More than half a century on, the story of Korea's economic development remains as intriguing, compelling, relevant, and divisive as ever. Economists agree on the mechanics of Korea's economic “miracle”: effective mobilization of labor, capital (including human), and technology, aided by relatively favorable institutional and external environments. Put loosely, we have an excellent knowledge of what happened and a fairly good understanding of how it happened. However, we remain largely ignorant and divided over questions of why it happened: Why Korea? The question is of enormous importance because, among other things, the answer(s) may hold the key to replicating the Korean experience in other countries. The Korean Economic Development Path by Seok-Choon Lew is the latest endeavor to explore Korea's fascinating experience with economic development.
This “edited” volume (Lew wrote or co-authored every chapter) is a collection of eight scholarly papers, three of which had been published elsewhere. The papers are placed in such order as to form a coherent piece of work that strives to support a single claim: above all else, it was Korea's own brand of Confucianism and its associated sociocultural network that made its modern economic development possible. The book makes no excuse for its bold conviction: “without the informal sector … the sociocultural context inherited from the history, the developmental strategy … would have failed” (p. 13). The channel through which Confucian culture nurtured development is what the author(s) call an affective network, an informal set of traditional social networks that is unique to Korea and that established the foundation for a state-business collaboration that championed economic development.
The book begins by establishing Confucianism as a religion, which “in Korean society has been functionally equivalent to Protestantism in Western societies” (p. 32) in terms of its influence on work ethic. In Korea's case, Confucian culture's emphasis on filial piety, self-sacrifice, and educational excellence created “a powerful economic drive to succeed” (p. 38), which collectively helped mobilize “a dedicated, disciplined, and educated workforce” (p. 44). The book then presents an analytical description as well as a defense of affective networks. These informal networks—formed on the basis of extended family, school, and regional background—represent a special form of nongovernmental sector in Korea that is distinct from NGOs or other Western-style groups: highly autonomous, non-profit seeking, yet involuntary. (One cannot choose one's family or birthplace.) Two features stand out. First, affective networks are “situated between the state and the market” (p. 86), since any network can have members employed in each sector, allowing an informal but intimate linkage between the two. Second, they are heavily influenced by Confucian traditions of public-mindedness, civic duty, and common rather than individual interests. As such, affective networks did not exacerbate nepotism and cronyism. On the contrary, because they are “deeply rooted in Korean history, tradition, and philosophy, namely, Confucianism” (p. 50), the networks provide an important public good in the form of social capital (trust) that helped drastically reduce transaction costs involved in economic activities.
Building on the arguments in favor of affective networks, the book moves to the heart of the matter: how the intricate web of affective networks dynamically influenced and contributed to Korea's economic development. Specifically, the book makes two bold claims: first, that the state-business collusion—tightly interlinked by affective networks—was driven largely by common good and goals rather than self-serving interests, and second, that the collusion was the penultimate explanatory factor behind Korea's successful economic development.
Regarding the first claim, the chapters examine in convincing detail how the affective networks enabled the formation of an extremely close alliance between the state and the business sector that thrived on mutual trust and “general reciprocity.” The resulting state-business collusion largely avoided the pitfalls of rent-seeking and corruption, while operating with discipline and single-mindedness in pursuing the common objective of national development. On the second and main claim, however, despite solid analysis and the obvious conviction of its arguments, the book falls short of “nailing it.” The claim regarding the contribution of Confucian culture to economic development is based on one key presumption: “the state was deeply involved in the market and in planning the economy, which proved a success” (p. 100). Throughout the entire book, the author(s) take for granted the notion that Korea's economic success was due to state intervention. This reviewer happens to be (guardedly) sympathetic to this view but is mindful and respectful of the many opposing perspectives. The book categorically dismisses them all, which is unfortunate since a cultural perspective holds the potential to bridge the extreme divide in the Korean development debate.
Still, the book's culture-oriented narrative is fascinating, alluring, and even intuitive. It takes us back to those questions of economic development about which the Nobel laureate Robert Lucas famously stated, “Once one starts to think about them, it is hard to think about anything else.” Strikingly, in that same quote, Lucas asks, “If not [economic policies], what is it about the ‘nature of India’ that makes it so [stagnant]?”Footnote 9 Indeed, why Korea and not India? The book shows us where the answer may lie: each country's unique cultural and historical context from which they must “find their own recipes” (p. 181) for successful development.
Regarding readership, despite its visible attempts at objective scholarship, this book is not for everyone. It would certainly irk those who dismiss or abhor the legacies of past authoritarian regimes, particularly that of Park Chung Hee. On the other hand, budding students of modern Korea unaffected by personal history would likely find this book highly readable and insightful. Odd as this may sound, this book should also be instructive for those economists and political economists exploring new avenues of research, such as culture, in economic growth and development.
