[100 Challenge] DanJi’s reading_94

Seogamyeonggang 26 - Sustainable South Korea
After Miracles of High Growth, What Blocks Economic Innovation
Park Sangin, me
21st Century Books Publishing
2022.10.24

The Korean economy has been rapidly growing since the 1960s. This is an unrivaled growth that is unprecedented anywhere in the world.
In 1993, Robert Lucas, a master of macroeconomics who received the Nobel Prize in economics, described Korea's remarkable economic growth since the 1960s as a "miracle" in a paper [Making a Miracle] in <Economica>, one of the most prestigious journals in economics.
The Park Chung-hee development system has led Korea's economic development since 1961. The Park Chung-hee development system refers to a government-led and chaebol-centered development strategy.
The Korea Development Bank had to borrow foreign debt through guarantees. The Park Chung-hee administration provided government finance to distribute foreign capital brought in such a way to companies and played a role in implementing industrial policies. In other words, the government directly intervened in the market to perform the intermediary function to solve various problems arising from the absence of the financial market. This effectively solved the problem of market absence.
The Park Chung-hee administration adopted a so-called pursuit-type growth strategy that imitates booming industries in Japan and quickly follows them. The Park Chung-hee administration led the development by working pro-competitively to give preferential treatment to companies good at exporting.
When asked why Marcos' strategy to imitate Park Chung-hee failed in the Philippines' economic development, Filipino scholars said, "Marcos distributed preferential treatment to relatives and friends."
In many developing countries, capitalism is called 'Crony Capitalism, ' interpreted as relational capitalism. Capitalism distributes preferential treatment to people in close relationships, such as their relatives and friends.
The Park Chung-hee development system gave companies that export well preferential treatment. The export market was the most competitive by operating a pro-competitive compensation system. Companies that export well are competitive and have been given all kinds of privileges.
This government-led, chaebol-centered development strategy was very successful at the beginning of economic development. However, as the economy developed, a different pattern unfolded. This formula of success from the past no longer works. Instead, it is an obstacle to the transition to a new system that is more suitable for the new stage of development.