Chapter 3: Institutionalizing an Export-Oriented Regime
1. KOREA VS. TAIWAN Taiwan, in the late 1950s, and Korea, in the early 1960s, both commenced export-oriented growth by promoting the export of labor-intensive manufactured products. As a result, both Korea and Taiwan went through drastic economic transformations from typical backward economies to socalled export-oriented NICs. The objective of this chapter is to analyse the similarities and diﬀerences between the experiences of these two countries in their export-oriented growth (see Hong, 1991b, 1993a). Section 2 brieﬂy highlights the initial conditions in Korea and Taiwan prior to their commencement of export-oriented growth. Section 3 delineates the necessity of export promotion eﬀorts and the actual beginning of export-oriented growth strategy in these countries. Section 4 describes how these countries institutionalized the export-oriented regime. Section 5 examines the style of government intervention of markets in Korea and Taiwan. Section 6 examines the ﬁnancial systems that have been maintained in these countries, and Section 7 attempts a comparative evaluation of the growth performances of these two economies. 2. INITIAL CONDITIONS One may amplify the diﬀerences between the initial conditions of Taiwan and of Korea. In 1949, Chiang Kai-shek and his Kuomintang (Nationalist Party) men retreated to Taiwan in defeat. There was a sudden inﬂux of nearly two million elite refugees with distinct characteristic traits, from the mainland. This was indeed a unique occurrence. One may also emphasize the fact that Taiwan could beneﬁt from the extensive network of overseas Chinese and an experienced, though corrupt and discredited,...
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