1. Advisory Statement Professor Lim’s PowerPoint presentations are optimized for the Mac (OS X). Windows-based PC users may find some or all of the slides unviewable due to formatting incompatibilities. These slides have not been tested on Vista. This presentation is the intellectual property of Professor Timothy C. Lim Most images, pictures and charts are from third party sources

2. POLS 459 Politics of East Asia The Late Developers: South Korea and Taiwan October 25, 2007 Timothy C. Lim, Ph.D. California State University, Los Angeles Contact: tclim@calstatela.edu

3. The Late Developers: South Korea and Taiwan Getting Started … “The ‘East Asian Model’ is not of a piece. Despite many commonalities among the East Asian newly industrializing countries or NICs, it is important to understand the variations within them” One of the most salient differences has do with regime dynamics What does this term mean?

4. The Late Developers: South Korea and Taiwan Regime Dynamics Refers to the gaining or losing political legitimacy and the weakening or reconsolidation of political power More simply, regime dynamics refers to what happens (both within particular a political system--i.e., the “regime”--and also between that political system and other actors) that affects the relative power of the regime. Regime dynamics also refers to how political power is exercised, and to the limits on the exercise of power

5. The Late Developers: South Korea and Taiwan Getting Started: Three “Organizing” Questions How were developmental transitions made? How were developmental transitions executed? In each case, how did the sociopolitical consequences of a particular approach to development affect future strategies? 1 1 2 2 3 3

6. The Late Developers: South Korea and Taiwan Key Points: Three Major Mistakes This is a mistake!East Asian development is often depicted as a smooth, almost automatic transition from one economic stage to another--e.g., from ISI to EOI. This is a mistake! This is a mistake!East Asian development is often portrayed as an essentially generic process in that it unfolded in the same manner in Japan, South Korea, and Taiwan. This is a mistake! This is a mistake!East Asian development is also understood as a primarily economic rather than largely political process. This is a mistake!

7. The Late Developers: South Korea and Taiwan Key Points: The Politics of Development To understand why such mistakes are made, let’s begin with a basic assertion … “Development” is never a neutral process. There are always “winners” and “losers” and there are always trade offs, especially in the short run What does this statement tell us?

8. The Late Developers: South Korea and Taiwan Key Points: The Politics of Development Initiating a new development strategy and implementing one are not the same: implementation, or execution, is a separate process with multiple paths The path that is ultimately followed is often dependent upon a political process: Cheng, in particular, focuses on “the coalitional base of the regime constructed during the process of political change”

9. The Late Developers: South Korea and Taiwan Key Points: The Politics of Development South Korea’s EOI path favored a centralization of policy instruments, especially the power to access foreign and domestic credit Taiwan’s EOI path favored a decentralized approach, using fiscal incentives (e.g., tax breaks) and encouraging foreign direct investment (FDI) Why this difference? Examples Next slide offers a simple answer

10. The Late Developers: South Korea and Taiwan Key Points: The Politics of Development Why did South Korea and Taiwan implement EOI in dramatically different ways? Short answer: Politics, and more specifically, regime dynamics To really understand the differences, therefore, we need to begin by looking more closely at the differences in the type of ___________ that exist(ed) in each country regime

11. The Late Developers: South Korea and Taiwan Key Points: Regime Types South Korea and Taiwan, in the early postwar period both had __________________ regimes However, authoritarian regimes are not all the same … South Korea: strong bureaucracy sustained by state-business alliance and a visible, coercive apparatus; political leadership was entirely indigenous Taiwan: ruled by a dominant party (the KMT) that maintained (1) tight control over the state, (2) quasi-corporatist structure in the society, and (3) initially a large public sector; political leadership was composed of “foreigners” from the mainland, while economy was dominated by Taiwanese authoritarian

12. The Late Developers: South Korea and Taiwan Key Points: Regime Types Consider Taiwan: Political leadership and economic elite had different interests Political leaders wanted to preserve their dominance in Taiwan vis- à-vis local capital, but still needed a strong, dynamic economy: What type of policy choice did this encourage? In general, the KMT chose policies “that would fragment business, disperse economic power and expand latitude for economic distribution in order to buttress the state’s power bases in society”

13. The Late Developers: South Korea and Taiwan Key Points: Sociopolitical Bases “Development is a cumulative process; once the policy pattern is set in motion, it tends to sustain itself and, in the event of a regime change, to reproduce itself. Different sets of policy tend to shape, and then become anchored in, a particular social structure …” More specifically, different “approaches to ISI and EOI resulted in different sociopolitical consequences that further constrain the way a development strategy is pursued in the following stage” In short, the development process contains an important element of social inertia (or path dependence) …

14. The Late Developers: South Korea and Taiwan Different Developmental Paths The Transition to ISI in Taiwan and South Korea History and “situational imperatives” played a key role in the initial transition to ISI for both countries Colonial rule left the political-economic landscape fairly open to ISI: “No social interested existed to hinder or advocate ISI” Once the transition to ISI was made, however, Taiwan and South Korea moved in different directions, and the results were very different--gradual surplus generation in Taiwan vs. rent-seeking in South Korea: one economy was moving up, the other down

15. The Late Developers: South Korea and Taiwan Different Paths to Development Why were different paths followed? Despite a similar colonial experience, the postcolonial process differed markedly Postcolonial South Korea was turned over to the American military government (AMG), while Taiwan was dominated by a highly disciplined and cohesive party, the KMT AMG rule encouraged a scramble for power, among both political and economic “entrepreneurs,” while KMT rule was purposeful, organized, and iron-fisted

16. The Late Developers: South Korea and Taiwan Different Paths to Development Sociopolitical Inertia TheThe initial developmental path in South Korea solidified the position of a new, powerful and very privileged capitalist class, and to a lesser extent, a class of rent-seeking political entrepreneurs initial developmental path in Taiwan solidified the position of the KMT (and Taiwan’s leader, Chiang Kai-shek)

17. The Late Developers: South Korea and Taiwan Different Paths to Development The Transition to EOI “The transition to EOI in the East Asian NICs was exceptional, for a less developed country (LDC) with some natural resource base tends to perpetuate ISI, a path of least resistance that avoids the pains of dismantling protected interests, both private and bureaucratic” So why did both Taiwan and South Korea make the transition to EOI? (Discuss)

18. The Late Developers: South Korea and Taiwan Different Paths to Development The Transition to EOI Internal pressures The limits of ISI in small markets Economic or financial crisis External pressures and changes in the international context American aid and priorities Opportunities in key export markets

19. The Late Developers: South Korea and Taiwan Different Paths to Development The Transition to EOI: Key Points The transition to EOI was not inevitable in either Taiwan or South Korea; in both cases, there were significant obstacles This was especially true in South Korea: indeed, it took a military “revolution” to bring about the change Once the transition was made, however, regime dynamics and pre-existing sociopolitical forces continued to exert control over the implementation of the new economic strategy, EOI

20. The Late Developers: South Korea and Taiwan Different Paths to Development The Transition to EOI: Questions How (and why) did implementation of EOI differ in the two countries, Taiwan and South Korea? What were the sociopolitical consequences? Note: No answers are provided here. If you cannot answer these questions now, you need to re-read the relevant sections of the article on your own to find the answers.

21. The Late Developers: South Korea and Taiwan Different Paths to Development: Some Lessons Cheng’s analysis tells us that economic development, despite outward appearances, is also a profoundly political processCheng’s analysis tells us that economic development, despite outward appearances, is also a profoundly political process Economic development is highly contingent, but also path dependentEconomic development is highly contingent, but also path dependent Economic development is grounded in sociopolitical forces, both historical and contemporaryEconomic development is grounded in sociopolitical forces, both historical and contemporary Developmental paths are both “chosen” and “given”Developmental paths are both “chosen” and “given” Developmental paths are highly variableDevelopmental paths are highly variable