The author was born in South Korea in 1963, at a time when the country was extremely poor. Nowadays, South Korea is a prosperous and highly developed nation with a very high per capita income, which has grown significantly as a result of an industrialisation programme introduced in the 1970s. This programme led to the formation of many new companies, an increase in the design and manufacture of cars, and a rise in exports.
Economic development has become something of an obsession for Koreans, but what are the reasons behind the country’s success? Many argue that the answer is very simple: Korea followed the rules of the free market. The country kept inflation low, it encouraged private enterprise and free trade, and it opened up to foreign investment while minimising state intervention. In short, it rigorously and systematically implemented the principles of neoliberalism. According to the author, however, this is not entirely accurate, because the government only supported a few select companies, which benefited the private sector, by introducing customs barriers, subsidies, and other state intervention schemes. What’s more, the government owned all the banks through which it channelled credit. Finally, state-owned companies seized every opportunity to launch major projects, such as POSCO, a company that later became a leader in the steel production industry.
The South Korean government’s approach to private companies has always been very practical, rather than ideological. If they were inefficient, the state either took them over, restructured them, and then sold them, or else they turned them into state-owned enterprises. In addition, the state kept almost complete control over the amount of foreign currency in the country. It is therefore fair to say that South Korea’s achievements were the result of the government’s relatively flexible stance: while it did not rely completely on the free market, in contrast to the standard approach of most communist countries, it did not obstruct it either. In essence, the state only intervened if necessary. So, it is not quite the neo-liberal triumph that many make it out to be, and shows that the situation is actually much more complex than it would appear.