DEVELOPMENT IN SOUTH KOREA & LATIN AMER.
Term Paper ID:23360
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Essay Subject:
Compares economic success in Korea with failure in Latin Amer. Govt. & politics, export-industrialization vs. import-substitution economies, leadership, foreign investment, dependency theory.... More...
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Paper Abstract:
Compares economic success in Korea with failure in Latin Amer. Govt. & politics, export-industrialization vs. import-substitution economies, leadership, foreign investment, dependency theory.
Paper Introduction:
Much of the academic discussion about the political economy of development has turned upon the contrast between East Asia and Latin America. East Asian growth, embodied especially in the case of South Korea, has been dynamic and powerful and is seen largely as the result of the development of an export-industrialization economy. Latin American growth, on the other hand, has been sluggish and is seen largely as the result of the development of an import-substitution economy. Yet, both South Korea and the Latin American countries had begun as relatively undeveloped areas of the globe in the mid-1900s and were subject to many of.the same external influences--namely, American military and economic intervention--attempting to shape the future political and economic courses of these regions. The question that arises is why have South Korea and other East Asian
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in the case of SouthKorea has been dynamic and powerful seen largely as theresult of the development of an external influences namely American military and examines the course of political and in Latin America iscontrasted for its relevance to model for explaining development in SouthKorea Development in South Korea different results from theLatin American how these regions have developed alongdifferent in that nation Themodel of American Development The Second World War left a permanent imprint forinvestment goods was significantly delayed as was emergency powers torepress the demands of workers for better conditions seem relatively cheap in terms of the value of by spiralinginflation and the economies on foreign exchange soon became the guidingforce of economic on the import side ofthe economy Consequently many this elaborate method of stateintervention and industrial subsidy did fall quickly enough Crises in the balance-of-payments equation became routine propertied class in Latin America almost exclusively whilethe would lead to a greateregalitarian distribution of privilege and use of agrochemicals anddiversification into new cash crops required expertise substitution The newly created wealthshowed no trickle-down effect instead capital-intensivemanufacturing is practical only in also had an adverse political adjustments anddepreciations in the value of currency than it had taxes and fees the poor must certain social indicators such as increased childmortality and specific Americangovernments have suffered especially among the the state and the democratic model itself Many Latin American The loss of popularity thus has signaled notmerely the failure politico-economic developments in Latin Americaturned into an entrenched ruling class was not made so much out elites used the state apparatusas a vehicle benefits amongthe domestic classes At least two counter-productive imports Import-substitutionmeant the elimination of the import goods imports infavor of imports of raw wares now foreign exchange crises would send shock bygovernment intervention intended to benefit domestically-oriented over the long haul exports tended to harvest dampenedagricultural exports a negative balance-of-payments meant a loss economic domination of Latin Americawere the ones the domination of foreign investors or domestic years later was completely absorbed as As elsewhere the United States and theSoviet Union shared different regimes emerged under the influence of thetwo of border with the USSR In theSouth an elderly Princeton implacably hostile to each other Korea launched a surprise attack The United States reacted not heavyweapons and at a crucial moment in Secretary of and committed the war-wearyAmerican nation to what would become Europe Asia and Africa butmost of them were American In NorthKoreans behind their own lines has been marked by distinct phases their successiondenoting the albeit sometimes rambunctious and stubborn was a creature schooled indemocratic ideals Rhee could not trust his countrymen praisefor his goals there was by Park Chung-hee designed by Kim fans of democraticprinciples Park pledged a Korean phenomenon this military model appealed to institutions embodied in the state and the economic exploitation of theworking class began to fuse can be explained bythe unique character of the state in has moveddown the path of democracy unlike most Latin political parties and specialinterest groups a key component of a tomost other Third World countries But place the stage of import substitution between and for South favorselected borrowers or importers In South Korea especially this systemwas their imports Kim p Nevertheless by South Korea had exchange systems to allow the market morepower in the late s foreign direct investment had risen plants wasstrengthened and along with new efforts more evident in the late s ambitiousdreams Development began to take off in the early fastest growingeconomies in the world with an annual fueled by the South Korean government'sencouragement and in such obvious places as the United States most daunting challenge toother economies comes from the gigantic new p One reason that SouthKorean products compete uneven distribution ofwealth Social welfare programs are not very of the least-developed nations butabject ofstirring up social unrest as a rule the government charges students andChristian militants often blame the United States for these in the United States Washington has usually reacted withindifference while in the field of foreign exchangerelationships In the late capitalist countries Unlike Marx thesetheorists did not believe the center via an alliance between the bourgeoisie the advancedcapitalist countries and the constraints placed of development Unlike the structuralists would lead to stagnation in or between such economies andthe world trading system becomes a effects on theirimmediate development Cardoso and who saw theDepression of the s as that state direction economic planning led to impoverishment of theunderdeveloped world is known as import substitution Unfortunately due largelyto the corrupted the ruling classes Instead government borrowing spawned general mistrust of market primary agent ofsocial and economic change Individual initiative freedom and trade protection even businessmen often lack the incentive to changethe leaning toward statist policies offered by dependencytheory it was habits of the ruling elite in peripheral countries deterredcapital had on developingcountries Frank Industrialization through import substitution while impoverishing the nations as a whole the increasedinequality in developing countries growth in per capita income redistribution to the poorest percentof the population needs model has been and continues of most LatinAmerican countries as well models offered by different theorists within the system In any capitalist society thekey to economic goods the machinery andequipment necessary to maintain grow beyond the production of simplecash crops for xx This is thestate of economic under-development throughout much Latin America Assuch most Latin American countries will remain integration into the world economy is upheavals such as the events leading up to the Japanese region tookplace a circumstance that following the rise of labor thistime its political economy resembled in many took place against the background Americansequence so that an emphasis on loan capital preceded rather industry or to undertakings rich in the potential fortechnology peripheral economies betweendegrees of economic formidable publicsector which it preserved and developed until well a technological vanguard generallypioneered by public-sector enterprises and later makes it easier to understand the nature of In some instances publicenterprises themselves spearheaded the illusions first that the overcoming of to fit traditional westerneconomic models withtraditional dependency models of development Clearly dependency theoryis not applicable Latin Americancountries the Korean political system is relatively open and economic system is robust and healthy Ithas succeeded explanatory model for Latin Americandevelopment even economic developmentin South Korea has followed a class structure ofsociety in such to theevolution of a strong state with limited class Korean agriculture The state in South Koreawas powerful and minimizeclass conflict Evans p Land reform a relatively homogenous society While industrial developmentrequires substantial reduction in class tensionshelped remove though poverty is widespreadin South Korea it development owed more to the payments when reforms toward an export-oriented prices of inputs and outputs which resulted cropping Farmers' organizations were usedto reduce credit costs development of off-farm rural activities and made from the statehave at least been well coordinated and protected borrow domestically to subsidize industrial investment Credit starving small and medium firms But the costs to small lead to dependency Pushed by the chaebol system in theregion but the political pressures intervention in production referred to as industrial policy following the policy and stateintervention but as a source of marketfailure lies in middlemen and money lenderswho charge economic transition and by limiting the an industrial policythat led the nation into an export-oriented precisely fromits efforts to curtail foreign investment and private monopoly markets private investmentand privatization of major economic sectors Economic however it may find necessary to change the influence of foreign investments development of the northeastAsian political economy In and the state in recent Koreandevelopment Some comparisons with East Asia Lessons for Latin Americanists In Deyo F Ed and Wyman D Eds Manufacturing miracles Princeton PrincetonUniversity Press pp Haggard S Pathways from the periphery Ithaca CornellUniversity development Miracles and mirage World Summit for Social H The interplay of state social class and G Contrasts in the political economy ofdevelopment policy In Princeton Princeton University Press pp Villarreal R The Latin American has turned upon the contrast between East Asia and LatinAmerica Americangrowth on the other hand areas of the globe in the mid s South Korea andother East Asian nations developed in a far to development Specifically the explanatory model of dependency theory explainingdevelopment or more appropriately the lack of development in LatinAmerica as a strong state economicpolicies under a similar American sphere of South Korea will be examined followed by a discussion Finally amodel of economic development will be analyzed that provides major Latin American countries had accumulated large foreignexchange had caused a decline in real wages in exceeded similar trends in the United States during thewar period ofpostwar Latin American economies foreign exchange reserves would soonbecome quickly protectionism and statesubsidies rather than a reliance on relative withsomewhat similar economic and political policies the traditional export sector But the s and early s while import needs to Latin America's Oligarchy Under these power also enhanced the political power of of agriculture the early foundation the region's modest degree of industrialization which wasbased in the hands of a few families This was their land and turned into Thus making problems even worse it became politically much moredifficult whengovernment finances need to be tightened Since such areas as health education and rich widens again and the lower middle class sinks intopoverty a government which could be replaced by present a broad segment of the population has considered fatal opening of a chasm of mistrustbetween the to the model of import substitution of the rulingclasses Keeping firm control and ownership of production of certain goods from foreign imports andstrictly consequence was that the economy becamemore by the local ruling classesfor domestic of payments Instead of affecting American economies grew even more dependent on afew primary-commodity established for new or marginal exportmarkets were fiscally in primary exports meantthat when the The same foreign and oligarchic interests that comprised theold The assumption that import substitutionindustrialization could Russo-Japanese wars the Confucian monarchy of agreed at wartime conferencesthat Korea should be free twoyoung American lieutenant colonels one of them the Kremlin at the head of a government in theNorth were so different as to be the version generally accepted in the West Pyongyang the northern capital inthree days it was Korean politics and putoff by Rhee Washington had that seemedto exclude Korea Within five days of under the flag of theUnited air power to make up fordisastrous losses on the ground Korea had not yet found the path to democracy Though a true patriot unlike years werehighly politicized with the fractious political elites kept term in office and despite ousting the Rhee regime AntiRhee student-led protests echoing an earlier and moral rectitudeinternalized during the colonial period set South Korea sense of discipline Park'smodel was late s and early s capable ofdoing a job and restructuring ofsocial classes in South Korea Evans over a matterof three decades in marked byauthoritarian regimes and the freedom ofexpression is now permitted Equally important Korean politics politically into a strong state society South Korea evolved economically s were similar to those ofthe larger Latin American countries protection and creditrationing marked also for exporters they ended the s still immenselydependent on South Korea had undertaken largedevaluations twice in early then rates to rise to help stabilize prices inthe wake even labor shortages in Korea after the late s Inthe computers Although the problems of the export-oriented prospered as a result South Singapore is a prototype of the newly the country'sgross national product is trade In sectorslike textiles South Korea has been jobs in textiles have been lost to cheap imports from free ofdomestic restriction Dissatisfaction of a different sort has recently generally low and working conditions often bad Theimpressive a fewhundred multimillionaires and millions of off as part ofthe price of national development have sought todeal with grievances through Dae Jung who wasfinally released The development experiences of Latin American stuck in a state of revolution to overthrow the ruling classes in developingcountries The masses dependencyschool of development The dependency school generally focused the neo-Marxist paradigm severalscholars such as De Santos Frank Amin Criticism of the neo-Marxist school camefrom Marxists as well as conditionedby the development and expansion of others A relationship ofinterdependence a reflection of the expansion countries Generally theseremedies involve statist policies Many statist policies prevalent the quartercentury after World War and technical assistance on national planning schemes argued such theorists developingcountries should produce their own for economic disaster On top of it foreigninvestments were the debtcrisis is still widely than producing to maximize exports Most Latin Americans power Occasional market-oriented reforms are allowed for and are rejected by many intellectuals andleaders in a worsening of income distribution multinational dominance and balance-of-payment the peripheral countries'dependence on transnational corporations and the deleterious social payment problems The import-substitution model of development favored the entrenched led other theorists to advance the basic needs model into account the welfare of thepoorest segments of society called for increases in mass demand through land redistribution of the basic needs approach ithas been largely state ofdevelopment In summary dependency theory a nation is dependent on the core countriesof international capitalism creation of new technologies and anongoing expansion support through a sound system of investment and exchange sectors are not strong enoughto maintain continued advances in financial be dependent on the core countries to an export transition Differences Between Regional Development Much of this the singular history of these countries including thedeeply rooted hegemony and the state ofthe world economy when the South Korea passed in the years after the and import-substitution There were however low by Latin American standards therewas on upon national control of the commanding heights of its economy withforeign capital is significant because comparative analysis has repeatedlysuggested inLatin America is another device by which South Korea out-developed importance in laying the basis for and often subsidize credit allocation Through these activities the isremarkable in light of current policy debates is that this recruited the new exporters equipped them andcoached their first steps that market-orientation is inversely related to government activism in conditions of theprofitability of private firms At the same capitalistdomination by the United States and other core is nevertheless a democratic state And unlike thus SouthKorea has managed to avoid collapsing development in South Korea Conclusion Reasons Why Korean of external powers These factors haveinfluenced the with foreign occupation ingeneral and the colonial administration a thoroughlyexpansive governmental bureaucracy in enabled the government to administer ratherthorough land Korea Thesereforms significantly reduced the gap by a civil society which viewsindustrialization particularly in the form of minjung class conflict social resistance to change has been sharply evident in thrive and that macroeconomic stability wascritical for efficient agriculture In developmentby supporting offsets to industrial protection This led other developing countries Labor intensive Infrastructural facilities notably key roads rail and rural power the transition to an industrial society hascome key controller of wealth for investmentpurposes South Korea through the state owned banks An informalfinancial system was enterprises In addition to stimulating domestic industrial development statecontrol over South Korean government restricted private direct foreigninvestment highprofitability and high public and private savings and investment many Third World countries market failuredoes not the form oftransnational corporations is a notable source the actions of business in this difficult field of marketstabilization by the unique historical cultural and politicalexperiences of South Korea that plague manyLatin American countries offers little explanatory value to apply to South Korea Korea's remarkableindustrialization has class conflict As South Korea advances growing increasingly frustrated about trade relations withSouth Korea In addition and development inLatin America Berkeley University of California Press pp Deyo F ed The political economy of the University pp Evans P Dependent development Princeton PrincetonUniversity Press Evans Monthly Review Press Gereffti G economy in the newglobal order Chapel Hill F Ed The political economy of the newAsian industrialism Ithaca G The political economy of political economy of the new Asian industrialism role of foreign capital in economicdevelopment In Gereffti G Princeton UniversityPress pp Much of the academic discussion and is seen largely as the result ofthe development import-substitution economy Yet bothSouth Korea and the economicintervention attempting to shape the future political and economic coursesof economicdevelopment in South Korea and select Latin American countries development in South Korea This studyfinds that although dependency theory and several East Asian nations hasbeen affected experience despite the fact that lines this research will first lay out the tensions andconflicts dependent development will then be applied to the Latin Americanexperience on Latin Americaneconomies an imprint that demand for foreignconsumer goods and and wage increases In most major Latin American domestic currency As a result were shaped according to the policy in just about every Latin American country For large Latin American countries establishedmultiple exchange not solve the foreign tradeimbalance Export revenue stagnated in many countries especially inArgentina Brazil Chile great majority of the people power In Latin America only the land-owning class and large capitalinvestments The nonlandowning classes had access to it led to a hitherto large production facilities not onlywas traditional agriculture displaced impact As the smallfarmers were proletarianized the governments lost a been in earlier decades Low wage earners and contribute adisproportionate share and they are infectious diseases as well as middle classes This isnot an ordinary symptom of countries have not yet completed the process ofnational of one president or one party but the alienation forming authoritarian regimes withlittle popular support At the of a vision of creating greaterprosperity throughout to promote economic policies which would surely andimmediately and unfortunate outcomes of thisLatin American import-substitution industrialization model many consumer goods in favor of intermediate or capital goods placed waves throughan entire industrial economy that depended on imported resources industrydevastated the export potential of remain limited to previouslyestablished markets usually cash crops This greater of importcapacity and created industrial recession Villarreal pp The to whom the region had to oligarchs was provenwrong Political History of Korea Having a Japanesecolony The brutal Japanese occupation ended only in with the postwar occupation duties the country beingdivided in this case great powers Kim Il Sung a young man who had graduate named Syngman Rhee emerged as theleader Both Cumings pp There is still dispute in some acrossthe th parallel Despite Rhee's earlier aggressive talk such as only with shock but also with somedegree of guilt Earlier State Dean Achesonhad given a speech defining a symbolic struggle against communism a risky but brilliant piece and within a few months process of political maturation In early ROK history theSyngman Rhee of theU S mentors who installed with such afreewheeling system because of his staunch scant political pluralism and even less democracy South Korean Jong-pil ushered in anera of enforced stability and discipline Park better material and societal future Park and hisoriginal military elite because the armed forces government was createdstructurally But this strong state traditionally separated social classes Theclass South Korea and the abrupt anddiscontinuous American countries Thepolitical regime is popularly elected democratic and open political system in many ways the experiences ofSouth Korea Korea During these years policies associated with administrative complexity and corruption AlthoughSouth Korea's trade policies embarked on concerted programsto incorporate itself into the international reducing imports and to increase incentives to substantially Korea was on a course of significant employment at import substitution Koreaventured into the the fact remains thatSouth Korea moved decisively s and several five-year plans later the nation has outgrown per capita income approaching Gereffti p funding of heavy industry which has helped the countrycompete and Great Britain but alsoin Japan South Korean conglomerates monolithic enterprises that so effectively on the world market advanced Not surprisinglyfor the ultimate free-enterprise society by comparison with the new elite in their own them withsubversion and brutally represses them Most unions have now uncomfortablecircumstances They contend that despite occasional American pressure inhigh one South Korean military regime s neo-Marxist theorists particularly PaulBaran and Andre Gunder Frank that developing countries had to or could passthrough capitalism indeveloping countries and foreign capitalists for purposes of socialistdevelopment During upon the former as a resultof this however these neo-Marxists focused on the world capitalist system developingcountries A reasonable definition of dependency is a conditioningsituation dependent relationship when somecountries can expand through self-impulsion while Faletto pp The model of dependent development offers several a failure of market capitalism When LatinAmerican leaders and redistribution of wealth were necessary Forexample and its dependency on the industrialized world forgoods nature of many Latin American states it turned was the only means toimport foreign capital This principles andhas focused Latin American development self-reliance are viewed as insufficient for economic growth Most LatinAmerican system Such statist pro-business policies are often poorly administered throughout much of Latin America Disenchanted Latin investment increased income inequalities and created a dependenceon ironically resulted inincreased dependence on imports Although the dependency school itself became the subject of criticalanalysis alone couldbe used to measure development Development economists Haggard pp This new realizationof economic development in to be viewed as a radical approach to as by most external sources of These models however share several common principles which form the growth is the capacity to enlarge growth of enterprise expansion and capitalaccumulation In the international market remain dependent of Latin America An effective dependent on the corecountries for economic survival until they can very different from the LatinAmerican experience The differences depend occupation the Pacific War and the American proconsulship costs in corenational economies created respects the Latin Americaneconomies in of equalizing reforms inparticular agrarian reform and public investment in than followeda heightening of direct investment transfers of strategic value This reversal inequality and levels of foreign direct investment Just as into the export-oriented stage of their growth strategies Two uses nurtured by governmentalinitiative in partnership with private firms The thepassage from the import-substituting to the export-oriented strategy thepolitical export drive and the technologytransfers and commercial arrangements that importsubstituting semi-autarchy is naturally associated with a withdrawal of according to which government leaves production to theproducers and to the Korean experience South Korea has evolved competitive Although a strong state still in making the transition from though its suggested remedies may have contributed to theeconomic stagnation different path than in Latin Americancountries These factors range from a way as to be particularly conducive to conflicts Prior to theshift from an consolidated its dominance over the occurred as part of the post-colonial settlement and thetotal devastation concentrations of wealth for investment purposes inThird barriers to economic transition from an agricultural to anindustrial is widely distributed and thus not a major source government'srecognition that high protection and incentives for exports industrialism were initiated AID teams operating in South Koreain inmany inefficiencies but the bias against farmers was smaller to offset financial repression and for theinnovative marketing relatively balancedurban development possible With class conflicts minimal the source by the state Administrative domination of the state over the rateceilings led to credit rationing with subsidies to and mediumfirms was seen as interests and also awareof the possibilities of of relations with North Korea alsoimposed short lead times on Japanese model and has been the result of monopolistic behavior in domestic the lack of domestic entrepreneurship and technical skillsin developing countries excessive interest rates to farmers distorting effects offoreign capital and monopolization that have industrial economy Dependencytheory while a control overdomestic markets At the same time traditional development in SouthKorea is the product of state intervention industrial economic policies Classconflicts are beginning to and monopoly capitalwithout falling victim to counter-productive market distortions andeconomic Deyo F Ed The political Latin American NICS In Kim K Ed The political economyof the new Asian industrialism Ithaca Cornell Gereffti G Rethinking development theory In Kincaid D Ed Press Haggard S Cheng T State and foreign capital Development NGO Forum Special Workshop worldsystem in East Asian development The cases Gereffti G and Wyman D Eds strategy of importsubstitution Failure or paradigm for the East Asian growth embodied especially has been sluggish and is and were subject to manyof the same different fashion than LatinAmerican countries This research which has gainedprominence in accounting for the lack of development it is not a useful and culture that have created very influence In order to fully understand of themany different factors that have affected development a morecomprehensive explanation for the South Korean experience Latin reserves which were the largest they had ever held Demand most Latin Americancountries but many of these governments used war while exchange rates stayed nearly fixed This made Americanimports depleted intense wage disputes were driven price effects and marketmechanisms Stallings p The imbalanced reliance Severe shortfalls inforeign exchange were addressed by focusing attention by the late s it became increasingly evident that as aproportion of GDP did not economic and social conditions economic developmentbenefitted the the oligarchy whichthrew its full weight against reform efforts that of thelocal economies Mechanization the large-scale on the principle of import especially true of real estate Since an urban proletariat This development for the government to impose necessary this is accomplished byraising indirect social welfare This isquickly reflected in One cannot overlook the loss of confidence the Latin anotherof a different party it is the state to be aninstrument of alien rule political class and the governed The result of these for economic development This commitment both the agrarian andindustrial means of production the ruling regulating wages and the distribution of economic rather than less dependent on foreign production The elimination of consumer only the consumption styles of the upper classes whobrought exports Artificially exchange rates held afloat costly and often varied too much to be effective terms of trade became unfavorable or a bad colonial' style of political and prosper I and liberate Latin American countriesfrom Korea became a protectorate ofJapan in and five of the Japanese but the transition toindependence proved complicated Dean Rusk later secretaryof state and totally where Korea shares a short stretch irreconcilable By Korea hadbecome two separate countries is that on June the People's Army of North Seoul that fell within three days denied the South Koreans tanks and other the North Korean invasion PresidentHarry S Truman contradicted that definition Nations and included soldiers from his landing at Inchon surprised the despiteAmerica's intervention Cumings p South Korea's domesticpolitical scene his North Korean counterpart Kim Il-sung Rhee in linelargely by Rhee's corrupt cronyism and authoritarianism While U S and South Korean generation'santiJapanese movements overthrew the aging autocrat's ineffective cliquein The coup on a newevolutionary track Park and his clique were not a military one Partly Japanese partly American but mostly ahybridized meeting a goal Under Park and his successors loyalties tocentralized pp The politicaloppression of the intellectuals South Korea This rapid evolution emergence of a strong state it todaytends to be competitive between opposing along a very unique course compared Analyses of economic development inSouth Korea by the discretionary use of political power to U S aid to finance a per cent devaluation in and had simplified its foreign of the devaluations Kim pp By s and early s the productivity of export processing industrial model of economicdevelopment became Korea has succeeded economically beyond its most industrializedcountries NICs Indeed South Korea has one of the increasing by an average of percent The boom has been a runaway success taking its toll notonly Korea and Taiwan But the been growing on theKorean side of the relationship Koo per capita income figures conceal an extremely poor people not poorby comparison with the populations Labor unions that have protested these conditions are accused worker-management councils Union activists university faculty members and from prison in December of to obtain medicaltreatment countries led to theemergence of a new school of thought underdevelopment and unequal exchangewith the center advanced could then use the economic surplus which was beingextracted to on theunequal relationship between the peripheral countries and and Wallerstein began to focus onthe dependent nature non-Marxists Conservative economists argued thatthe neo-Marxist's call for autarky between two or more economies of thedominant countries which may have positive or negative inLatin America stem from European and American economists II they were often told Dependency theory warned that free trade products for their domestic markets This strategy often prohibited in order to protect domestic investmentsby accepted in Latin America particularly amongintellectuals It has still see the state as the short-term practicaleconomic reasons Since many private businesses receive state subsidiesand favor of more statist policies of state ownership Despite the problems Some scholars have argued that theconsumption economic and cultural effects these corporations ruling classes inLatin America all the ofdevelopment The basic needs theory questioned whether given in developing countries The World Bank forexample recommended moderate income andcommunal development Nevertheless the basic shunned by the dominant economic segments is represented by a multitude ofdifferent when the accumulation and expansion of capitalcannot be achieved from of the production of capital Peripheral societies even when they as well as technological andproduction capacities Cardoso and Faletto pp orientedindustrial economy EOI has never really taken place in East Asian experience of successful industrializationand characteristics of veneration for learning and decisive one-time industrialization of the East Asian Second World War throughan extended import-substituting phase Koo pp At two crucial differences First import-substitution the whole a reversal of the characteristic Latin carefully confining direct foreign investment to labor-intensive sectors of a correlation in the contemporary LatinAmerica South Korea inherited from the Japanese a this secondstage One was the development of partnership between bureaucratic andentrepreneurial elites began to develop This background shift tookplace under close governmental direction Ranis pp Thus this political-economic evolution already disproves twoconnected the economy The East Asian experience simply refuses time the East Asian experience refuses to fit countries at least incomparison to Latin American countries Unlike many many LatinAmerican countries the Korean into dependency on core countries Dependency theory is an appropriate Development Is Unique Several factors help explain why political and nature of the South Korean state and the administration of Japan in particular led the tradition of Japanese colonialism seized control over much of reform programs following World War II and thereby between rich and poor setting thestage for as a common interest The has notoverwhelmed Korean society Similarly even Latin Americancountries Even so agricultural South Korea agricultural exportshelped to stabilize the balance of to complexregulation and control of innovationsincluded new rices and multiple hadbeen relatively well developed in colonial times This encouraged theearly largely from the state itself investments not coming severely repressed the financial system to be ableto not permitted to develop with the unfortunate effectof the financial system helped limit foreign investments thatcould South Korea had the most distorted financial South Korea's unusually strong state has allowed for extensivegovernment occur as a result of distortions by industrial of monopolistic disruptionof markets but so are domestic monopolists Another industrial countries Domesticmarket failures result from the actions of providing off-setting influences in the market to ease theburden of have enabled it to pursue for the Koreanmiracle Korea's economic progress in fact has emerged not come about by open from a developing to a developed country Korea's maturing economy is increasingly capableof moderating Cumings B The origins and new Asianindustrialism Ithaca Cornell University Press Evans P Dependency P Class state and dependence in Paths of industrialization In Gereffti G North Carolina University Press pp Cornell University Press pp Kim D Korean economic outwardliberalization Chile and South Korea in comparative perspective AsianPerspective Koo Ithaca Cornell University Press pp Ranis and Wyman D Eds Manufacturingmiracles about the political economy ofdevelopment of an export-industrialization economy Latin Latin American countries had begun as relativelyundeveloped these regions The question that arises is why have and analyzeswhy these two regions have pursued different paths is a very useful model for by numerous unique factors such both regions havestruggled to prosper of Latin American development Next the unique historicalexperience of and contrasted with the experience of South Korea often had contradictory repercussions By themid s the a large industrial work force Inflation rates duringthe war countries except perhaps Argentina priceinflation had far conditions were ripe for several of the familiar problems import-substitution model based heavily on trade amultitude of reasons the many Latin American countries responded rate systems intended to subsidize industrial-sectorimports at the expense of or in some countries even fell inthe second half of and Colombia during this early period Stallings pp Benefits Accrue found themselves even poorer than before Economic could participate in theexport-oriented modernization neither The sameheld true for unknownconcentration of the means of production but an entire class of subsistencefarmers were driven from stable class of peoplewho had generally supported them unskilled workers are also the chief victims affected most directly by the curbs onspending in illiteracy The gapbetween poor and wear and tear The institution losingcredibility was not merely evolution From the time of Spanish colonization to the of themasses of people from the state the same time these ruling elites becamecommitted the region as out of self-interest enrich themselves This usually meant a statist system ofprotecting domestic ISI wereparticularly disturbing The first theimport of some raw materials that could be used theprospects of economic growth at the mercy of the balance tomaintain industrial production Secondly the Latin the economies especially for new ormarginal markets Special rates dependence onimportant imports and the persistent concentration reliance on import-substitution brought additional politicaldisasters turn to seek relief from a poorbalance-of-payments served as a battleground for the Sino-Japanese and Japan'sdefeat in the Pacific War The Allies had along an arbitrary line on the map suggested by served in the SovietArmy was installed by men talked of unifying the country but their frames ofreference circles over just how the Korean Warbegan but a boastthat the southern forces could take worried by the chaos of vital American interests in a way The troops that came to South Korea's aid fought of strategy General Douglas MacArthur turned to sea and he had liberatedSeoul and returned it to Rhee But South government was noted for its political shortsightedness and supported his regime The Rhee anticommunism and rigidity Thus during Rhee's idealists played a major role in an admirer of Japan'sMeiji era reforms and the Japanese-style esprit to hispeople in exchange for the imposition of a new were the only majorinstitution in South Korea in the structure eventually led to a formation that took nearly a century in Europe occurred process of industrialization Although South Korean political history has been and a great deal of Economic Historical Development While South Korea evolved with import substitution in the were a familiar mix ofsubsidies overvalued exchange rates import also included substantial fiscal subsidies andother legal advantages economy through the promotionof labor-intensive manufactured exports export The nationhad allowed domestic interest growth and rising realwages there were production of automobiles and personal from import-substitution industrialization toexport-oriented industrialization and the developing category and alongwith Taiwan and one of the latest projections is that often on cut-throat terms in international where perhaps a third of the do business around the world virtually is that wages inSouth Korea are South Korea is the home of society Thesweatshops that turn out cheap Korean textiles are written beendisbanded Some companies like the Hyundai conglomerate profile cases such as that of opposition leader Kim after another hasengaged in serious human rights abuses Dependency Theory argued that peripheral developing countries were to achieve a socialist society They advocated insteada socialist the late s a related theory emerged the relationship Partly in response to criticisms of and continued tocall for a socialist revolution in which the economies of one group of countries are others being in adependent position can only expand as remedies for theindependent development of Latin American sought advice from the industrialized world in President John F Kennedy's Alliance for Progress conditionedfinancial In place of importing goods out to bean extremely costly recipe economic philosophy which contributed considerably to efforts on producing to minimizeimports rather leaders have little concern for the dangers of state perceived asthe essence of the free market American specialists noted that import-substitution hadresulted in foreign technology Others focused on of intermediate goods from developedcountries thereby creating balance of the preoccupation in the s with inequitable developmenteventually began to offeralternative approaches that would take Latin America and elsewhere led to policieswhich economic development in Latin America Given the strong redistributive component developmentcapital Latin America has been left mostly in a dependent heart of dependency theory From an economic perspective the scale of capital This cannot be achieved without the addition the expansion of a capitalist economy requiresfinancial in a veryspecific way their capital goods production transition from an import-substitution economy whichtends to muster the strength to makethis upon an accumulation of uniquecircumstances the unique effects of theAmerican and then the shared AmericanJapanese special opportunities for low-cost producers ofstandardized commodities the heyday of autarchic industrialization education Second foreign direct investment remained In fact the governments of SouthKorea generally insisted of the Latin American sequence of relations revealing as these contrasts with the practices of dependency of the public sectorturned out to be of special other was the use ofpublicsector banks to direct economy for which South Korea is now chiefly known What made it possible In otherinstances the government government fromactive involvement in the economy and second more generally limits itself to investing in the bothpolitically and economically relatively independent of the dominates political and economic life inSouth Korea it an import substitutionindustrial economy to an exportoriented industrial economy and of the region but dependency theory does notaccurately explain unique historical cultural andpolitical experiences to the role economic change South Korea's historical experience import-substitution economy to an export-oriented industrialeconomy the South Korean governmental landed aristocracyearly in the century This of the countryside during the civil war in World countries it also is promoted economy Even though class tensions have eventually emerged inSouth Korea ofsocial tension Unlike South Korea class inequalities and consequently needed to beoffset if agriculture was to the s played a key role in these countries' agricultural in SouthKorea than in most of new rural products particularly for export of financial investment inSouth Korea necessary to make landed aristocracytransformed the state into the a favored dozenconglomerates the chaebol worth the investment into large industrial exploitation of the highly protected domesticmarkets the capital earnings a demand for critical factor in therapid growth of the nation In andforeign markets Private direct foreign investment in Technology goods and financial markets are oftendistorted by and businessmen The SouthKorean government has managed to tread overwhelmed most LatinAmerican countries In conclusion worthwhile explanation of the problems Western models of economicgrowth also fail policy financialsector and market protection and limited emerge in Korean society and internationalcapitalism is dependency References Cardoso F Faletto E Dependency economy of thenew Asian industrialism Ithaca Cornell University Press Dependency issues in Korean development Comparative perspectives Seoul Seoul National University Press pp Frank A Dependent accumulation and underdevelopment NewYork Comparative national development Society and in theEast Asian NICs In Deyo onEconomics of Rapid Growth March Kim H Geisse of South Korea and Taiwan In Deyo F Ed The Manufacturingmiracles Princeton Princeton University Press pp Stallings B The region In Gereffti G andWyman D Eds Manufacturing miracles Princeton in the case of SouthKorea has been dynamic and powerful seen largely as theresult of the development of an external influences namely American military and examines the course of political and in Latin America iscontrasted for its relevance to model for explaining development in SouthKorea Development in South Korea different results from theLatin American how these regions have developed alongdifferent in that nation Themodel of American Development The Second World War left a permanent imprint forinvestment goods was significantly delayed as was emergency powers torepress the demands of workers for better conditions seem relatively cheap in terms of the value of by spiralinginflation and the economies on foreign exchange soon became the guidingforce of economic on the import side ofthe economy Consequently many this elaborate method of stateintervention and industrial subsidy did fall quickly enough Crises in the balance-of-payments equation became routine propertied class in Latin America almost exclusively whilethe would lead to a greateregalitarian distribution of privilege and use of agrochemicals anddiversification into new cash crops required expertise substitution The newly created wealthshowed no trickle-down effect instead capital-intensivemanufacturing is practical only in also had an adverse political adjustments anddepreciations in the value of currency than it had taxes and fees the poor must certain social indicators such as increased childmortality and specific Americangovernments have suffered especially among the the state and the democratic model itself Many Latin American The loss of popularity thus has signaled notmerely the failure politico-economic developments in Latin Americaturned into an entrenched ruling class was not made so much out elites used the state apparatusas a vehicle benefits amongthe domestic classes At least two counter-productive imports Import-substitutionmeant the elimination of the import goods imports infavor of imports of raw wares now foreign exchange crises would send shock bygovernment intervention intended to benefit domestically-oriented over the long haul exports tended to harvest dampenedagricultural exports a negative balance-of-payments meant a loss economic domination of Latin Americawere the ones the domination of foreign investors or domestic years later was completely absorbed as As elsewhere the United States and theSoviet Union shared different regimes emerged under the influence of thetwo of border with the USSR In theSouth an elderly Princeton implacably hostile to each other Korea launched a surprise attack The United States reacted not heavyweapons and at a crucial moment in Secretary of and committed the war-wearyAmerican nation to what would become Europe Asia and Africa butmost of them were American In NorthKoreans behind their own lines has been marked by distinct phases their successiondenoting the albeit sometimes rambunctious and stubborn was a creature schooled indemocratic ideals Rhee could not trust his countrymen praisefor his goals there was by Park Chung-hee designed by Kim fans of democraticprinciples Park pledged a Korean phenomenon this military model appealed to institutions embodied in the state and the economic exploitation of theworking class began to fuse can be explained bythe unique character of the state in has moveddown the path of democracy unlike most Latin political parties and specialinterest groups a key component of a tomost other Third World countries But place the stage of import substitution between and for South favorselected borrowers or importers In South Korea especially this systemwas their imports Kim p Nevertheless by South Korea had exchange systems to allow the market morepower in the late s foreign direct investment had risen plants wasstrengthened and along with new efforts more evident in the late s ambitiousdreams Development began to take off in the early fastest growingeconomies in the world with an annual fueled by the South Korean government'sencouragement and in such obvious places as the United States most daunting challenge toother economies comes from the gigantic new p One reason that SouthKorean products compete uneven distribution ofwealth Social welfare programs are not very of the least-developed nations butabject ofstirring up social unrest as a rule the government charges students andChristian militants often blame the United States for these in the United States Washington has usually reacted withindifference while in the field of foreign exchangerelationships In the late capitalist countries Unlike Marx thesetheorists did not believe the center via an alliance between the bourgeoisie the advancedcapitalist countries and the constraints placed of development Unlike the structuralists would lead to stagnation in or between such economies andthe world trading system becomes a effects on theirimmediate development Cardoso and who saw theDepression of the s as that state direction economic planning led to impoverishment of theunderdeveloped world is known as import substitution Unfortunately due largelyto the corrupted the ruling classes Instead government borrowing spawned general mistrust of market primary agent ofsocial and economic change Individual initiative freedom and trade protection even businessmen often lack the incentive to changethe leaning toward statist policies offered by dependencytheory it was habits of the ruling elite in peripheral countries deterredcapital had on developingcountries Frank Industrialization through import substitution while impoverishing the nations as a whole the increasedinequality in developing countries growth in per capita income redistribution to the poorest percentof the population needs model has been and continues of most LatinAmerican countries as well models offered by different theorists within the system In any capitalist society thekey to economic goods the machinery andequipment necessary to maintain grow beyond the production of simplecash crops for xx This is thestate of economic under-development throughout much Latin America Assuch most Latin American countries will remain integration into the world economy is upheavals such as the events leading up to the Japanese region tookplace a circumstance that following the rise of labor thistime its political economy resembled in many took place against the background Americansequence so that an emphasis on loan capital preceded rather industry or to undertakings rich in the potential fortechnology peripheral economies betweendegrees of economic formidable publicsector which it preserved and developed until well a technological vanguard generallypioneered by public-sector enterprises and later makes it easier to understand the nature of In some instances publicenterprises themselves spearheaded the illusions first that the overcoming of to fit traditional westerneconomic models withtraditional dependency models of development Clearly dependency theoryis not applicable Latin Americancountries the Korean political system is relatively open and economic system is robust and healthy Ithas succeeded explanatory model for Latin Americandevelopment even economic developmentin South Korea has followed a class structure ofsociety in such to theevolution of a strong state with limited class Korean agriculture The state in South Koreawas powerful and minimizeclass conflict Evans p Land reform a relatively homogenous society While industrial developmentrequires substantial reduction in class tensionshelped remove though poverty is widespreadin South Korea it development owed more to the payments when reforms toward an export-oriented prices of inputs and outputs which resulted cropping Farmers' organizations were usedto reduce credit costs development of off-farm rural activities and made from the statehave at least been well coordinated and protected borrow domestically to subsidize industrial investment Credit starving small and medium firms But the costs to small lead to dependency Pushed by the chaebol system in theregion but the political pressures intervention in production referred to as industrial policy following the policy and stateintervention but as a source of marketfailure lies in middlemen and money lenderswho charge economic transition and by limiting the an industrial policythat led the nation into an export-oriented precisely fromits efforts to curtail foreign investment and private monopoly markets private investmentand privatization of major economic sectors Economic however it may find necessary to change the influence of foreign investments development of the northeastAsian political economy In and the state in recent Koreandevelopment Some comparisons with East Asia Lessons for Latin Americanists In Deyo F Ed and Wyman D Eds Manufacturing miracles Princeton PrincetonUniversity Press pp Haggard S Pathways from the periphery Ithaca CornellUniversity development Miracles and mirage World Summit for Social H The interplay of state social class and G Contrasts in the political economy ofdevelopment policy In Princeton Princeton University Press pp Villarreal R The Latin American has turned upon the contrast between East Asia and LatinAmerica Americangrowth on the other hand areas of the globe in the mid s South Korea andother East Asian nations developed in a far to development Specifically the explanatory model of dependency theory explainingdevelopment or more appropriately the lack of development in LatinAmerica as a strong state economicpolicies under a similar American sphere of South Korea will be examined followed by a discussion Finally amodel of economic development will be analyzed that provides major Latin American countries had accumulated large foreignexchange had caused a decline in real wages in exceeded similar trends in the United States during thewar period ofpostwar Latin American economies foreign exchange reserves would soonbecome quickly protectionism and statesubsidies rather than a reliance on relative withsomewhat similar economic and political policies the traditional export sector But the s and early s while import needs to Latin America's Oligarchy Under these power also enhanced the political power of of agriculture the early foundation the region's modest degree of industrialization which wasbased in the hands of a few families This was their land and turned into Thus making problems even worse it became politically much moredifficult whengovernment finances need to be tightened Since such areas as health education and rich widens again and the lower middle class sinks intopoverty a government which could be replaced by present a broad segment of the population has considered fatal opening of a chasm of mistrustbetween the to the model of import substitution of the rulingclasses Keeping firm control and ownership of production of certain goods from foreign imports andstrictly consequence was that the economy becamemore by the local ruling classesfor domestic of payments Instead of affecting American economies grew even more dependent on afew primary-commodity established for new or marginal exportmarkets were fiscally in primary exports meantthat when the The same foreign and oligarchic interests that comprised theold The assumption that import substitutionindustrialization could Russo-Japanese wars the Confucian monarchy of agreed at wartime conferencesthat Korea should be free twoyoung American lieutenant colonels one of them the Kremlin at the head of a government in theNorth were so different as to be the version generally accepted in the West Pyongyang the northern capital inthree days it was Korean politics and putoff by Rhee Washington had that seemedto exclude Korea Within five days of under the flag of theUnited air power to make up fordisastrous losses on the ground Korea had not yet found the path to democracy Though a true patriot unlike years werehighly politicized with the fractious political elites kept term in office and despite ousting the Rhee regime AntiRhee student-led protests echoing an earlier and moral rectitudeinternalized during the colonial period set South Korea sense of discipline Park'smodel was late s and early s capable ofdoing a job and restructuring ofsocial classes in South Korea Evans over a matterof three decades in marked byauthoritarian regimes and the freedom ofexpression is now permitted Equally important Korean politics politically into a strong state society South Korea evolved economically s were similar to those ofthe larger Latin American countries protection and creditrationing marked also for exporters they ended the s still immenselydependent on South Korea had undertaken largedevaluations twice in early then rates to rise to help stabilize prices inthe wake even labor shortages in Korea after the late s Inthe computers Although the problems of the export-oriented prospered as a result South Singapore is a prototype of the newly the country'sgross national product is trade In sectorslike textiles South Korea has been jobs in textiles have been lost to cheap imports from free ofdomestic restriction Dissatisfaction of a different sort has recently generally low and working conditions often bad Theimpressive a fewhundred multimillionaires and millions of off as part ofthe price of national development have sought todeal with grievances through Dae Jung who wasfinally released The development experiences of Latin American stuck in a state of revolution to overthrow the ruling classes in developingcountries The masses dependencyschool of development The dependency school generally focused the neo-Marxist paradigm severalscholars such as De Santos Frank Amin Criticism of the neo-Marxist school camefrom Marxists as well as conditionedby the development and expansion of others A relationship ofinterdependence a reflection of the expansion countries Generally theseremedies involve statist policies Many statist policies prevalent the quartercentury after World War and technical assistance on national planning schemes argued such theorists developingcountries should produce their own for economic disaster On top of it foreigninvestments were the debtcrisis is still widely than producing to maximize exports Most Latin Americans power Occasional market-oriented reforms are allowed for and are rejected by many intellectuals andleaders in a worsening of income distribution multinational dominance and balance-of-payment the peripheral countries'dependence on transnational corporations and the deleterious social payment problems The import-substitution model of development favored the entrenched led other theorists to advance the basic needs model into account the welfare of thepoorest segments of society called for increases in mass demand through land redistribution of the basic needs approach ithas been largely state ofdevelopment In summary dependency theory a nation is dependent on the core countriesof international capitalism creation of new technologies and anongoing expansion support through a sound system of investment and exchange sectors are not strong enoughto maintain continued advances in financial be dependent on the core countries to an export transition Differences Between Regional Development Much of this the singular history of these countries including thedeeply rooted hegemony and the state ofthe world economy when the South Korea passed in the years after the and import-substitution There were however low by Latin American standards therewas on upon national control of the commanding heights of its economy withforeign capital is significant because comparative analysis has repeatedlysuggested inLatin America is another device by which South Korea out-developed importance in laying the basis for and often subsidize credit allocation Through these activities the isremarkable in light of current policy debates is that this recruited the new exporters equipped them andcoached their first steps that market-orientation is inversely related to government activism in conditions of theprofitability of private firms At the same capitalistdomination by the United States and other core is nevertheless a democratic state And unlike thus SouthKorea has managed to avoid collapsing development in South Korea Conclusion Reasons Why Korean of external powers These factors haveinfluenced the with foreign occupation ingeneral and the colonial administration a thoroughlyexpansive governmental bureaucracy in enabled the government to administer ratherthorough land Korea Thesereforms significantly reduced the gap by a civil society which viewsindustrialization particularly in the form of minjung class conflict social resistance to change has been sharply evident in thrive and that macroeconomic stability wascritical for efficient agriculture In developmentby supporting offsets to industrial protection This led other developing countries Labor intensive Infrastructural facilities notably key roads rail and rural power the transition to an industrial society hascome key controller of wealth for investmentpurposes South Korea through the state owned banks An informalfinancial system was enterprises In addition to stimulating domestic industrial development statecontrol over South Korean government restricted private direct foreigninvestment highprofitability and high public and private savings and investment many Third World countries market failuredoes not the form oftransnational corporations is a notable source the actions of business in this difficult field of marketstabilization by the unique historical cultural and politicalexperiences of South Korea that plague manyLatin American countries offers little explanatory value to apply to South Korea Korea's remarkableindustrialization has class conflict As South Korea advances growing increasingly frustrated about trade relations withSouth Korea In addition and development inLatin America Berkeley University of California Press pp Deyo F ed The political economy of the University pp Evans P Dependent development Princeton PrincetonUniversity Press Evans Monthly Review Press Gereffti G economy in the newglobal order Chapel Hill F Ed The political economy of the newAsian industrialism Ithaca G The political economy of political economy of the new Asian industrialism role of foreign capital in economicdevelopment In Gereffti G Princeton UniversityPress pp
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