State and Market in the Economic Development of Korea and Taiwan

Abstract

A country’s economic development performance is determined by its: initial conditions — natural resource endowments, human capital, and socio-cultural heritage; institutional structure — economic relations within its agrarian and industrial sectors, the nature of the state, particularly the degree of its autonomy, whose interests the government represents, and the relations between the government and civil society, private enterprise and the citizenry; economic policies with respect to resource allocation and accumulation patterns; and the external economic and political environment within which development takes place. The development process is path dependent, in a pattern of causality that runs from initial conditions to institutional structures and policies that are interdependent within periods and dynamically recursive over time. In what follows, the discussion of similarities and contrasts between South Korea and Taiwan will therefore be subdivided into three sections: initial conditions (part 14.1), development policies (part 14.2) and institutions (part 14.3), taking cognizance of the changing pressures and opportunities afforded by the external environment.

I a indebted to Jeff Chung for his assistance on Taiwan and to Kim Mabn Je, Nam Duk Woo and Song Byung Nak for their insights into Korean economic development.