and regulating force on economic markets and consequently those who favor markets invariably also favor smaller government. However in most Asian economies the picture is very different. Governments in Korea, Japan, and of course most recently in China, have played a central, and usually dominant role, in planning and promoting the growth of private companies.

I'm not sure if this approach would be applicable to African nations, but I am sure that it hasn't really been tried.
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