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Three Books on Korea
Journal of Asian Economics 14 (2003) 679–680
Book review Three Books on Korea The South Korean Economy: Towards a New Explanation of an Economic Miracle Junmo Kim (Ed.), Ashgate Publishing Ltd., Hampshire, UK, 2002 Reforming Korea’s Industrial Conglomerates Edward M. Graham (Ed.), Institute for International Economics, Washington, DC, 2002 The Korean Diaspora in the World Economy C. Fred Bergsten, Inbom Choi (Eds.), Institute for International Economics, Washington, DC, 2003 These three small volumes (each within 200 pages) form part of a rapidly growing literature on an economy whose recent experience offers a variety of lessons—both positive and negative—on available paths toward economic transformation and modernization. Kim’s South Korean Economy is an effort to explain the success and failures of the Korean model of late industrialization, with its emphasis on heavy and chemical industry development and reliance on the large corporate combines. The approach is to analyze wage growth patterns in individual industries as a measure of industrial performance, using cluster analysis and other pattern-discerning statistical methods to identify causal roles of investment, interest-rate policy, and (impliedly) government. The book would have benefited from more editing, as a wordy style and somewhat loose use of English grammar make it more difficult to penetrate than it needs to be. The near-exclusive reliance on a single statistical approach makes it difficult to be confident in the interpretations offered. Still, the book raises important questions about what it calls the ‘‘East Asian’’ model of industrialization, and makes a serious effort to answer them based on the facts. The chapter comparing Korean and Japanese experience brings out the interesting differences (importance of foreign capital, export reliance, and extent to which large combines have been favored over smaller enterprises or SMEs) as well as similarities. Other chapters explore the differential effects, now diminishing, on SMEs of the government’s past approach, and the future prospect for curing consequent financial weaknesses and successfully embracing the newer digital and service sector technologies. Graham’s Reforming Korea’s Industrial Conglomerates covers essentially the same period of time and asks some of the same questions; it employs a more narrative approach although with extensive statistical documentation. While the book’s objective is to explain the contribution of the combines (chaebol) to Korea’s economic development and assess policies toward them, in the process it provides a good overview of Korean industrial policies of the past four or five decades, as well as the policy response to the late-1990s 1049-0078/$ – see front matter # 2003 Elsevier Inc. All rights reserved. doi:10.1016/S1049-0078(03)00092-7
680
Book review
economic crisis. With respect to both the policies of successive Korean administrations and the chaebol themselves, the book describes Korea as an economy remarkable both for its outstanding successes and for some major failures in negotiating the transformation into an industrialized, market economy. A major theme is the costs of having allowed financial development to lag behind from the mid-1980s, when industry policy began to be dismantled. Graham argues that this prevented the emergence of financial institutions as a countervailing power to the chaebol and politicians, and thus deterred industrial firms from making necessary adjustments to the changed conditions of a mature economy. Problems of the top firms, exposed during the upheavals of 1998, are traced not only to financial but also economic failures, evidenced by declining productivity and other measures in the preceding period. The discussion of reform to date and reform still needed contains many familiar ideas: on how to strengthen financial institutions, transparency, corporate governance, bankruptcy procedures, and labor market flexibility. But the background on Korea’s experience to date, including detailed stories of the Dae Woo and Hyundai groups, puts flesh on these bones that inform the ongoing debate about why and how Korea’s economy and the combines need to and are likely to change. The Korean Diaspora in the World Economy is a conference volume on an unusual topic: the contributions and experience of offshore ethnic Korean communities in a global economy. Individual chapters explore the experience of ethnic Koreans in China, Japan, and the United States; another compares the Korean ‘‘diaspora’’ to the offshore business networks of ethnic Chinese. Ethnic Koreans overseas number something under 6 million, small relative to their 36 million Chinese counterparts (outside mainland China, Taiwan, and Hong Kong); but compared to the total population living within North and South Korea they are comparatively large at almost 10% (the figure for offshore Chinese is said to be 2.6%). The articles bring out at least as much about the variety of experience—both in how different societies accept and utilize the contributions of ethnic minorities and in how those minorities adapt to local circumstances and change—as they do of Korea-specific implications. Indeed, much of the first chapter by Imbom Choi is devoted to exploring what ‘‘diasporas’’ are and how they differ in origin and experience. The approach of different chapters varies: several are by demographers, others by economists. Marcus Noland’s contribution uses cross-section analysis of state level data to measure the contribution of Korean immigration to US economic growth (found to be positive). The opening and closing chapters take a distinctly positive view of Korea’s (and Koreans’) potential role in the future global economy. This is to be expected from a project jointly sponsored by the Overseas Koreans Foundation; but the analysis provided is serious, well supported, and thought-provoking. P. Kuwayama 119 West 22nd Street, Floor 1 New York, NY 1001, USA
Book review Three Books on Korea The South Korean Economy: Towards a New Explanation of an Economic Miracle Junmo Kim (Ed.), Ashgate Publishing Ltd., Hampshire, UK, 2002 Reforming Korea’s Industrial Conglomerates Edward M. Graham (Ed.), Institute for International Economics, Washington, DC, 2002 The Korean Diaspora in the World Economy C. Fred Bergsten, Inbom Choi (Eds.), Institute for International Economics, Washington, DC, 2003 These three small volumes (each within 200 pages) form part of a rapidly growing literature on an economy whose recent experience offers a variety of lessons—both positive and negative—on available paths toward economic transformation and modernization. Kim’s South Korean Economy is an effort to explain the success and failures of the Korean model of late industrialization, with its emphasis on heavy and chemical industry development and reliance on the large corporate combines. The approach is to analyze wage growth patterns in individual industries as a measure of industrial performance, using cluster analysis and other pattern-discerning statistical methods to identify causal roles of investment, interest-rate policy, and (impliedly) government. The book would have benefited from more editing, as a wordy style and somewhat loose use of English grammar make it more difficult to penetrate than it needs to be. The near-exclusive reliance on a single statistical approach makes it difficult to be confident in the interpretations offered. Still, the book raises important questions about what it calls the ‘‘East Asian’’ model of industrialization, and makes a serious effort to answer them based on the facts. The chapter comparing Korean and Japanese experience brings out the interesting differences (importance of foreign capital, export reliance, and extent to which large combines have been favored over smaller enterprises or SMEs) as well as similarities. Other chapters explore the differential effects, now diminishing, on SMEs of the government’s past approach, and the future prospect for curing consequent financial weaknesses and successfully embracing the newer digital and service sector technologies. Graham’s Reforming Korea’s Industrial Conglomerates covers essentially the same period of time and asks some of the same questions; it employs a more narrative approach although with extensive statistical documentation. While the book’s objective is to explain the contribution of the combines (chaebol) to Korea’s economic development and assess policies toward them, in the process it provides a good overview of Korean industrial policies of the past four or five decades, as well as the policy response to the late-1990s 1049-0078/$ – see front matter # 2003 Elsevier Inc. All rights reserved. doi:10.1016/S1049-0078(03)00092-7
680
Book review
economic crisis. With respect to both the policies of successive Korean administrations and the chaebol themselves, the book describes Korea as an economy remarkable both for its outstanding successes and for some major failures in negotiating the transformation into an industrialized, market economy. A major theme is the costs of having allowed financial development to lag behind from the mid-1980s, when industry policy began to be dismantled. Graham argues that this prevented the emergence of financial institutions as a countervailing power to the chaebol and politicians, and thus deterred industrial firms from making necessary adjustments to the changed conditions of a mature economy. Problems of the top firms, exposed during the upheavals of 1998, are traced not only to financial but also economic failures, evidenced by declining productivity and other measures in the preceding period. The discussion of reform to date and reform still needed contains many familiar ideas: on how to strengthen financial institutions, transparency, corporate governance, bankruptcy procedures, and labor market flexibility. But the background on Korea’s experience to date, including detailed stories of the Dae Woo and Hyundai groups, puts flesh on these bones that inform the ongoing debate about why and how Korea’s economy and the combines need to and are likely to change. The Korean Diaspora in the World Economy is a conference volume on an unusual topic: the contributions and experience of offshore ethnic Korean communities in a global economy. Individual chapters explore the experience of ethnic Koreans in China, Japan, and the United States; another compares the Korean ‘‘diaspora’’ to the offshore business networks of ethnic Chinese. Ethnic Koreans overseas number something under 6 million, small relative to their 36 million Chinese counterparts (outside mainland China, Taiwan, and Hong Kong); but compared to the total population living within North and South Korea they are comparatively large at almost 10% (the figure for offshore Chinese is said to be 2.6%). The articles bring out at least as much about the variety of experience—both in how different societies accept and utilize the contributions of ethnic minorities and in how those minorities adapt to local circumstances and change—as they do of Korea-specific implications. Indeed, much of the first chapter by Imbom Choi is devoted to exploring what ‘‘diasporas’’ are and how they differ in origin and experience. The approach of different chapters varies: several are by demographers, others by economists. Marcus Noland’s contribution uses cross-section analysis of state level data to measure the contribution of Korean immigration to US economic growth (found to be positive). The opening and closing chapters take a distinctly positive view of Korea’s (and Koreans’) potential role in the future global economy. This is to be expected from a project jointly sponsored by the Overseas Koreans Foundation; but the analysis provided is serious, well supported, and thought-provoking. P. Kuwayama 119 West 22nd Street, Floor 1 New York, NY 1001, USA