Korea's Developmental Alliance: State, Capital and the Politics of Rapid Development (Routledge Advances in Korean Studies)

171 Pages·2008·0.55 MB·English

by  David Hundt

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Korea’s Developmental Alliance
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3111 South Korea is often cited as a case of miraculous transformation from poverty
4 to prosperity. Korea’s achievement of moving from one of the world’s poorest
5 countries as recently as the early 1960s to the ranks of the ten biggest econ-
6 omies only four decades later has rightly attracted interest from policymakers
7 and scholars alike.
8 This book identifies the factors that shaped relations between the state and
9 big business in Korea, the ‘developmental alliance’. These factors offer a
20111 cogent framework in which to identify and predict changes in power relations
1 between government and business. Rather than merely offering a means
2 of explaining the rapid-growth phase of Korean development, the politics of
3 the developmental alliance also help us understand how and why the Korean
4 miracle turned to crisis in 1997 and why the subsequent recovery has been
5 so uneven. In this way, the book highlights the political power of business,
6 which is often underplayed in discussions of the development of Korea. It
7 also sheds light on the constraints on policymakers during modernisation,
8 and how power is shared among a small number of powerful parties.
9 Illustrating the tumultuous politics of the ‘developmental alliance’ between
30111 business and government during the rise and decline of South Korea’s
1 economic miracle, this book is an essential read for anyone interested in
2 Korean politics, economics and development.
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4 David Hundt is Lecturer in International Relations at Deakin University,
5 Australia.
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Routledge Advances in Korean Studies
1 The Politics of Economic Reform 9 Industrial Relations in Korea
in South Korea Diversity and dynamism of Korean
A fragile miracle enterprise unions from a
Tat Yan Kong comparative perspective
Jooyeon Jeong
2 Market and Society in Korea
Interest, institution and the 10 The Global Korean Motor
textile industry Industry
Dennis McNamara The Hyundai motor company’s
global strategy
3 Social and Economic Policies in
Russell D. Lansbury, Chung-Sok
Korea
Suh and Seung-Ho Kwon
Ideas, networks and linkages
Dong-Myeon Shin 11 Korean Workers and Neoliberal
Globalisation
4 North Korea in the World
Kevin Gray
Economy
Edited by E. Kwan Choi,
12 Korea in the New Asia
Yesook Merrill and E. Han Kim
East Asian integration and the
China factor
5 Legal Reform in Korea
Francoise Nicolas
Edited by Tom Ginsburg
6 Women, Television and 13 Foreign Direct Investment in
Everyday Life Post-Crisis Korea
Journeys of hope European investors and
Youna Kim ‘mismatched globalization’
Judith Cherry
7 Transformations in Twentieth
Century Korea 14 Korea Confronts Globalization
Edited by Chang Yun-Shik and Edited by Chang Yun-Shik,
Steven Hugh Lee Hyun-ho Seok and
Donald L. Baker
8 The Development of Modern
South Korea 15 Korea’s Developmental Alliance
State formation, capitalist State, capital and the politics of
development and national identity rapid development
Kyong Ju Kim David Hundt
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Alliance
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6 State, capital and the politics
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of rapid development
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David Hundt
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First published 2009
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 5RN
Simultaneously published in the USA and Canada
by Routledge
29 West 35th Street, New York, NY 10001
This edition published in the Taylor & Francis e-Library, 2008.
“To purchase your own copy of this or any of Taylor & Francis or Routledge’s
collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.”
Routledge is an imprint of the Taylor & Francis Group,
an informa business
© 2009 David Hundt
All rights reserved. No part of this book may be reprinted or
reproduced or utilised in any form or by any electronic,
mechanical, or other means, now known or hereafter
invented, including photocopying and recording, or in any
information storage or retrieval system, without permission in
writing from the publishers.
British Library Cataloguing in Publication Data
A catalogue record for this book is available
from the British Library
Library of Congress Cataloging in Publication Data
Hundt, David.
Korea’s developmental alliance: state, capital and politics of
rapid development/David Hundt.
p.cm.
Includes bibliographical references and index.
1. Business and politics—Korea (South). 2. Korea (South)—
Economic policy. 3. Economic development—Korea (South).
4. Korea (South)—Economic conditions. 5. Korea (South)—
Politics and government. I. Title.
HC467.756.H86 2008
338.95195—dc22 2008017316
ISBN 0-203-88906-1 Master e-book ISBN
ISBN10: 0–415–46668–7 (hbk)
ISBN10: 0–203–88906–1 (ebk)
ISBN13: 978–0–415–46668–4 (hbk)
ISBN13: 978–0–203–88906–0 (ebk)
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Contents
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3111 Acknowledgements vii
4 Abbreviations ix
5 Note on romanisation xi
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7 Introduction: The developmental alliance and
8 Korean development 1
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Prologue: a new beginning? 1
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Power and political economy in Korea 4
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The dynamics of the developmental alliance 6
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Overview of the book 9
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4 1 Korea in the political economy literature 13
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Introduction 13
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Appraising the neoclassical approach 14
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The developmental state and Korea 17
8 The structural power of business 23
9 Conclusions 28
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1 2 The dynamics of the developmental alliance 30
2 Introduction 30
3 From developmental state to developmental alliance 30
4 Conclusions: a new understanding of Korean development 38
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6 3 Priming for take-off 39
7 Introduction 39
8 Learning the lessons of Japan 40
9 Geopolitics and the imperatives of the Cold War 45
40111 The Rhee interregnum 49
1 Conclusions 53
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3 4 Forming the developmental alliance 56
44 Introduction 56
45111 In quest of infrastructural power 58
vi Contents
The view from Washington 60
An unruly alliance 64
The limits of state power 67
Containing the backlash 70
Conclusions 71
5 The developmental alliance in flux 74
Introduction 74
Retrenching the state? 75
The democratic interlude 80
Kim Young-sam and globalisation 84
No way out? 90
6 Realigning the alliance 93
Introduction 93
The paradox of neoliberal reform 94
Learning to love the IMF 95
Repositioning the state 97
The taming of the two 100
The politics of chaebol discipline 104
Widening the alliance? 108
From crisis to recovery 110
Conclusions 113
7 The alliance in retrospect 115
Introduction 115
Bureaucracy 116
Social pressures 117
National security 119
Economic conditions 121
Globalisation 123
Patterns of change 124
Understanding change 127
Still the developmental alliance? 129
The alliance and the market 130
Appendix 1 135
Key personages in the Korean developmental alliance
Appendix 2 140
Glossary of Korean terms used in the text
References 141
Index 155
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Acknowledgements
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3111 This book is the product of over fifteen years of involvement in the field of
4 Korean Studies. The Korean staff at Griffith University – Professors Jung
5 Jae-Hoon, Kim Chong-Woon and Nah Minjung – cultivated in me an enduring
6 interest in this fascinating society. I am also grateful to Kim Yong-gi, Kim
7 Hyeong-nam, Oh Mihwaja, Oh Kuija, Kim Hyeon-suk, Park Eun-sil, Chae
8 Seong-il, Shin Seung-jun and Babak Bahmanzad. I thank Seoul National
9 University’s Professors Yoon Young-Kwan and Shin Wookhee for overseeing
20111 my masters thesis, and Kim Song-geon, Hur Gil-sang, Kim Joo Hwan, Dr
1 Park Tae-gyun, and Dr Kim Joo Hwan for their assistance during my visit
2 to Korea in 2004 for doctoral research. I would like to thank those people
3 who agreed to interviews for my research. Officials from the Korean
4 Democratic Labour Party, the National Assembly and the FKI offered valuable
5111 insights and information that assisted the writing of my thesis.
6 I would like to thank my supervisory team at the University of Queensland.
7 Stephen Bell supported my research over a four-year period, and I am
8 grateful for his patient encouragement and advice. Mark Beeson, Roland
9 Bleiker and William Tow offered guidance at crucial stages of the thesis.
30111 Since moving to Deakin University, I have been the recipient of much
1 support and sagacious advice from colleagues such as Sally Totman and
2 Geoff Stokes, and Helen Andrew in terms of administrative support. I also
3 offer my thanks to Gary Smith, who ensured that the manuscript reached
4 this final stage of production.
5 Among the Korean Studies community in Australia, special mention goes
6 to Ruth Barraclough and Moon Kyoung-Hee. My doctoral candidature at the
7 University of Queensland was made more enjoyable and enriching thanks
8 to colleagues such as Greg Chaikin, Sarah Howe, John Mackenzie, Morgan
9 Brigg and Paul Carnegie. I also thank Brooke Anderson, Michael Bissell,
40111 Jane Park, Mark Reed and Jack Saunders for their friendship. I am also most
1 grateful to my family for their ongoing understanding at all times.
2 Finally, I would like to thank the people most directly involved in bringing
3 this book to fruition. Stephanie Rogers, Sonja van Leeuwen and Leanne
44 Hinves from Routledge not only provided valuable editorial direction but
45111 also did me a great service by sending the manuscript to two anonymous
viii Acknowledgements
reviewers, who provided many suggestions about how to improve its quality.
Furthermore I am indebted to the examiners of my doctoral thesis for incisive
commentary and encouragement to publish in the first place. It would also
be remiss of me to not comment on the sterling performance of Brendan
Harris as copy editor and commentator in the final stages of the manuscript’s
production. Despite the substantial input of all these contributors, I take full
responsibility for the final product.
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Abbreviations
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3111 BOK Bank of Korea
4 CEO chief executive officer
5 DA developmental alliance
6 D-E debt-to-equity (ratio)
7 DLP Democratic Liberal Party
8 DPRK Democratic People’s Republic of Korea
9 DRAM dynamic random access memory
20111 EOI export-oriented industrialisation
1 EPB Economic Planning Board
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FKI Federation of Korean Industries
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FRUS Foreign Relations of the United States (US government
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papers)
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FSC Financial Securities Commission
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GNP Grand National Party
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HCI Heavy and Chemical Industry (project)
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HDTV high-definition television
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HMWU Hyundai Motor Workers Union
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IFIs international financial institutions
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IMF International Monetary Fund
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ISI import-substitution industrialisation
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KCIA Korean Central Intelligence Agency
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KCTU Korean Council of Trade Unions
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M&A mergers and acquisitions
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MCI Ministry of Commerce and Industry
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MITI Ministry of International Trade and Industry (Japan)
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MOF Ministry of Finance
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40111 MOFE Ministry of Finance and Economy
1 NBFI non-bank financial institution
2 NGO non-governmental organisation
3 NPL non-performing loan
44 PSPD People’s Solidarity for Participatory Democracy
45111 ROK Republic of Korea