Asia's Next Giant: South Korea and Late Industrialization

Asia's Next Giant: South Korea and Late Industrialization

Asia's Next Giant: South Korea and Late Industrialization

Asia's Next Giant: South Korea and Late Industrialization

Synopsis

South Korea has been quietly growing into a major economic force that is even challenging some Japanese industries. This timely book examines South Korean growth as an example of "late industrialization," a process in which a nation's industries learn from earlier innovator nations, rather than innovate themselves. Discussing state intervention, shop floor management, and big business groups, Amsden explores the reasons for South Korea's phenomenal growth, paying special attention to the principle of reciprocity in which the government imposes strict performance standards on those industries and companies that it aids. She thereby shows how South Korea, Japan, and Taiwan were able to grow faster than other emerging nations such as Brazil, Turkey, India, and Mexico. With its new insights, Asia's Next Giant is essential reading for anyone concerned with global competition and the world economy.

Excerpt

This book seeks an answer to the puzzle of why South Korea has grown so much faster than most developing countries, even those that have gone through what is called "late industrialization." Late industrialization applies to a subset of developing countries that began the twentieth century in an economically backward state based on raw materials, and dramatically raised national income per capita by selectively investing in industry. Included are South Korea, Taiwan, Brazil, Turkey, India, and Mexico. This book also treats Japan as a late-industrializing country, which makes the list all the more heterogeneous. Diversity notwithstanding, all late industrializers have in common industrialization on the basis of learning, which has conditioned how they have behaved. These countries industrialized by borrowing foreign technology rather than by generating new products or processes, the hallmark of earlier industrializing nations.

South Korea's growth is a classic example of late industrialization, and embodies all of the elements common to these countries. It has involved a high degree of state intervention to get relative prices "wrong" in order to overcome the penalties of lateness, the growth of large diversified business groups (even in Taiwan) to transcend the hardships of having to compete without the advantages of novel technology, the emergence of salaried managers responsible for exploiting the borrowed technology (the private entrepreneur in large companies playing a much reduced role compared to earlier times), and a focus on shopfloor management to optimize technology transfer. All these factors allowed Korea to be among the first countries to penetrate world markets on the basis of low wages rather than a technological edge. England succeeded during the First Industrial Revolution on the basis of invention, and leading firms in Germany and the United States at a later time captured market share from England on the basis of innovation.

But Korea has succeeded far beyond the non-East Asian late industrializers. This book will examine in detail the factors that contributed to its success. It will analyze the crucial role of government not only in subsidizing certain industries to stimulate growth, but in . . .

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