Historical South Korea Industrialisation History (Miracle on the Han River)

[Nilgiri]

@Nilgiri

Can you make a thorough analysis behind South Korea industrialization success ?? In other forum South Korean member said they have some doubt in early phase of their industrialization when they want to start their indigenous automotive sector. South Korea is able to make their own engine while Malaysian Proton still rely Japanese engine until Today. Same ambition, different result.

I will start here when I get some time later @Indos

I have put it on my to do list for now.

Maybe others will also be interested to contribute too.

 

[Indos]

Some thing that is quite extra ordinary is that their industry is pushed by their local conglomerates. I think they dont rely much on FDI during their early industrialization process (and also until Today), but more on domestic direct investment.

 

[Nilgiri]

Some thing that is quite extra ordinary is that their industry is pushed by their local conglomerates. I think they dont rely much on FDI during their early industrialization process (and also until Today), but more on domestic direct investment.

Somewhat true. But also they got specific loans and know how from Japanese (Japanese reasons for doing so I will cover bit later, it has to do with both WW2 and cold war).

For example the first integrated steel plant (company later become POSCO), shipbuilding knowhow and a number of other projects (and more importantly project handling knowhow) was assisted by Japanese.

"FDI" itself is a very post-cold war term and concept. It is hard to delineate this investment in cold war times especially for early industry founding in developing world.

 

[Indos]

@Bilal9 bro, you can contribute in this thread as we are all eager to see how our own country can learn from South Korea success. Maybe you have some opinion behind the country industrialization.

 

[Madokafc]

Lotte group owner Shin Kyuk-ho is actually founding his company Lotte in Japan then he is reinvested the capital he gained to South Korea in sixty decade.

BTW, the South Korean government is known for heavily subsidized their chaebol and had a lot of scandal including corruption and bribery. The most intense relationship between Chaebol and Korean Government is happened during the reign of Park Chung Hee, but at the same time it was the time of economy miracle of South Korean as the Chaebol gained a lot of capital needed to expand their business and become conglomerate with many business sector opened for them.

 

[Indos]

@Logam42 bro, you can contribute here as well, explaining the main reason of South Korea industrialization success and how our country can get some lesson from it.

 

[Logam42]

@Logam42 bro, you can contribute here as well, explaining the main reason of South Korea industrialization success and how our country can get some lesson from it.

Its not my main area of study, but from what I know its a better version of Suharto and his conglomerate cronies, as well as stronger external threat that kept the dictatorial government on their toes, leading to better development outcome as they need to deliver better success than North Korea (North Korea used to have more industry thenSokor and so they had to play catch up.

I will definitely be willing to study it more and post the results once my schedule clears up mid December.

Till then, here is an informative vidoe on North Korea:

 

[ekemenirtu]

@Nilgiri

South Korea is able to make their own engine while Malaysian Proton still rely Japanese engine until Today. Same ambition, different result.

Malaysia co-developed CamPro engines with British engineering firm Lotus.

Malaysian oil and gas multinational corporation Petronas had also supposedly developed the E01 engine

Subsequently, an improved version NE01 2.0L was supposedly developed and slated to be installed in Proton Perdana models.

Not much success apparently.

Later, British engineering firm Ricardo collaborated with Proton to develop an engine prototype. Not much progress there apparently either.

Six new engines for Proton automobile brand was supposed to be developed by 2017. Afterwards, Chinese brand Geely took over and these projects have probably been shelved.

As you may see from the video, these public companies like Proton and Silterra were the brainchild of Dr Mahathir Mohamed.

Apparently, Malaysia lacks enough enterprising people and enough engineering talent to make a successful venture out of Proton. Or out of Silterra.

Unlike South Koreans, who made ample use of the abundant technology transfer from Japanese and American corporations and institutions. And went on to build their national champions. I believe Hyundai automobiles obtained the blueprints for everything from the engine to the chassis from Mitsubishi.

In 1981, Mitsubishi agreed to license engine, transaxle, chassis, and emission control technology to Hyundai.

We have no direct method of measuring knowledge creation or absorption by countries. The best proxies available that we can use may provide some indicators.

Variables such as PISA test scores, R&D spending, number of scientists and engineers, number of nonself citations per capita in STEM (Science, Technology, Engineering, Mathematics) disciplines, high tech exports per capita, number of patents granted outside home country per capita, intellectual property earnings per capita.

Other researchers may think up some other variables of interest.

In any case, Korean 'miracle on the Han river' was not much different from the story of their East Asian neighbours at similar stages of development. Japan, Taiwan, Singapore or China experienced similar phases in their development stories.

Only that Singapore was probably too tiny to build massive national champions, resulting in overreliance on foreign multinatinal corporations.

Going by the lack of democratization in Singapore that Korea and Taiwan had experienced decades ago and the subsequent lack of an entrepreneurial class that can create national champions to compete with the region or the planet's best, we might say that the Korean or Taiwanese democratic and national-champion-development model has proven to be superior to Lee Kuan Yew's model of inviting foreign multinational corporations to base their regional HQ, manufacturing, sales and marketing, R&D, financial and procurement and logistics hub for the Asia-Pacific or ASEAN regin.

 

[Nilgiri]

Going by the lack of democratization in Singapore that Korea and Taiwan had experienced decades ago and the subsequent lack of an entrepreneurial class that can create national champions to compete with the region or the planet's best, we might say that the Korean or Taiwanese democratic and national-champion-development model has proven to be superior to Lee Kuan Yew's model of inviting foreign multinational corporations to base their regional HQ, manufacturing, sales and marketing, R&D, financial and procurement and logistics hub for the Asia-Pacific or ASEAN regin.

True, but then again Singapore only has about 4 million + 1 million (expats and foreign labour) to work with.

Korea and Taiwan actually have far larger populations (and space for lot more kinds of industries and services),

They cannot afford to be so govt-corporate model in this day and age, whereas Singapore can given they have built up a certain city-focused-PR model.

 

[ekemenirtu]

True, but then again Singapore only has about 4 million + 1 million (expats and foreign labour) to work with.

Korea and Taiwan actually have far larger populations (and space for lot more kinds of industries and services),

They cannot afford to be so govt-corporate model in this day and age, whereas Singapore can given they have built up a certain city-focused-PR model.

I am told that the true blue Singaporean population does not amount to 3 million. A lot of "Singaporeans" are supposedly third-rate rejects from third world, developing countries that have been naturalized and granted citizenship to "maintain the racial balance" (that's their government's official stance, go figure).

It is understandable why Singapore has been faltering in the past few years and many Singaporeans, rightly so I might add, have begun to venture abroad.

A notable example would Teo Swee-Ann who founded Espressif Systems and is based in Shanghai, China.

China, especially in some of the eastern and southern coastal cities, are simply on a different level from pretty much all of South Asia, Africa, Latin America or ASEAN. I suppose you could add Eastern Europe and Central Asia to the mix too if you are being generous.

An interesting observation is that of the 200 or more countries and territories in the world, the 50 most populous countries house more than 88% of the world's population. The remainder of countries and territories are "too small" and therefore, unable to produce their national keiretsus or chaebols.

Having said that, I would argue that the Korean or Taiwanese model of nurturing national champions is more sustainable in the long run and more beneficial for the nation as a whole. Lee Kuan Yew's adopted model of inviting in foreign MNCs and basing their manufacturing, R&D, sales & marketing, financial services or logistics operations in the country may not be sustainable - more so for an extremely tiny country like Singapore that lacks both land and population.

 

[Nilgiri]

I am told that the true blue Singaporean population does not amount to 3 million. A lot of "Singaporeans" are supposedly third-rate rejects from third world, developing countries that have been naturalized and granted citizenship to "maintain the racial balance" (that's their government's official stance, go figure).

It is understandable why Singapore has been faltering in the past few years and many Singaporeans, rightly so I might add, have begun to venture abroad.

A notable example would Teo Swee-Ann who founded Espressif Systems and is based in Shanghai, China.

China, especially in some of the eastern and southern coastal cities, are simply on a different level from pretty much all of South Asia, Africa, Latin America or ASEAN. I suppose you could add Eastern Europe and Central Asia to the mix too if you are being generous.

An interesting observation is that of the 200 or more countries and territories in the world, the 50 most populous countries house more than 88% of the world's population. The remainder of countries and territories are "too small" and therefore, unable to produce their national keiretsus or chaebols.

Having said that, I would argue that the Korean or Taiwanese model of nurturing national champions is more sustainable in the long run and more beneficial for the nation as a whole. Lee Kuan Yew's adopted model of inviting in foreign MNCs and basing their manufacturing, R&D, sales & marketing, financial services or logistics operations in the country may not be sustainable - more so for an extremely tiny country like Singapore that lacks both land and population.

Like overall I kind of agree, with certain caveats.

Thing is Singapore is a city state with its establishment psyche of the Malaysian (federal) ejection, there is only so much it can do with what its inherited.

But then again every country has their specific set of circumstances. I would say given what it had, Singapore has done close to the best it can (incl importing talent and labour...of varying quality, but some are quite good now). I mean it has developed to level it can pay into this model and wait and see with rest of world innovation and take cues from it as it can deploy...rather than create huge breakouts itself. For example you can look at what UNCTAD has as the Singapore FDI stock....it explains whole story about Singapore model and future for it to some degree....it is a finance hub now basically.

Of course other countries can do even better given their access to lot more options.

 

[ekemenirtu]

Like overall I kind of agree, with certain caveats.

Thing is Singapore is a city state with its establishment psyche of the Malaysian (federal) ejection, there is only so much it can do with what its inherited.

But then again every country has their specific set of circumstances. I would say given what it had, Singapore has done close to the best it can (incl importing talent and labour...of varying quality, but some are quite good now). I mean it has developed to level it can pay into this model and wait and see with rest of world innovation and take cues from it as it can deploy...rather than create huge breakouts itself. For example you can look at what UNCTAD has as the Singapore FDI stock....it explains whole story about Singapore model and future for it to some degree....it is a finance hub now basically.

Of course other countries can do even better given their access to lot more options.

For countries such as Turkey or other countries with similar sized populations, therefore South Korea may present some clues on how to proceed with industrialization and development.

The problem begins when we take geopolitical context out of that analysis and attribute other factors to the "Miracle on the Han River". Moreover, a country the size of Japan could not surpass the United States or free itself from the clutches of American control in 70 years.

How far could much smaller South Korea have progressed without American 'blessing' in the form of direct technology transfers, favourable market access, providing security through military bases on Korean soil and such?

I notice that no country in the wider Middle East, Central Asia, Caucasus or Balkans is still greater than Japan in terms of population. The reasons for their repeated failure to oust the United States from the region should be easy enough to understand.

It should also be an effective lesson to all that it is thanks to China's immense population that China could push the USA and 16 countries out of North Korea - through the usage of force, not through negotiations, not through diplomatic finesse, not through the usage of economic sanctions or espionage but through the sheer strength of its military that it could evict the then-jubilant American forces from North Korean soil and provide them with a dose of reality.

At the time, China had not developed nuclear weapons yet and a certain Gen MacArthur is said to have threatened China with nuclear weapons attack. Chinese leader Mao did not shudder and the result is clear for all to see. North Korea exists thanks largely to Chinese military intervention.

(Incomplete)
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I had written a longer response but it was deleted for some reason.

To keep the message short, good luck to Koreans on both sides of the border.

Countries of the size of Korea, Turkey, Iran, Egypt or the likes are well advised not to challenge the dominance of the West in the absence of overwhelming firepower, technological or manpower advantage.

South Koreans played their part well by aligning with the United States. North Koreans have successfully created hydrogen bombs and tested intercontinental ranged ballistic missiles.

The other listed countries should take cues from these experiences.

 

[Nilgiri]

For countries such as Turkey or other countries with similar sized populations, therefore South Korea may present some clues on how to proceed with industrialization and development.

The problem begins when we take geopolitical context out of that analysis and attribute other factors to the "Miracle on the Han River". Moreover, a country the size of Japan could not surpass the United States or free itself from the clutches of American control in 70 years.

How far could much smaller South Korea have progressed without American 'blessing' in the form of direct technology transfers, favourable market access, providing security through military bases on Korean soil and such?

I notice that no country in the wider Middle East, Central Asia, Caucasus or Balkans is still greater than Japan in terms of population. The reasons for their repeated failure to oust the United States from the region should be easy enough to understand.

It should also be an effective lesson to all that it is thanks to China's immense population that China could push the USA and 16 countries out of North Korea - through the usage of force, not through negotiations, not through diplomatic finesse, not through the usage of economic sanctions or espionage but through the sheer strength of its military that it could evict the then-jubilant American forces from North Korean soil and provide them with a dose of reality.

At the time, China had not developed nuclear weapons yet and a certain Gen MacArthur is said to have threatened China with nuclear weapons attack. Chinese leader Mao did not shudder and the result is clear for all to see. North Korea exists thanks largely to Chinese military intervention.

(Incomplete)
---

I had written a longer response but it was deleted for some reason.

To keep the message short, good luck to Koreans on both sides of the border.

Countries of the size of Korea, Turkey, Iran, Egypt or the likes are well advised not to challenge the dominance of the West in the absence of overwhelming firepower, technological or manpower advantage.

South Koreans played their part well by aligning with the United States. North Koreans have successfully created hydrogen bombs and tested intercontinental ranged ballistic missiles.

The other listed countries should take cues from these experiences.

Yes the role of the US market in cold war for the East Asian tigers (relative to their own market) along with the political situation favouring the US to expand trade (esp imports from) these countries...guaranteed by US military supremacy (esp its navy) is a big feature that will not really be applicable going forward given the world has really changed now.