Big Business, Strong State:  Collusion and Conflict in South Korean Development, 1960-1990, by Eun Mee Kim.  SUNY Series in Korean Studies.  Albany:  State University of New York Press, 1997.  224pp. (ISBN 0-7914-3209-2 cloth; ISBN 0-7914-3210-6 paper).

Reviewed by Ruediger Frank
Humboldt University Berlin

[This review first appeared in Acta Koreana, 2 (1999): 153-56.
Acta Koreana is published by Academia Koreana of Keimyung University.]

The research for this book started as early as the 1980's, and considering the fact that it was published in 1997, it covers a period of tremendous development, both in South Korea itself and in the academic community as well.  Writing books about the South Korean economic takeoff became increasingly en vogue in the West as the success of the former developing country became more and more visible.  The main arguments in publications considering the reasons for and interpretation of this fact vary:  from a model case for other countries, to a successful follower of a Japanese example or a bubble doomed to end in chaos -- numerous points of view have been offered.  Engaged in this discussion were not only dozens of unknown young scholars writing their doctoral dissertations, but also real heavyweights in the fields of international economics or political science.

Consequently, the first question to ask must be:  Has the author offered anything new in her book? Eun Mee Kim explicitly states her main arguments as follows:

(1) "South Korea's rapid economic development was attained initially by a tight alliance formed between a strong, developmental state and big businesses."(p. 4)

(2) "The relations between the state and capitalists changed in the course of successful economic development.  The relationship is a dynamic one . . ." (p. 5)

(3) "The developmental state underwent significant transformations in the course of successful economic development, from a 'comprehensive' to a 'limited' developmental state." (p. 5)

(4) "The chaebol were not complacent rent-seekers in spite of generous state subsidies provided to them.  The largest and most successful chaebol did not solely rely on state subsidies and protection." (p. 6)

Argument (1) per se can hardly be regarded as new, but the author opposes it to views of the World Bank, which she says has consciously underestimated the role of the state in favor of market forces.  Arguments (2) and (3) seem to be trivial because among other things the word "development" itself implies dynamics.  The author stresses this point because others have tried to describe the South Korean development since 1961 with a static model.  Possibly, she misunderstood their intention:  to simplify reality in order to make some otherwise hidden points more visible.  Rather surprisingly, a nearly perfect means of strengthening argument (3) - comparing the five-year plans for economic development - is not used.  A review of the plans would support what the author claims - a shift from a strict and detailed interference to a broader, frame-setting approach.  As for argument (4), one of the key elements in the success of the South Korean planned economy (which was missing in the East-block countries until the '80's) has been the policy of keeping parts of the market intact as a means of fostering competition and competitiveness.  >From this point of view, an entrepreneurial spirit, risk-taking, and innovation have all been an integral part of the overall development strategy.  Relying solely on the state would not have allowed this, so argument (4) also does not seem too revolutionary.  What can be extracted as the main message of the book is that development in South Korea has not followed a static path, but has been dynamically adapted to varying conditions.  Regarding the contacts between the state and big business, this relationship itself provided the momentum for change.  According to the author, the ability to adapt to new challenges and to get rid of old practices -- often referred to by critics as trial-and-error policy -- is the key to South Korea's economic success (see p. 228).

The second basic question concerns the position the author takes in the debate on the significance and direction of South Korea's path.  According to Eun Mee Kim, there is no static South Korean model (p. 214); South Korea has indeed roughly followed the Japanese example, though with modifications (p. 221), and it will be hard for other nations to follow the South Korean path because the external (in the sense of objektiv in Marx's terminology) influences on its development have been unique; furthermore, it will hardly be possible to obtain the resources for a strong developmental state in the midst of an international climate of liberalization (p. 223).  As for the future direction of South Korea's economic development, the author sees a chance for success if both the question of indigenous, independent technological development and of a stable relationship between the state, business, and labor are satisfactorily settled.  This is highly possible ". . . precisely because South Korea's success lies not in a static formula . . . but in its creativity and flexibility in overcoming structural obstacles and challenges" (p. 228).  This stands in a slight contradiction to what is said about the relevance of the South Korean example for other countries and the significance of external conditions (some economists call them the "window of opportunity").

After an introduction on the research subject and methodology, Part One, "Institutions of Development," introduces the above-mentioned key players. The state is described both in its initial form at the beginning of the Third Republic and during the transformation (see argument 3).  The chaebôl are shown both in their organizational structure and in their historical development, which is important to know if one wants to understand what the motives for their (or their chairmen's and CEO's) actions could be.  Part Two, "History of Development," is divided into three chapters, covering the '60's, '70' and '80's, respectively.  Here, the main developments are named, but the most detailed parts concern the chaebôl.  The final chapter is dedicated to summarizing what has been said before and to discussing the validity of the South Korean development as a model, both in itself and for Third World nations.  Every chapter ends with a short conclusion, which makes the book very easy to use.

Some minor errors have occurred, however.  The use of the year 1960 in the title is misleading, because the author surely has in mind the take-off initiated by Park Chung Hee, who came to power in May 1961.  In addition, like many other scholars, Eun Mee Kim underestimates the role of the Syngman Rhee era as the foundation for Park's success.  Also, the choice of 1990 is not clearly understandable.  One could consider the mega-merger of the political parties in that year, but if this was the reason, it has not been so stated by the author.  The end of the Fifth or the Sixth Republic would have been a more logical stopping point.  When citations are made, the source is named, but the exact page numbers appear only occasionally -- and their lack will be noticed by those who want to get deeper into specific debates without having to look through dozens of books in detail. Only cosmetic but nevertheless unnecessary is the transcription of chaebôl as chaebol - in spite of citing the ROK Ministry of Education's romanization rules as the standard for the book (p. 229) and correctly using the brève in other places.  The same is true for charip (independent), which is transcribed as chalip (p. 103-104).  While correctly citing the support by the United States as elementary for the realization of Park Chung Hee's plans, neither the Vietnam War nor the 1965 Normalization Treaty with Japan are evaluated -- even though Cho Hak Chung's relevant work (Effects of the Vietnam War and the Normalizationof the Korean Japanese Relationson the Korean Economic Development in the 1960s, 1972) is cited in the references.  Some statements may provoke further debate.  So it is not very convincing to call the very existence of advanced industrialized nations an obstacle for the further economic development of Third World countries (p. 215).  The history of South Korea's technology -- acquisition by licensing and reverse engineering -- indicates the opposite.  With nobody to follow, not only would all the inventions have had to be made with the scarce resources of a small county, but also all the mistakes.

Nevertheless, the book is definitely worth reading and highly recommendable, though perhaps not for someone without knowledge of South Korea's economic and political development.  For beginners it probably would be more effective to choose a book like Cho Soon's The Dynamics of Korean Economic Development, Woo Jung-en's Race to the Swift, or Sakong Il's Korea in the World Economy.  Readers who already possess some basic knowledge on the topic should profit from reading Big Business, Strong State and will probably enjoy it as well, since this book is not just another descriptive, chronological economic history of the Park era and its aftermath.  Instead, the writer takes a more sociological approach, focusing on the role of two key players -- the state and the chaebôl -- and, last but not least, offers many points for discussion.  Accordingly, the most interesting chapters are numbers 2, 3, 6, and 7.  The strength of Eun Mee Kim's work undoubtedly lies in her clear and solidly founded analysis.  This is true, among other things, for the connection between democratization and the change of economic policy paradigms, the sources of the take-off, and the illustration of the players' reactions to changing internal and external conditions.