Catch-up and Crisis in Korea

Catch-up and Crisis in Korea

Wontack Hong

Whilst the process of catch-up in Korea – led by export-oriented growth – has been rapid and, in a sense, very successful, it has also been subject to turbulence, not least in a crisis of near bankruptcy that has dramatically revealed its Achilles heel. Informed by the 1997 crisis, Wontack Hong writes a new history of the Korean economy; one that seeks to understand export-oriented catch-up in newly industrialized countries (NICs) whilst offering a realistic appraisal and forewarning of the pitfalls which could signal self-destruction.

Chapter 1: Introduction: Catch-Up

Wontack Hong

Extract

THE CATCH-UP Starting the catch-up process is by itself a great feat for a backward economy. Catch-up, however, is not always an uneventful process. The country might fall into a chaotic stagnation for an indefinite period of time or might even return to backwardness at halfway. Catch-up necessarily involves a certain specific form of institutionalization, but an institutionalization which might well breed the seeds of an eventual catastrophe and possible self-destruction. There may have to be a fundamental restructuring of the initial institutional setting at certain point in time, in order to avoid the possible disastrous end. Catch-up is very much like taking inter-state turnpikes to travel from a destitute backward state to an advanced state of material affluence. Unless the latecomer is prepared to repeat a more than, say, two or three hundredyear journey of its own (very chancy) industrial revolution and the following natural evolution, it has to take turnpikes. Unfortunately, however, there is neither a ready-made passageway to a turnpike at the point of departure, nor any ready-made ramps connecting to other turnpikes that one may have to switch to at various junctions on the way to the final destination. Once on a turnpike, there is no built-in force to switch automatically to another turnpike or to get off it at the right moment. There is, furthermore, no ready-made ramp connecting to other turnpike or local highway either. What is more, the kinetic energy or the law or inertia is somewhat conducive to keeping...

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