The Developing Economies
Volume 35, Number 4 (December 1997)
■ The Developing Economies Volume 35, Number 4 (December 1997)
■ B5
■ 105pp
■ December 1997
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CONTENTS
Special Issue: Development Mechanisms in Korea and Taiwan
A Comparative Study of Development Mechanisms in Korea and Taiwan: Introductory Analysis, (89KB) / Tamio Hattori and Yukihito Sato
A Distributive Comparison of Enterprise Size in Korea and Taiwan (125KB) / Makoto Abe and Momoko Kawakami
Diverging Development Paths of the Electronics Industry in Korea and Taiwan (1MB) / Yukihito Sato
Democratization of the Taiwanese and Korean Political Regimes: A Comparative Study (53KB) / Masahiro Wakabayashi
Chaebol-Style Enterprise Development in Korea (1MB) / Tamio Hattori
Abstract
Tamio
Hattori
and
Yukihito
Sato,
"A
Comparative
Study
of
Development
Mechanisms
in
Korea
and
Taiwan:
Introductory
Analysis,"
pp.
341-57.
This
article
is
the
introduction
to
a
special
issue
of
The
Developing
Economies
which
presented
the
results
of
a
research
project
by
the
Institute
of
Developing
Economies
that
examined
the
development
mechanisms
in
Korea
and
Taiwan.
Our
conclusion
in
this
article
is
that
their
development
mechanisms,
despite
their
similar
development
patterns
of
export-led
industrialization,
have
been
essentially
different:
a
government-led
mechanism
in
Korea
as
opposed
to
a
market-led
mechanism
in
Taiwan.
We
verified
this
difference
through
comparative
studies
of
the
two
economies
covering
trade
balances,
the
growth
of
total
factor
productivity,
the
scale
of
enterprises
and
business
groups,
and
the
development
processes
of
individual
manufacturing
sectors.
In
our
explanatory
discussion
we
propose
that
the
difference
in
the
mechanisms
is
based
on:
1)
the
amount
of
accumulation
in
the
economy
at
the
time
postwar
industrialization
started,
2)
the
relationship
between
government
and
society,
and
3)
the
mechanism
of
social
network
formation.
Satoru
Okuda,
"Industrialization
Policies
of
Korea
and
Taiwan
and
Their
Effects
on
Manufacturing
Productivity,"
pp.
358-81.
In
this
paper
the
total
factor
productivity
(TFP)
of
the
manufacturing
sectors
in
Taiwan
and
the
Republic
of
Korean
was
measured
and
compared
using
the
growth
accounting
method.
Through
descriptive
analysis,
inefficiency
in
the
Korean
manufacturing
sectors
was
revealed,
especially
for
the
period
prior
to
1986.
Also
for
the
period
posterior
to
1986,
it
was
found
that
TFP
tended
to
contribute
more
to
the
value-added
growth
in
both
countries.
An
econometric
analysis
with
industrialization-related
variables
revealed
a
contrast
in
the
structure
of
TFP
growth
between
the
two
countries.
Import
penetration,
capital
intensity,
and
growth
of
real
output
were
estimated
to
exert
a
positive
productivity
impact
in
Taiwan,
reflecting
Taiwan's
flexibility
and
superiority
in
factor
utilization
compared
with
Korea.
It
was
estimated
that
the
export
ratio
did
not
have
any
major
productivity
impact
in
both
countries,
in
contrast
with
the
results
reported
by
the
World
Bank
(
The
East
Asian
Miracle:
Economic
Growth
and
Public
Policy
,
New
York:
Oxford
University
Press,
1993).
Makoto
Abe
and
Momoko
Kawakami,
"A
Distributive
Comparison
of
Enterprise
Size
in
Korea
and
Taiwan,"
pp.
382-400.
Research
to
date
on
the
economic
development
of
the
Republic
of
Korea
and
Taiwan
has
frequently
contrasted
the
two
economies
by
depicting
the
former
as
centered
on
large-scale
enterprises
and
the
latter
on
small
and
medium-size
enterprises
(SMEs).
The
purpose
of
this
study
is
to
see
if
the
appropriateness
of
this
perception
will
also
be
verified
by
the
statistical
data.
In
Section
I
the
authors
utilized
census
data
on
the
Korean
and
Taiwanese
manufacturing
sectors
to
compare
the
distribution
pattern
of
the
sizes
of
enterprises
in
the
two
economies.
However,
on
examining
the
available
data
for
making
this
comparison,
the
authors
discovered
that
for
Korea
the
statistics
provided
are
those
at
the
level
of
the
establishment
(a
physical
unit
engaging
in
industrial
activities
such
as
a
factory,
workshop,
office,
or
mine)
while
the
statistics
for
Taiwan
are
those
at
the
enterprise
level.
Mindful
of
this
difference,
the
authors
looked
at
the
portion
of
the
economy
accounted
for
by
large-scale
establishments
in
Korea
that
employed
500
workers
or
more
and
by
enterprises
in
Taiwan
employing
the
same
number
of
workers,
and
they
discovered
that
the
portion
that
these
large-scale
businesses
account
for,
especially
in
the
area
of
output,
has
steadily
declined
since
the
1980s.
When
comparing
the
share
of
total
production
that
these
large-scale
establishments/enterprises
account
for
in
the
two
economies,
the
authors
concluded
that
those
in
Korea
accounted
for
a
larger
share
of
that
economy's
production
than
did
their
counterparts
in
Taiwan.
The
authors
then
compared
the
portion
of
the
economy
accounted
for
by
establishments
in
Korea
and
enterprises
in
Taiwan
that
employed
less
than
ten
workers,
and
they
found
that
the
portion
of
the
two
economies
that
these
very
small-scale
production
units
accounted
for
has
also
been
on
the
decline.
Section
II
compares
the
portions
of
the
two
economies
accounted
for
by
large
business
groups.
After
comparing
the
percentage
of
GDP
accounted
for
by
the
total
sales
of
these
business
groups,
the
authors
found
that
large
business
groups
in
Korea
have
played
a
far
more
important
role
in
Korean
economy
than
has
been
the
case
for
such
groups
in
Taiwan.
This
difference
in
the
importance
of
such
business
groups
in
the
two
economies
has
also
played
an
significant
part
in
fostering
the
perceived
dichotomy
of
large-scale
enterprises
playing
the
important
role
in
Korea
versus
SMEs
being
the
important
players
in
Taiwan.
Section
III
compares
the
percentage
of
total
exports
accounted
for
by
SMEs,
and
shows
that
SMEs
in
Taiwan
account
for
a
larger
share
of
exports
than
do
their
counterparts
in
Korea.
This
section
also
shows
that
in
Taiwan
the
share
of
export
sales
for
SMEs
has
consistently
exceeded
that
for
non-SMEs,
while
in
Korea
the
relationship
between
enterprise
size
and
the
rate
of
export
sales
has
been
directly
proportional.
This
difference
in
the
size
of
the
major
export
players
is
another
factor
fostering
the
perception
of
the
Korean
economy
being
centered
on
big
business
while
Taiwan's
is
on
SMEs.
Although
there
were
difficulties
and
limitations
when
comparing
the
data
of
the
two
economies,
the
statistical
comparison
undertaken
in
this
study
shows
that
in
general
big
business
has
played
the
major
role
in
the
development
of
the
Korean
economy
while
in
Taiwan's
economic
development
this
role
has
been
played
by
SMEs.
Thus
the
statistical
data
also
verifies
the
perceived
dichotomy
of
these
two
economies.
Yukihito
Sato,
"Diverging
Development
Paths
of
the
Electronics
Industry
in
Korea
and
Taiwan,"
pp.
401-21.
This
paper
examines
the
process
and
mechanism
of
economic
development
in
the
Republic
of
Korea
and
Taiwan
through
a
comparative
analysis
of
the
electronics
industry
in
each
country.
The
paper
will
show
that
in
its
initial
stage
of
development,
the
electronics
industry
in
both
economies
had
the
same
type
of
dual
structure:
a
domestic
demand
sector
based
on
the
protected
domestic
market,
and
an
export
sector
intended
to
capitalize
on
low-wage
labor
for
the
international
market.
However,
this
dual
structure
in
the
two
economies
faded
away
after
the
mid-1970s
as
their
respective
indigenous
export-oriented
enterprises
began
to
develop.
But
the
primary
industrial
players
in
each
economy
were
very
different.
In
Korea
they
were
comprehensive
electronics
manufacturers
affiliated
with
chaebols
,
and
in
Taiwan
they
were
small
and
medium-size
enterprises.
Differences
in
the
two
economies'
development
mechanisms
have
brought
about
this
divergence
in
development
paths.
In
Korea
this
mechanism
has
been
characterized
by
the
government's
positive
role
and
the
chaebol
's
readiness
to
react
to
the
government's
leadership.
In
Taiwan
the
development
mechanism
has
been
based
on
the
private
sector
independent
from
the
government.
As
an
extension
of
such
diverged
development
paths,
ICs
and
personal
computers
showed
spectacular
growth
in
Korea
and
Taiwan
after
the
1980s.
The
development
of
ICs
in
Korea
was
primarily
the
result
of
a
decisive
role
played
by
the
chaebol
's
sizable
financial
resources,
while
the
competitiveness
in
personal
computers
largely
reflected
the
agility
and
flexibility
of
Taiwanese
small
and
medium-size
enterprises.
Masahiro
Wakabayashi,
"Democratization
of
the
Taiwanese
and
Korean
Political
Regimes:
A
Comparative
Study,"
pp.
422-39.
Both
authoritarian
until
the
mid-1980s,
the
political
regimes
of
Taiwan
and
the
Republic
of
Korea
differed
significantly
in
the
nature
and
degree
of
stability.
While
the
Korean
regime
was
a
quasi-military
state,
the
Taiwanese
regime
can
be
characterized
as
a
quasi-conquering
state.
The
Taiwanese
regime
was
more
stable
than
the
Korean
regime.
These
differences
were
responsible
for
the
differences
in
the
democratization
processes
of
the
two
states.
The
Korean
democratization
process
belonged
to
the
"transplacement"
type
while
the
Taiwanese
process
to
the
"transformation"
type.
Ichiro
Numazaki,
"The
Laoban
-Led
Development
of
Business
Enterprises
in
Taiwan:
An
Analysis
of
the
Chinese
Entrepreneurship,"
pp.
440-57.
This
article
analyzes
the
attitudes
and
behavioral
patterns
of
the
laoban
,
the
"bosses"
who
own
and
manage
small
and
medium-scale
enterprises,
and
elucidates
the
six
salient
features
of
entrepreneurship
among
the
Taiwan
Chinese:
independence,
risk
taking,
moneymaking,
family
assets
over
corporate
capital,
partnership,
and
guanxi
.
The
laoban
can
and
does
produce
organizational
and
managerial
innovations
and
therefore
is
an
"entrepreneur"
in
a
Schumpetarian
sense.
The
author
further
argues
that
the
Chinese
family
is
the
incubator
of
laoban
and
Chinese
society
nourishes
and
sustains
the
laoban
-style
entrepreneurship.
The
author
maintains
that
the
laoban
have
been
the
driving
force
of
Taiwan's
economic
development
which
has
been
characterized
by
the
predominance
of
relatively
small
"family
firms"
concentrated
in
the
production
of
export-oriented
consumer
goods.
Tamio
Hattori,
"
Chaebol
-Style
Enterprise
Development
in
Korea,"
pp.
458-77.
Korean
economic
development
centered
mostly
on
business
conglomerates
called
chaebol
.
In
the
process
of
economic
development,
chaebol
enterprises
ceaselessly
grew
in
size,
giving
rise
to
an
industrial
structure
and
formation
very
different
from
those
of
Taiwan.
The
Korean
development
pattern,
like
that
of
Taiwan,
resulted
from
entrepreneurs'
efforts
to
minimize
their
risks
in
a
given
environment,
the
consequence
in
Korea
was
the
formation
of
chaebol
conglomerates.
The
difference
between
Korea
and
Taiwan
was
in
their
business
environments.
(1)
For
Korean
entrepreneurs,
establishing
a
number
of
subsidiaries
and
growing
gradually
into
a
chaebol
was
a
short-cut
which
minimized
risks
and
maximized
benefits.
(2)
The
government
exercised
monopoly
control
over
the
acquisition
and
allocation
of
investment
funds.
(3)
Human
networks
based
on
shared
home
regions
and
alma
maters
worked
to
convey
the
thoughts
and
inclinations
of
the
government
to
private
firms
and
vice
versa.