Comparative Perspective 600
the costs of repression. They preferred cooptation to repression to cut the cost of rulership and sustain a broad base of support. In this regard, the South Korean regime in the early 1960s scores high: its willingness to create a National Assembly and accept political parties is greater than might have been expected from its circumstances at installation.
The regimes with installation difficulties (Brazil and Mexico) and South Korea 1961–1972 followed similar strategies to govern society. They deactivated political participation and, for the most part, employed low levels of repression to accomplish this purpose, reducing the incentive for opponents to rise in protest. They employed state-corporatist instruments to control the society and harness it toward regime ends. Brazil and Mexico—but not South Korea 1961–1971—eschewed ideological appeals in order to deprive their critics of a standard by which to hold them accountable.
Argentina and Chile had primitive and politically ineffective authoritarian regimes. In order to govern, they bashed heads. They banned legislatures and parties, found it difficult and distasteful to co-opt critics, repressed brutally, and eschewed state-corporatist strategies. They deactivated political participation by force, thereby giving their opponents strong incentives to organize to defeat them. Argentina’s second dictatorship was generally a worse performer than its first dictatorship; alas, even though the second dictatorship at its start learned the utility of succession rules, its leaders broke those rules soon after the first scheduled succession.
The Park regime’s political effectiveness systematically deteriorated from the 1960s to the 1970s. By comparative political standards, it was an above-median performer in the 1960s (most often resembling Brazil) but a below-median performer in the 1970s. The Park regime in the 1960s employed the legislature, sponsored an official political party, preferred to coopt rather than to repress, attempted to frame organized labor within a state-corporatist scheme, and promoted political deactivation in urban areas but with low levels of repression. (The Park regime was the only one to create a fairly formal official ideology.) The founding of the yushin regime in 1972 led to worse performance on all of these dimensions. The longer Park ruled, the more politically underdeveloped his regime became. This pattern of political decay continued under his immediate successors.
Analytically, this chapter has proceeded in three steps across time. The first step shows broad, sufficient similarities between the cases to permit comparison. This step of the analysis also indicates that South Korea had the apparently most propitious hypothesized conditions prior to regime installation to meet the criteria for a “perfect dictatorship” sketched at the outset. Nevertheless, Park’s South Korea would become less politically
The Perfect Dictatorship?
601
effective than authoritarian regimes in Mexico and Brazil. Why did this happen?
The second step answers one part of this puzzle. It turns out that the hypothesized “propitious conditions” prior to installation proved counterproductive for longer-term authoritarian regime political efficacy. Instead, difficult installation circumstances are more likely to provide incentives for the authoritarian coalition to be politically innovative and to approximate the criteria of the “perfect dictatorship.” Five years after regime installation, this foundational variable correctly ranks four (see Table 20.5) of the five countries in terms of the cumulative political efficacy of their respective dictatorships: Mexico, Brazil, South Korea, and Argentina. However, Chile had an authoritarian installation but the behavior of its rulers resembled Argentina 1976 and eventually South Korea’s yushin rather than Mexico and Brazil. Moreover, regime trajectories changed not just in response to the initial installation but at some later time in Argentina 1976, Chile, and South Korea. Why did this happen?
The third step takes note that Generals Galtieri in Argentina, Pinochet in Chile, and Park in South Korea cared more for their personal power than for the construction of a broader-based authoritarian regime. Pinochet’s response to a difficult installation was not to shift away from repression but to impose his personal rule and repress more. Galtieri and especially Park, in turn, undid the more effective political means adopted earlier in their respective authoritarian regimes, concentrated power, and repressed more in the regime’s later years. Not every founding dictator behaved this way, and not every founding dictator who attempted to lengthen his rule succeeded, as the greater political success of authoritarian rule in Mexico and Brazil shows. Twenty years after installation, only the authoritarian regimes founded in Mexico and Brazil survived.
Table 20.5
Comparative rank order for authoritarian political effectiveness: Time dimension
Rank
At installationa
Installation + 5 years
Installation + 20 yearsb
1 Best
Argentina 1966
Brazil
Mexico
2
S. Korea
Mexico
Brazil
3
Argentina 1976
S. Korea
4
Brazil
Argentina 1976
5
Chile
Chile
6 Worst
Mexico
Argentina 1966
a. This column combines the two first columns in Table 20.2 prior to establishing succession rules.
b. The other authoritarian regimes no longer existed.
Comparative Perspective 602
Politically effective dictators seek political stability and economic growth. They hope that both goals will reinforce each other, but they value political stability more. Politically effective dictators prefer cooptation and preemption to repression and ex post responses to crises—they are proactive, not merely reactive. These are qualities, to be sure, that resemble those of effective democratic rulers.
“The perfect dictatorship is not communism, nor is it the Soviet Union, nor is it Fidel Castro: it is Mexico.”50 So alleged Peruvian novelist and es-sayist Mario Vargas Llosa in August 1990 during a series of round tables convoked in Mexico City by the dean of Mexican letters, the late Octavio Paz. Vargas Llosa noted that the long-term permanence of a single party in power, the manipulation of elections, and the suppression of domestic criticism marked this dictatorship. He also emphasized the political effectiveness and complexity of the Mexican regime’s procedures and institutions.
Park Chung Hee was an economic-growth visionary. The initial conditions that he faced at the start of his authoritarian regime and Korea’s high economic growth performance made the Park dictatorship the “most likely to succeed” politically. It should have relied less on crude repression and it should have lasted the longest. Yet Park’s authoritarian regime was less politically successful from its first to its second decade and generally less successful than those installed in Brazil and Mexico. Park’s choice of politically inept strategies leading up to and under the yushin system was a mistake. Park’s political errors probably contributed to his assassination and certainly to the death of the yushin system.
c h a p t e r
t w e n t y - o n e
Industrial Policy in Key
Developmental Sectors:
South Korea versus
Japan and Taiwan
Gregory W. Noble
Aremarkable surge in the production and export of commodity manufactures dramatically lifted the standard of living in South Korea, and became one of the most enduring legacies of the Park era. By the end of Park’s rule, labor-intensive manufactures such as textiles were increasingly joined by capital-intensive heavy industrial goods.
Explaining South Korea’s industrial accomplishment and placing it in comparative perspective is no easy task. Some authors have compared Korea, particularly under the second half of Park’s reign, to the bureaucratic authoritarian regimes of Latin America in the same period.1 This perspective highlights the dilemmas of
growth and the wary but interdependent relationship between generals and economic bureaucrats, but ultimately proves limiting, if not misleading. The immediate stimuli for South Korea’s yushin constitution were security concerns and politics (Park’s attempts to justify a third presidential term, and then the ruling party’s loss of the two-thirds legislative majority necessary to revise the constitution) rather than a crisis of accumulation. Latin America’s pattern of industrialization, with its mobilized labor unions, abundant natural resources, and high levels of direct foreign investment also was dramatically different from that of Korea.
An alternative approach focuses on the similarities linking South Korea and its East Asian neighbors, Japan and Taiwan.2 The three Northeast Asian economies not only shared important geographic and demographic
Comparative Perspective 604
legacies such as dense populations and a paucity of natural resources, but also were deeply influenced by Chinese culture, by the developmental state first created in Meiji Japan, and by the postwar American attempt to contain Asian communism through economic development. War, inflation, and land reform distributed wealth and income far more widely than in Latin America or other developing areas. Rapid growth in postwar Japan provided South Korea and Taiwan both a model for development and a tangible stimulus in the form of trade and investment.
By the late 1960s, economic development in all three countries was characterized by strikingly high levels of educational attainment, savings, investment and growth, and impressive improvements in public health indicators such as infant mortality and life expectancy.3 In all three, political parties supported by organized labor remained weak, while the government intruded heavily in economic activity, protecting domestic markets, promoting favored industries, and exercising decisive influence over the allocation of capital.
Nevertheless, without completely denying the manifest similarities, many regional experts highlight the differences across the three countries and caution against generalizations about any one “East Asian model of development.”4 Japan enjoyed a larger population base, a longer history of development, a more independent business class, and an earlier development of democratic institutions than did its two former colonies, leading to a more stable and balanced pattern of economic development. During the rapid growth period, the Japanese government generally held inflation in check and balanced its budgets. Japan’s capacious domestic market meant that even behind protectionist barriers a large number of domestic firms competed at efficient scale in most industries, although competition was more often oligopolistic and restrained than perfectly free. Large companies and business groups coexisted with a much larger mass of independent small firms. Exports, though important to pay for raw materials and other necessary inputs, remained modest compared with domestic production. Taking advantage of skilled engineers and workers, Japanese companies combined the mass production of commodities with more specialized and flexible production of consumer durables and capital equipment.5
Taiwan had but one-sixth the population of Japan and a later start in development. However, its entrenched and stable ruling party, developed in competition with the Chinese Communist Party and re-formed in Taiwan after the loss of the mainland, and its powerful state structure, enriched by the legacy of the Japanese colonial period and rationalized with help from the Americans, allowed Taiwan to maintain extraordinary macro-
Industrial Policy in Key Developmental Sectors 605
economic stability and intervene only selectively in the workings of the private sector. The bitter experience of wartime hyperinflation also inclined Taiwan’s government toward conservative macroeconomic management.
Taiwan grew on the back of exports of labor-intensive goods, most produced by small local enterprises, with a secondary role for state-owned enterprises (SOEs) supplying upstream commodity inputs such as metals, machinery, and petrochemicals, and a tertiary role for foreign investors, particularly in electronics. Private business groups, mostly owned by ethnic “Taiwanese” rather than by the émigrés from mainland China who dominated the government, were smaller, less tightly integrated, and less diversified than in Japan or South Korea (though perhaps more significant than many analysts have realized).6
Lacking the support of the cohesive and deeply rooted political parties that governed Japan and Taiwan, Park and other Korean presidents relied directly upon the military-bureaucratic machinery of the state, largely neglecting hard-to-organize areas such as the small business and rural sectors. Severely damaged by fighting in World War II and the Korean War, and unable to match the balance and stability of Japan and Taiwan, South Korea under Park adopted an aggressive macroeconomic policy to try to catch up with North Korea, which had inherited most of the peninsula’s industrial base and grew rapidly in the 1950s and 1960s. Park accepted high rates of inflation and foreign debt, refusing to slow down even after the oil shock of the early 1970s.
In the dash to development, Park and his successors aggressively channeled capital to favored large private firms, particularly the diversified, family-controlled chaebol business groups, as well as to major public firms such as the Pohang Iron & Steel Company (POSCO) and Korea Telecom.7
The chaebol produced most of Korea’s exports, often from plants proudly hailed as the largest in the world. Problems of monopoly and moral hazard, however, were much more severe in Korea’s limited domestic market than in Japan. The use of export performance measures as a proxy for efficiency only partly ameliorated the task of implementing effective administrative guidance, and did little to encourage firms to maintain sound financial structures. Some observers have lauded the South Korean chaebol for their speed, power, and aggressive investments in new plants and research and development.8 Others (particularly after the Asian financial crisis of the late 1990s) assailed their lack of financial discipline and transparency and their tendency to focus on mass production of low-margin commodities.9 Virtually all analysts agree, however, on the centrality of the chaebol to the industrial structure crafted by Park. And if Park was able to
Comparative Perspective 606
control the business octopuses he fostered, after his death many observers concluded that the chaebol had grown powerful enough to check or override the state.10
The differences across the political economies of the East Asian countries were not, however, as stark as implied by this static picture of giant Korean chaebol, tiny Taiwanese enterprises, and loose Japanese business networks. Over a longer time span, and in a number of key industries, the three countries shared important commonalities. In the first half of the Park era South Korea did not look so different from Taiwan (and earlier Japan). Only with the massive heavy industrial push under the yushin constitution of the 1970s did Korea diverge dramatically from Japan, whose earlier heavy industrialization occurred within a much larger and more balanced economy, and Taiwan, whose “ten major construction projects”
of the late 1970s were but a weak echo of Park’s drive for heavy and chemical industrialization (HCI).
Once in place, the Korean chaebol were able to strengthen their position, but even before Park’s death important policy changes began to reduce Korea’s distinctiveness. In mid-1979, Park and his advisors hammered out a financial stabilization policy. After his death, the new Chun administration (1980–1988) imposed fiscal restraint. Over the 1980s, inflation rates declined, largely converging with those of Taiwan. In the 1990s, the South Korean government largely stopped providing policy loans. Initially the chaebol were still in an advantageous position to gain credit on normal commercial grounds, and also aggressively entered the nonbank financial sector, but many collapsed or disintegrated during and shortly after the Asian financial crisis. In contrast, from the late 1980s, large firms and groups in Taiwan assumed a greater prominence in the economy, somewhat shrinking the gap with Korea.
In specific important industrial sectors, moreover, similarities across the three countries were often more important than differences.
These similarities resulted from the economic requirements of the sector more than from the peculiarities of the country. Thus in textiles, all three countries nurtured a core group of large, upstream suppliers of fibers, which in turn supported a much larger group of mid-sized fabric producers and a mass of garment firms downstream. In the 1960s and 1970s, both South Korea and Taiwan led the world as shoe producers, though Korea’s were mostly athletic shoes, while firms from Taiwan were more active in women’s fashion shoes. In electronics, all three specialized in mass-produced consumer items, including radios, television receivers, and, from the mid-1970s, vid-eocassette recorders, computers, and monitors. All came to produce the semiconductors used in consumer electronics. All, with limited exceptions
Industrial Policy in Key Developmental Sectors 607
in Japan, remained stronger in consumer electronics than in industrial electronics and software. It is true that Japanese and later large Korean firms were more likely to develop their own brands, while Taiwanese firms tended to remain smaller, more specialized, and more reliant upon original equipment manufacture (OEM), following the specifications and carrying the brands of multinational corporations. Yet even Japanese and Korean firms engaged in significant amounts of OEM production during their periods of rapid growth—South Korea became the world’s leading producer of microwave ovens, for example, by supplying General Electric and other foreign brands.
Moreover, strategies often converged over time. In semiconductors, large Korean firms began aggressive mass production of memory chips in the late 1970s under Park’s heavy industry drive. The Taiwanese remained much more cautious until 1987, when Taiwan Semiconductor Manufacturing (TSM) pioneered the concept of the “pure-play” fabrication facility that did not design its own semiconductors but produced only the designs of customers. Together with its compatriot United Microelectronics (UMC), Taiwan Semiconductor came to control 80 percent of the large and rapidly growing fab market. Korean firms like Hyundai and Samsung soon vowed to join them. Thus differences across countries were often less significant than differences across industries, and despite some differences in timing and emphasis, South Korea and Taiwan were often in the same broad industrial categories at roughly the same level of sophistication, usually a decade or so behind Japan.
Park Chung Hee Era Page 86
