We have determined two important facts that affected economy transformation of South Korea. One was international and historical factors and the other was market factors. A lot of people, of course economists argue that what really matters in the South Korean context is the market factors such as a labor, land reform and market conforming government policies, and reservoir of good entrepreneurs. On the other hand, historians would argue that it has something to do with Japanese colonial modernity, American contribution, and horizontal connection with Japan. But I would argue that most of us in Korean Politics in economy would argue that the economy transformation of South Korea in the 1960s and 70s, even 80s has something to do with the state. And some people argue that it was the development of state that was responsible for economy in South Korea. What is meant by developmental state? The term was initially coined by Professor Charmers Johnson who passed away. Professor Charmers Johnson was teaching at the University of California at Berkeley. He's, I would say that really superb expert in Japan and China but he led a very interesting book called the MITI meaning ministry of international traded industry of Japan, MITI and the Japanese Miracle. That book really sensationalized the entire world, because in that book Charmers Johnson identified the capitalist developmental state as the key factor of Japanese economic miracle in the 1970s. And later, Professor Alice Amsden of MIT who is more wrote a book, Asia's Next Giant. In the book Alice Amsden really focused on South Korea and predicted that South Korea will be Asia's economic giant. And in that book, Alice Amsden also economic transformation in South Korea through role of the state government and political leadership. Stephan Haggard and myself also wrote these some pioneering articles on the role of state and economic transformation in South Korea. They're all used to term developmental state but in their sense of developmental state, the state is neither a sum of pluralist interests like American state, nor an instrument of class domination by the state, okay? Meaning what? The Marxists in arguments, okay? And Charmers Johnson, Alice Amsden, Stephan Haggard and Chung-in Moon all argued that Korean state, was an autonomous entity, okay, and also its character was developmental, independent of social capture. Therefore, developmental state is what? State has a main actor of economic transformation but it was not universal phenomenon. The developmental state was unique and. Where they're confined to northeast Asian countries such as Japan, South Korea, Taiwan, Singapore and even today's China. Then what is meant by development state? Okay, you can look into organization of the developmental state in following way. First, in the developing state there's a very strong executive dominance. Simply put, president or prime minister, they are free from, pressure from political society and civil society, executive leadership in Japan and South Korea were rather free from legislative check and balance, judicial check and balance and even pressures from civil society. Therefore, the amount role of eject leadership played a very important role. Another important organizational feature of developmental state into vertical ties between chief executive and bureaucrats. Chief executive tend to control and command outcasted bureacratics. Therefore in other words, if you look at the so-called parliamentary system like a Great Britain and elsewhere, really, bureaucrats tend to run the show. But in the developmental state, it is a president or a prime minister who really orchestrate national economy by commanding, controlling bureaucrats. Third important characteristic is horizontal cooperation and coordination among bureaucrats. Meaning what? In the most countries, bureaucratic fighting, bureaucratic feuds tend to be a major hindrance to effective in policy implementation, okay? But under the developmental state, bureaucratic in-fighting was minimal. There was minimization of bureaucratic politics. And another important characteristic is the insulation of economic decision making from social and political pressures, okay? They can build collaterally up in ejective leadership, okay? Finally, dense networks between the state and societies through formal and informal policy networks construct another important organizational characteristic of developmental state. So those are the so called organizational features of developmental state. Then what are the operational logic of developmental state? I argue that, in to Thomas Johnson and Stephen Haggard and civil add the student of developmental state argue that developmental state is developmental ideology such as, the slogan of rich nation and strong army. Japanese call it Fukoku kyōhei Koreans called Buguk GangByung Okay? Making country rich. And making having a strong army. And also, another important developmental ideology was catch up mentality Japan will catch up with the United States. South Korea wanted to catch up with Japan. China wanted to catch up with South Korea or Japan and the United States. Those two things, reach nations strong army and capture mentality constituted the core of the ideology Another one is a state tend to select the strategic sectors such as heavy chemical industrialization, okay? With great forwards and backwards linkages. Each government who picked up the winners, okay? And third, Government makes strategic allocation of scarce resources to those sectors. They sometimes think government went against market logic. Alice Amsden called this one the getting the price is wrong. For example, early 1970s, International economic environment was not favorable to the adoption of heavy chemical industrialization. Yet, President Park Chung-hee chose heavy chemical industrialization. According to Alice Amsden, that was really getting the price is wrong. Because South Korea was going against the principle of. Yet, back to his choice of heavy chemical industrialization, they turned paid off. There is another interesting aspect of operational Principles of developmental state. And also developmental state tend to have a frequent resort to administrative guidance is again the from Japan. Gyosei shidou, okay. To government bureaucrats. Instruct, direct, and orchestrate, coordinate civil acts. In other words, in the government want in the partition of coordinating, orchestrating civil society Including market forces. The final aspect of operating principles of developmental state is a formation of developmental coalitions through the exclusion of public sector, and inclusion of travel, big business, and farm sector. Therefore in other words Park Chung-hee was authoritarian ruler. But even under the authoritarian setting, if he did not have supporting coalition foundation he could have not pushed for the whole this idea of developmental state logic. But he builded it up into a coalition composed of big business and farmers but with the exclusion of popular sector. Then made his development of state farm in the war. But another interesting aspect of developments is the term embedded autonomy There's a professor Peter Evans at University of California Berkley coined the term embedded autonomy. His book under the title of embedded autonomy. There was another professor, Daniel Okimoto, Stanford University, he also come up with a very interesting book called Between MITI and the market and examining industrial policy in Japan. And then he coined the term policy networks. I would argue that the policy networks is manifestation of embedded autonomy. Thar, pretty simply, the state is embedded in market and civil society. And two were interconnected through the dense policy networks, such as examination councils, advisory councils and amakudari. Here amakudari means that Descending from the heaven. In Japan former officers of the bureaucracy such as Ōkura-shō, the treasury ministry or MITI after they get out of the government service they tend to join the private firms or intermediate organizations such as Japan plastic manufactures association, Japan automobile manufacturers association. Those are the perfect examples of intermediate organizations. And they joined the kinds of intermediate organizations and they played wall-over mediator between the government and the private sector. And both Peter Evans and Tanya Yokimoto argued that in addition to the development state, it was this pause networks or embedded autonomy that made significant contribution to economic transformation and even economically in south Korea. Why? Because certain kinds of policy networks are expected to reduce transaction costs, facilitate information flow, and enhance efficiency. Therefore now, here, you keep in mind, when understanding the economy of South Korea, first you've got to understand the International and historical context. Second, market factors. Third, the role of state. And finally, the networks between the state and firms. Even the civil society. Therefore this network economy, those four things conjured up when they were combined They created very influential synergistic impacts on the economic performance of South Korea.
