Korea and Taiwan’s experience of economic development exhibit many similarities as well as differences.
Examine in length how these two countries differ critically in terms of their development experience. Do these differences have lasting implications for the country’s economy, politics and/or society?In the process, discuss how well Taiwan and Korea fit the “governed market” theory.
South Korea and Taiwan both belong to the small group of first generation”Asian tigers” also including Hong Kong and Singapore. The two economies which are subject of this study share a number of common features. First, like Korea, Taiwan was a Japanese colony and was tightly integrated into the Japanese economic system. A substantial industrialized base and physical infrastructure was established by the Japanese to utilize local labour and materials. Second, both South Korea and Taiwan have a difficult external political situation. In the case of Taiwan, there is claim by the People’s Republic of China (PRC) of it being an integral part of the mainland, and in the case of Korea there is external threat from the unstable North Korea.
Both South Korea and Taiwan can also be described, at least in earlier periods, as being authoritarian corporatist states. They also share common features in the development path, going through primary-substituting industrialization, primary export-oriented industrialization and secondary import-substituting industrialization as well as secondary export-oriented industrialization.
In the early phase of development much of industrial production took advantage of abundant labour supply and later moved into consumer goods industries and more capital-intensive industries. These stages in industrial development correspond rather well to the notion of technological learning found in the sequences of industrial development, implying successively higher capital-ratios and higher levels of technological sophistication (Tier 1 to Tier 4), although...