[KS] KSR 1999-11: _Big Business, Strong State: Collusion and Conflict

[Stephen Epstein]

_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
chaeb™l 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
chaeb™l.  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 chaeb™l 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 brve 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 Normalization of
the Korean Japanese Relationson the Korean Economic Development in
the1960s_, 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 chaeb™l --
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.

Citation:
Frank, Reudiger  1999
Review of Eun Mee Kim, _Big Business, Strong State:  Collusion and Conflict
in South Korean Development, 1960-1990_ (1997)
Korean Studies Review 1999, no. 11
Electronic file:
http://www.mailbase.ac.uk/lists/korean-studies/files/ksr99-11.htm
[This review first appeared in _Acta Koreana_, 2 (1999): 153-56]


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