The Development Of The East Asian Miracle

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Thus far, I have laid out some of the most important arguments in the extant literature on the East Asian Miracle with particular reference to South Korea. In this section, I integrate the preceding two sections on the existing literature and propose an alternative theory. In brief sum, the existing developmental state literature, including that specific to South Korea, argues that the developmental state causes economic growth through export-led industrialization. I reverse the order of two links in that theoretical chain. Specifically, I argue that the developmental state does not give rise to export-led growth. In fact, it is the inception of the export-led growth strategy that gives rise to the developmental state, which emerges as a…show more content…
Intuitively, countries that adopt ELI need markets to which they can export. Import substitution industrialization, which focuses on domestic industrial production, has less of an emphasis on creating goods for the international market. In contrast, countries that follow an export-led industrialization strategy, by the very nature of ELI, must find markets to which they can export their goods. In the absence of sufficient demand, ELI strategies fail. Put positively, ELI strategies require sufficient demand for the goods of the country in question. Where, then, does demand come from? This is a particularly vexing problem. It seems a reasonable intuition that developing countries would not, prima facie, produce goods of sufficient quality that external, developed markets would demand. Moreover, only developed markets would be worthwhile targets for exports; exports to developing markets would not provide sufficient capital flows to fuel transformation into a developed country. In other words, embarking upon an ELI strategy is a fundamental catch-22. A solution to this problem of demand is the presence of not only a willing market for the developing country’s goods, but also a market that is willing to make investments of capital and technology into that developing country. Doing so would enable domestic firms to develop their industry to levels of quality and
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