Economic Catch-up and Technological Leapfrogging
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Economic Catch-up and Technological Leapfrogging

The Path to Development and Macroeconomic Stability in Korea

Keun Lee

This book elaborates upon the dynamic changes to Korean firms and the economy from the perspective of catch-up theory. The central premise of the book is that a latecomer’s sustained catch-up is not possible by simply following the path of the forerunners but by creating a new path or ‘leapfrogging’. In this sense, the idea of catch-up distinguishes itself from traditional views that focus on the role of the market or the state in development.
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Chapter 7: Is leapfrogging-style reform possible in North Korea?

Keun Lee

Abstract

Chapter 7 argues that North Korea can achieve an economic catch-up after decades of economic isolation and stagnation if it tries a specific type of economic opening (leapfrogging) focused on foreign trade and investment in a sustained manner. An analogy is been made with the case of Fujian Province in China, which has accomplished economic catch-up, mainly due to Taiwanese investments. To realize its potential, it is argued that North Korea should treat its foreign direct investment from South Korea as intra-Korean investment. The chapter also discusses the diverse modes of engagement with foreign capital that are available for North Korea considering its own capability (absorption or management capabilities), rivalry among possible foreign investors, implications for market structure (monopoly or more competition), the nature of target technologies or facilities, opportunity for learning and transfer, and so forth. Finally, the chapter discusses the economic and political preconditions for such economic catch-up.

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