The Political Economy of Technology Development in Korea after the 1997 Financial Crisis

Changes in global environments including trade and technology in conjunction with the financial crisis that hit Asia in 1997 has created different conditions under which Korean firms operate. There has been much freer flow of capital. Further, the current WTO regulations prohibit most governmental provisions such as export incentives to specific industries. Faced with these changes, Korean firms have come to realize the need for shifting their strategic focus from scale-intensive, low-cost manufacturing-based businesses to higher value-added high-tech ones.

Policy attention of Korea has also shifted toward a more market-based industrialization since the financial crisis. And yet, it is under debate whether Korea’s shift to a more market-based industrialization has contributed to the growth of the real economy of Korea. Is this predicated on genuine capitalism?; or heavily influenced by crony Western capitalism?

Despite its more market-oriented policy stance on the surface, the Korean government intervening in the markets has persisted to a larger degree...

It may be true that political progress, the 1997 financial crisis and external environment have weakened the control of the government in the economy. However, although to a much lesser degree than in the early years of industrialization, running businesses in Korea continues to be heavily influenced by government policy...

Globalization has permeated the Korean economy. Capital inflows have increased. The global environment loaded with the free flow of capital and free trade has presented a whole new condition and opportunity for the Korean high-tech firms...

The interplay between technonationalism and globalization forces has posed challenges at both national and private levels...

In a command economy, capital is controlled by politicians...

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