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8/11/2019 FAJNZYLBER (1981) - Some Reflections on South-East Asian Export Industrialization
1/24
C E P A L
Review
Director
R A U L P R E B I S C H
Technical Editor
A D O L F O G U R R I E R I
Deputy Secretary
G R E G O R I O W E I N B E R G
U N I T E D N A T I O N S
ECON OM IC COM MISSION FOR LATIN AMERICA
SANTIAGO, CH ILE / DECEM BER 1981
8/11/2019 FAJNZYLBER (1981) - Some Reflections on South-East Asian Export Industrialization
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C E P A L
Review
Nu m be r 15 Santiago, Chi le Decem ber 1981
C O N T E N T S
D e v e l o p m e n t a n d e q u i t y . T h e c h a l le n g e of t h e 1 9 8 0s
Enrique V. Iglesias
7
P r o b l e m s a n d o ri e n t a t io n s o f d e v e l o p m e n t
CEPAL Economic Projections Centre
47
C o n s u m p t i o n i n t h e n e w L a t in A m e r i c a n m o d e l s
Carlos Filgueira
71
S o m e r e f l e c t i o n s o n S o u th - E a s t A s ia n e x p o r t i n d u s t r i a l iz a t i o n
Fernando Fajnzylber
111
T h e d e v e l o p m e n t s t ra t e gy a n d e m p l o y m e n t in t h e 1 9 80 s
Vctor E. Tokman
133
T h e c o n c e p t o f i n te g r a t i o n
Isaac Cohen Orantes
143
D i a lo g u e o n F r i e d m a n a n d H a y e k . F r o m th e s t a n d p o in t o f t h e p e r ip h e r y
Ral Prebisch
153
S o m e C E P A L p u b l i c a t i o n s 175
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C EPA L R EV I EW
December 1981
Some ref lect ions
on South-Eas t
Asian expor t
indust r ia l iza t ion
Fernando Fajnzylber
The successful export strategies of some
Sou th-Ea st Asian countries have bee n raised in
certain Latin American circles to the level of
veritable paradigms and it is held that our re
gion sho uld im itate these processes in order to
achieve high rates of growth of production,
employment, productivity and even real re
muneration. For this reason, it is of particular
interest to analyse the policies, institutional
ma chinery , and dom estic and international so
cial and political conditions within the frame
work of whic h the se cases have taken place.
Th e pr esen t article analyses some aspects
of the se pro cesses w hich show the complexity,
richness and heterogeneity that characterize
them and which m ake it clear that the lessons
that can b e draw n from them wh ile richer and
more valuable than those deriving from the
'popular' version generally disseminated in
Latin America, do not permit their imitative
applica tion in this region.
After the Introduction, section H of the
article gives a brief description of the main
economic parameters of the four countries in
question South Korea, Taiwan, Hong Kong
and Singapore. Section III examines the rela
tionship between the export and industrializa
tion policies, section IV raises some aspects of
protectionist and import substitution policy,
section V analyses the role which the State has
played in these strategies, and the last section
of the article sets these examples against the
international context in which they have oc
curred.
* U N I D O I n d u s t r i a l A d v i s e r i n M e x i c o .
_
I
I n t r o d u c t i o n
In the rap id indus t r i a l i za t ion which has t aken
p lace s ince the war , spec ia l a t t en t ion i s war
ran ted by the expor t - l ed indus t r i a l i za t ion ex
p e r i e n c e n o t o n l y o f J a p a n , to w h i c h n u m e r o u s
r e f e r e n c e s w e r e m a d e i n a p r e v i o u s s t u d y, * b u t
a l so o f Sou th Korea , Ta iwan , Hong Kong and
Sin gap ore , f i rs t ly beca use o f the im press iv e
ra t es o f g rowth a nd t rans fo rmat ion o f the s t ruc
t u r e o f p r o d u c t i o n w h i c h t h e s e c o u n t r ie s h a v e
ac h ie ve d in a b r i e f space o f t ime, and seco nd ly ,
b e c a u s e t h e s u c c e s s a c h i e v e d b y t h e m h a s b e e n
g e n e r a t i n g t h e b e l i e f t h a t t h e e x p e r i e n c e o f
t h e s e c o u n t r i e s f o r ms a n e x a mp l e w h i c h c o u l d
and shou ld insp i re the fu tu re indus t r i a l g rowth
of La t in Amer ica .
The v iew i s f requen t ly expressed in cer
t a in c i rc l es in La t in Amer ica tha t t he success o f
these p rocesses i s due f i r s t ly to the i r t o t a l
o p e n n e s s t o i n t e r n a t i o n a l t r a d e , a n d s e c o n d l y
to the ver y low l eve l o f pub l i c , i n t e rven t io n . In
coming to th i s conc lus ion , a complex se t o f
dif-
f e r e n t e x p e r i e n c e s i s t h u s r e d u c e d t o a c o n c l u
s i o n o f a n o r m a t i v e n a t u r e w h e r e b y t h e c o u n
t r i es o f La t in Am er ica nee d on ly e l im ina te th e i r
p r o t e c t i o n i s t s c h e me s a n d r e d u c e p u b l i c i n t e r
ven t ion to i t s smal l es t poss ib le express ion in
order to permi t the genera t ion o f success fu l
e x p o r t mo d e l s c o mp a r a b l e t o t h o s e o f S o u t h -
Eas t As ia .
As we p ropose to show in th i s s tudy , the
mys t i f i ca t ion impl i c i t i n th i s vers ion o f what
h a s h a p p e n e d i n t h e " N e w l y I n d u s t r i a l i z e d
Count r i es" (NICs) o f As ia i s par t i cu la r ly se r i
ous fo r tw o reason s . F i r s t ly , bec aus e i t p rev en t s
us f rom advancing in our unders t and ing o f the
fac to rs which rea l ly exp la in these ra t es o f
g r o w t h a n d c h a n g e , t h u s l o s i n g t h e o p p o r t u n i t y
o f t a k i n g a d v a n t a g e o f e x p e r i e n c e s w h i c h a r e
undoub ted ly va luab le bo th in the f i e lds o f po l i
cy an d o f ins t i tu t ion a l ma ch in ery . Sec ond ly ,
b e c a u s e n o t o n l y a r e r e c o mme n d a t i o n s ma d e
w hi ch c or re spo nd on ly to a l imi t ed ex ten t to the
* F e r n a n d o F a j n z y l b e r ,
The Industrial Dynam ic in
Advanced Econom ies and in Semi-industrialized Coun
tries, P a c i f ic T r a d e a n d D e v e l o p m e n t C o n f e r e n c e , 1 9 8 0,
Seou l , Korea , 1 -4 Sep tember 1980 .
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SOUTH-EAST ASIAN EX PORT INDUSTRIALIZATION /
Fernanda Fajnzylber
113
relative growth is also to be observed in the
case of the 'normal ' countries of Korea and
Ta iwa n, altho ugh starting from lower levels: in
1963 Korea had a per capita income eq ual to 9%
that of the United states, r ising to 20% by 1976,
wh ile in Ta iwan the increase was from 14% in
1963 to 24% in 1976. In both cases, these levels
of per capita income were lower than those of
Brazil and Mexico.
As regards industrial output, and consid
erin g exclusively th e market econom ies, i t may
be no ted th at in 1963 the industrial output of
th es e four countries w as equivalen t to 0.35% of
A basic but frequently overlooked element in
the strategies followed by these countries is
their fundamental choice of industrialization:
industrialization aimed at penetrating interna
tional markets, perhaps, but industrialization
never theless . The sus tained and pers is tent
dynamic effects which these strategies had in
terms of the generation of employment, raising
of the level of the skill of the labour force,
incre ased product ivi ty, higher real wages , and
generation of consensus regarding the impor
tance of technical progress are intrinsically
linked with the basic fact that these countries '
exp orts we re industrial products. If the volume
of foreign exchange generated by these strate
gies had originated in the export of natural
resources, which in any case these countries
lacked, i t is very doubtful whether the sus
tained effects mentioned above would have
been comparable. Consequent ly, i t i s not the
orientation towards exports
per se
which
generates these dynamic effects, but rather the
basic fact that the products exported, even
though involving a high content of imported
inputs, are the subject of local processing
which leads to the incorporation and dissemi
nation of the ' industrial outlook' into the local
pa t r imony.
The following il lustrate the magnitude of
the process of change exper ienced by these
eco nom ies as a result of the leading role played
the industrial output of the market economies
as a who le, wh ile by 1976 it had risen to
1.35%.
Over the same period, the share of Brazil and
Me xico ro se from 2.6% in
1963
to 3.9% in 197 6.
1
The interesting feature of this industrial
grow th is the fact that it was accom panied by an
impressive expansion of industrial exports, re
flected in the increase in the share of the ex
ports of manufactures of these four countries
within the world total
2
from 1.35% in 1963 to
4.0% in 1976. Over the same period, the share
of the industrial exports of Brazil and Mexico
incr ease d from 0.22% in
1963
to 0.92% in 1976.
by the impressive industrial growth which
character izes their exp er ience.
In the case of Korea, the product of the
industrial sector represented only 5% of the
national product in 1954 (see table 1). In 1978,
ho we ver , 24 years later, the share of the in dus
trial sector had risen to 32%, while that of the
prim ary sector had gone from
50 %
to 19%.
In Taiwan, the industrial sector accounted
for 10% of the p rodu ct in 1952, whe reas this
prop ortion had risen by 1979 to the im pressive
leve l of 42% , wh ile primary production we nt
do wn from 3 7% to 11% over the same pe riod
(see tabl e 2).
In the city-State of Singapore, which has
practically no agriculture, the industrial sector
rep res en ted 13% of the products in 1960 but
24% by 1979. Th is chang e was due p artly to a
relative decrease in the role of the primary
sector from 5% in 1960 to 2% in 1979, but to a
larger e xtent i t was due to the relative decrease
in the role of the services sector, which was
resp ons ible for 79% of the produc t in 1960 but
only 70% in 1979. The relative weight of the
services sector reflects the special character
istics of this internationa l trading and distribu
tion centre, as in the case of Hong Kong, thus
' O E C D ,
The Impact of Newly Industrialized Coun
tries,
1979.
Hhid.
I l l
Indu strialization and export strategies
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114
CEPAL REVIEW
N o.15 /
December
1981
Table 1
SOUTH KOREA: SECTORAL STRUCTURE OF PRODUCTION
Share in GDP (%) 1954 1955 1960 1965 1970 1975 1979
Primary
production
Manufacturing
Services
50.2
5.3
44.5
44.3
8.4
47.3
45.9
9.7
44.4
34.2
15.0
50.8
27.8
20.9
51.3
24.0
28.2
47.8
19.1
31.6
49.3
Source: Chong Hvun Nam, Trade and Industrial
Policiesand.
the Structure of Protection in Korea,Korea D evelopment
Institu te, 1980, p. 6.
T ab l e 2
T A I W A N : S E C T O R A L S T R U C T U R E O F P R O D U C T I O N
Share in GDP {%)
Primary
product ion
Manufacturing
Social
security
Services
1952
37.13
9.82
9.61
42.83
1955
33.72
14.40
10.47
42.86
1960
33.87
17.44
11.08
39.39
1965
28.30
20.01
12.26
40.15
1970
19.81
27.31
13.74
42.03
1975
15.76
30.54
15.56
40.66
1979
10.56
42.12
14.96
34.58
Source:
Kwo-Shu Liang and Ching-ing Hore Liang,
Trade Strategy and the E xchange Rate Policies of Taiwan,
National
Taiw an University and National Cheng chi U niversity of Taiwan, 1980, p. 40.
calling for a different form of analytical treat
m en t from that appli ed to the rest of the devel
opin g countries (see table 3).
W e can see, then, that the notable dynamism
displayed by the economies of these countries
in the pe riod after the war cannot be separated
from the explosive industrialization reflected
in th e foreg oing figures, so that it
is
of particular
importance to go more deeply into the special
features of this industrialization process.
A
cen
tral feature of this is the concentration of these
coun tries on the export of consum er goods with
a high import content and the relatively inten
sive use of labour. In the case of Korea, where
perhaps the most advanced stage of industrial
ization has bee n reached, it may be noted, when
comparing exports and imports of industrial
goods, that the consumer goods category gen
erates a significant trade surplus (almost US$ 6
billion in 1978), but this is not enought even to
offset the imports of intermediate goods, in
cluding fuels, while a further deficit of US$
2 400 million is generated in the capital goods
secto r {see tab le 4).
It is important to stress, however, that this
export strategy involving a high im port content,
together with th e growth of the domestic m arket
and its consequent import requirements, ex
plain why the trade balance of Korea shows a
syste m atic deficit from 1960 to 1979. It is worth
notin g that betw een 1960 and 1973 the expan
sion of domestic demand accounted for 73%o f
th e ove rall grow th of the ind ustrial sector.
3
This
structural deficit in the trade balance points to
the importance of external financing, particu
larly in the 1960s
:
a subject which w ill be refer
red to later.
If we compare the relative size of the defi
cit with t he volume of exports, we see that there
has been a significant improvement, because
3
Larry E. Westphal, "The Republic of Korea's Expe
rience with Export-Led Industrial Development",
World
Development, Vol. 6, No. 3,19 78, table 12,p. 366.
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SOUTH-EAST ASIAN EXPORT INDUSTRIALIZATION / Fernando Fajnzylber
115
Table 3
S I N G A P O R E : S E C T O R A L S T R U C T U R E O F P R O D U C T I O N
Sh are in G D P (%) 1960 1973
1979
Agr i cu l t u r e , f i sh i ng and hun t i ng
M a n u f a c t u r i n g
C o n s t r u c t i o n
C o m m e r c e
Others
Total
4.5
13.2
3.7
33.6
45.0
100.0
2.3
22.6
5.8
28.6
40.7
100.0
1.7
23.6
4.8
25.0
44.9
100.0
Source:
WongKum-Poh,
The Financing of'Trade and Developm ent in the ADC s: The Experience ofSingapore,
University
of Singap ore, 1980, p. 6.
Table 4
SOUTH KOREA: NET EXPORTS,BYCATEGORIES
(Thousands of dollars)
Ca tegor y 1972 1973
1974 1975 1976 1977 1978
Capital goods
Interme diate goods
Consumer goods
Total
-545 610 -727 097 - 11 52 465 -11 65 385 -701690 -126 2 903 -2 412 348
-105 9 929 -165 158 5 -3 005114 -3 425 210 -3 931559 -4 4917 54 -5 770 009
699 342 1339 795 1 761930 2 376891 3 506 336 4 657 036 5691961
-897 914 -1015252 2391478 -2193 418 1058 523 -764 081 -2 249 814
Source: Toshio Watanabe,An Analysis of Structural Dependenc e Be tween the Republic of Korea and Japan: Toward a
More Optimal Division of Labour,University of'Tsukuba, Japan, 1980, p. 11.
whereas in the 1960s the def i c i t was o f a com
parab le o rder o f magn i tude to the expor t s o f
goo ds an d serv ices , f rom 1972 the p rop or t ion
w en t dow n to 40% , and in the per iod 1976-1978
i t a m o u n t e d t o o n l y 6 % .
4
Co n c e n t r a t i o n o n t h e e x p o r t o f c o n s u me r
g o o d s a n d h i g h i m p o r t c o n t e n t a r e w e l l - k n o w n
fea tu res o f th i s g roup o f As ian coun t r i es , bu t
so m et h in g wh ich i s no t so o f ten me n t ion ed i s
the i r par t i cu la r k ind o f l i nk wi th Japan , wi th
which they have a re l a t ionsh ip c l ear ly d i f fe ren t
f rom tha t which they have es t ab l i shed wi th the
U n i t e d S t a t e s a n d E u r o p e . T h u s , c o n c e n t r a t i n g
once aga in on the case o f Korea , we no te tha t
w h e r e a s t h e s e c o u n t r i e s ' e x po r t s p e n e t r a t e s uc
cess fu l ly in to marke t s o f the Un i t ed Sta t es and
E u r o p e a n d g e n e r a t e a t r a d e s u r p l u s f a v o u r a b le
fo r the expor t ing coun t r i es , t here i s a
signif-
i can t (and in the case o f Korea , g rowing) t rade
def i c i t w i th Jap an . In 1970 Korea ' s def ic i t w i th
Japan was US$ 589 mi l l ion , bu t in 1978 i t
am ou nt ed to US$ 3 412 mi l l ion , equ iva le n t to
prac t i ca l ly twice Korea ' s t o t a l t rade def i c i t i n
that year and equal to 6% of i t s gross nat ional
p r o d u c t
5
I f w e ana lyse th e s t ruc tu re o f the t rade
r e l a t i o n s b e t w e e n t h e t w o c o u n t r i e s i n q u e s
t ion , we see tha t Japan has a favourab le t rade
ba lan ce in the ca tegor i es o f ma ch ine ry (22) ,
e l e c t r i c a l a n d e l e c t r o n i c e q u i p me n t ( 2 3 ) ,
t ran spo r t eq u ip m en t (24), bas i c meta l s (19) and
che m ica l p rodu ct s (14) , wh i l e the t rade ba la nce
is favourable to Korea in the branches of text i -
4
See Park Yung-Chul, Export Growth and the Balance
of Payments in Korea 1960-1978,
Korea University, 1980, p.
6.
5
Toshio Watanabe, An Analysis of Structural Depen
dence Between the Republic of Korea and Japan,Universi
ty of Tsuku ba, Japan 1980. p. 7. Pacific Trade and Deve l
opm ent C onferen ce, 1-4 Septem ber 1980, Seoul, Korea.
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C E P A L R E V IE W
N o .
15
/December 1981
les (9), foodstuffs (5) and yarns an d threa ds (8).
Textile products, together with yarns and
threads, represent 57% of Korea's exports to
Japan.
Cle ar specialization is to be observed even
in the trade relations within this branch, since
Korea mainly exports clothing, silk products
and cotton yarns, while importing capital- and
technology-intensive products such as syn
thetic fibres and garments made therefrom.
6
Th e second most importent branch of Korea's
exports to Japan is that of electrical and elec
tronic equipment, where a c lear tendency to
specialization connected with the 'technolog
ical den sity ' of these pro ducts is likewise to be
observ ed. This branch includes household ap
pliances, electronic components and electrical
machinery and equipment, Korea's speciality
being the export of such household appliances
and goods as radios, television sets, watches
and pocket calculators all labour-intensive
item s. In th e other two groups, the advantage is
on th e sid e of Japan. Eve n within the branch of
electronic components there is specialization,
since Japan is a net importer of batteries and
integrated circuits for which the production
technology is well known while it exports
semi-conductors .
In th e case of this sector, the specialization
reflects t he fact that the Korean enterprises en
gaged in these lines were developed on the
initiative of Japanese or United States enter
prises seeking to take advantage of the lower
cost of labour through subcontracting. This is
refelcted in the high coefficients of exports and
imports characterizing this branch in Korea:
th e ex por t coefficient rose from 50% to 63%
be tw ee n 1970 and 1977, while the import
coef-
ficient remained practically constant at around
6 1 % over the same period.
7
The magnitude of
Hhid,
pp . 4-8 .
nbid.
th e pr es en ce of foreign firms in this sector
is
not
typical of the industrial structure of Korea, for
whereas in manufacturing as a whole foreign
enterprises are estimated to be responsible for
15 %
of the total expo rts, in the case of the e lec
tronic sector it is estimated that if subsidiaries,
joint ventures and wholly foreign-owned sub
sidiaries are inclu ded these account for 54% of
the production and
7 2%
of the exports.
8
There are indications that similar vertical
links exist between Japan and the remaining
Asian N IC s, although in the case of these other
countries the coefficients of horizontal special
ization are estim ated to be lower.
9
This special
l inkage be twe en the Asian NICs and Japan is of
particular importance because it shows that,
from Japan's point of view, the relative loss of
markets in the United States and Europe caused
by the new exports of labour-intensive prod
ucts from these countries is offset by the indi
rect exports of capital goods and intermediate
produ cts of Japanes e origin incorporated in those
countries ' exports. The multiplier effect of
Korea's exports for the Japanese economy has
be en work ed out in quantitative terms, and this
has confirmed the view that the net result is
highly favourable for Japan.
10
This situation
would tend to change, however, in so far as
these countries manage to progress in their
production structure towards the metal manu
factures a nd m achinery and chemical branches,
where they have indeed made significant steps
forward. In the present circumstances of the
world economy and those foreseeable in the
short and medium term, however, it would ap
pear that at least the speed of this diversifi
cation is becomin g less marked.
&The Republic of Korea's Experience..., op. cit., p . 362.
9
An Analysis of Structural Dependence..., op. cit.
mbid.
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SOUTH-EAST ASIAN EXPORT INDUSTRIALIZATION /
Fernando Fajnzylber
117
IV
Sele ctive impo rt substi tution policy
Co n t r a r y t o w h a t i s s u g g e s t e d b y t h e ' p o p u l a r '
vers ions , t he t rade po l i cy fo l lowed by these
c o u n t r i e s h a s i n c l u d e d a b y n o me a n s
insignif-
i c a n t i mp o r t s u b s t i t u t i o n c o mp o n e n t , a n d t h i s ,
u n l i k e w h a t h a p p e n e d i n L a t i n A me r i c a , h a s
h a d a n e x t r e me l y s e l e c t i v e n a t u r e a t t h e s e c
to ra l l eve l which has been g radual ly chang ing
wi th t ime and adap t ing i t se l f t o the modi f i ca
t ions undergone by the sec to ra l p r io r i t i es o f
indus t r i a l po l i cy . Th i s carefu l and se l ec t ive
p r o t e c t i o n i s t p o l i c y u s e d b o t h t a r i f f a n d n o n -
t ar ifT m ec ha n i s m s , re in fo rc ing bo th wi th me a
sures regard ing access to the fo re ign exchange
marke t . The se l ec t iv i ty re fe r red no t on ly to the
iden t i f i ca t ion o f sec to rs , bu t even to tha t o f
en ter p r i se s , t he au thor i za t ion o f fo re ign ex
c h a n g e f o r i mp o r t s b e i n g c o n d i t i o n a l u p o n t h e
g e n e r a t i o n o f e x p o r t s i n c o r p o r a t i n g t h o s e i m
p o r t s ,
and thus invo lv ing the ex i s t ence o f in
s t i t u t i o n a l me c h a n i s ms p e r mi t t i n g p e r ma n e n t
c o m m u n i c a t i o n b e t w e e n t h e g o v e r n m e n t
a u t h o r i t i e s a n d t h e r e s p e c t i v e e n t e r p r i s e s .
As we sha l l s ee l a t e r , t h i s ' i n s t i tu t iona l '
d im en s io n , wi th d i f fe rences o f form and in
t en s i ty , i s p r es en t in a l l four na t iona l cases and
makes i t c l ear tha t t hey invo lve an ' i n t e rven
t ion i s t ' S t a t e in the mos t o r thodox Japanese t ra
d i t i o n .
In the case o f the p ro tec t ion i s t po l i cy o f
Korea , t he f i r s t e l ement which mus t be borne in
mind i s the fac t t ha t t he in fo rmat ion p rov ided
by th e leve l of tar iff pro tect i on is extr em ely
s k e t c h y , s i n c e " q u a n t i t a t i v e r e s tr i c ti o n s o n im
ports have been much more important than tari ffs
as ways o f p ro tec t ing impor t subs t i tu t ion in
K o r e a " .
1 1
In th e cour se o f the so -ca l led ' impor t
l ibera l i za t ion ' wh ich took p lace in 1967 , a
'b l ack l i s t ' was in t roduced , whose e f fec t was
tha t a l l t ypes o f impor t s no t l i s t ed there were
a u t o ma t i c a l l y a u t h o r i z e d .
T h e G o v e r n m e n t
li
Trade and Industriai Policies and the Structure of
Protection in Korea, C h o n g H y u n N a m , K o r ea D e v e l o p
m en t Ins t i t u t e , 1980 , p . 16 . Pac i f ic T rade and D eve lopm ent
C o n f e r e n c e , S e o u l , 1 9 8 0 ,
a n n o u n c e d t h e n u m b e r o f i t em s c o r r e s p o nd i n g
to res t r icted imports , i .e . , the black l is t , twice
a year. The cri ter ia for defining the i tems
inc lud ed in th i s b lack li s t we re fundam enta l ly
the ba lance-o f -payment s s i tua t ion and the
r e q u i r e m e n t s f or p r o te c t i o n o f d o me s t i c i n d u s
t r i e s .
Quan t i t a t ive res t r i c t ions were app l i ed
main ly to compet i t ive and 'non-essen t i a l ' o r
' l uxury ' impor t s , wh i l e impor t s o f non-compet i
t ive raw mater i a l s and in t e rmedia te goods were
a p p r o v e d a u t o ma t i c a l l y .
W he n th e sys t em of the 'b l ack l i s t' was
ad op te d in 1967 , appro x ima te ly 60% of the
1 312 ba sic im por t i tems (S ITC four digi ts)
w er e no t inc lud ed in the li s t and cons equ en t ly
rec e iv ed au tom at i c approv al ; 118 i t ems we re
to ta l ly p roh ib i t ed , whi l e 402 were sub jec t t o
var ious types o f res t r i c t ions such as quo tas
or requ i rement s fo r recommendat ions f rom the
Min i s t ry o f Indus t ry and Trade o r o ther
mi n i s t r i es . Betw een 1967 and 1978 , i . e. , i n the
c o u r s e o f o n e d e c a d e , th e i t e ms w h o s e i m p o r t a
t i o n w a s p r o h i b i t e d w e r e g r a d u a l ly t r a n s fe r r e d
to the res t r i c t ed impor t l i s t , t he p ropor t ion
of the to t a l number o f i t ems au tomat i ca l ly
a u t h o r i z e d b e i n g ma i n t a i n e d a p p r o x i ma t e l y
con s tan t . By 1977 , the p ropor t ion o f au toma
t i c a l l y a u t h o r i z e d i t e ms a m o u n t e d t o 5 2 . 7 % ,
c o m p a r e d w i t h 5 0 . 4 % i n 1 96 7 , a n d s u b s e q u e n
t ly , t ow ard s the en d o f 1978 , the p ropor t io n o f
au tomat i ca l ly approved i t ems rose to 64 .9%
(see t ab le 5 ) . In genera l t e rms , th i s shows tha t
at l eas t from th e po in t o f v i ew of the nu m be r
of i t ems o f f ree o r res t r i c t ed im por ta t ion
t h e r e w e r e n o s u b s t a n t i a l c h a n g e s i n t h e d e c a
de fo l lowing what was ca l l ed ' impor t l i bera l i
z a t i o n p r o c e s s ' . Co n s e q u e n t l y , i n o r d e r to ma k e
a s t r i c t e r appra i sa l o f the na tu re o f the p ro tec
t ion sys t em, i t wou ld be necessary to have in
fo rm at ion no t on ly on the l eve l s o f t a ri ff p ro tec
t ion bu t a l so on the var ious im por t con t ro l s , and
c o m p a r i s o n o f p r i c e s b e t w e e n t h e d o me s t i c
a n d e x t e r n a l ma r k e t s .
Table 6 shows the levels of effect ive pro
tect ion for 1978 in comparison with those
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CEPAL REVIEW No .15 December 98
Table 5
SO U TH K O R EA : N O N -TA R IFF IMPO R T R ESTR IC TIO N S
1967 II
1968 I
II
1969 I
II
1970 I
II
1971 I
II
1972 I
II
1973 I
II
1974 I
II
1975 I
II
1976 I
II
1977 I
II
Prohibited
118
116
71
71
75
74
73
73
73
73
73
73
73
73
73
71
66
66
64
63
61
Restricted
402
386
479
508
514
530
526
524
518
570
571
569
556
570
574
592
602
584
579
580
560
Automatically
approved
(1)
792
810
756
728
723
708
713
715
721
669
668
670
683
669
665
649
644
662
669
669
691
Total*
(2)
1312
1312
1312
1312
1312
1312
1312
1312
1312
1312
1312
1312
1312
1312
1312
1312
1312
1312
1312
1312
1312
Deg ree of liberal
ization of imports
(%)
(3) = (l)/(2)
60.4
61.7
57.6
55.5
55.1
54.0
54.3
54.5
55.0
51.0
50.9
51.1
52.1
51.0
50.7
49.5
49.1
50.5
51.0
51.0
52.7
Source:
Chong Hvun Nam,
Trade and Industrial Policies and the Structure of Protection in Korea ,
Korea Developm ent
Institute
1980, p. 6.
"The classification of imports of goods was based on the SITC 4-digit codes up to 1970, but after that the BTN (CCCN)
4-digit codes were used.
es t imated for 1968 ( the es t imates of ef fect ive
p ro t e c t i on w er e ob t a i ned by u s i ng t he m e t hods
of Balassa and Corden) . This t ab le br ings out
var ious i n te res t ing features of the Korean
s chem e o f p ro t ec t i on i s t po l i cy ; t o beg i n wi t h ,
t he w e i g h t e d ave rage r a t e o f nom i na l p ro t ec
t ion for indus t r ia l ac t iv i ty as a wh ole rose f rom
1 4 % to 18% and th e ra te of ef fective pro tec t ion
from 1 1 % to3 1 % according to Balassa 's method
an d f rom 9% to 24% accordin g to Co rde n 's
m e t hod du r i ng t he pe r i od 1968 -1978 . A t t he
s am e t i m e , t he we i gh t ed ave rage t a r i f f p ro t ec
t i on w en t dow n f rom 54% t o 38% over t he s am e
pe r io d . Th is poin t s to the minor s igni f icance
which tar i f f pro tect ion seems to have had in the
case of Korea.
Se co ndl y , in the case of both nom inal and
effect ive pro tect ion , a l arger in ter-sectoral var i
a t ion i s ob ser ve d in 1978 than in 1968, wh ich
sugges t s that the d i scr iminatory nature of
s ec t o ra l p rom ot i on po l icy has bee n he i gh t ened .
Both nominal and effect ive pro tect ion tend to
be s m a l l e r fo r i n t e rm ed i a t e goods and h i ghe r
for cap i t a l goods and con s um er du ra b l es .
Thi rd ly , i t i s in teres t ing to note that in the
cas e o f Korea un l i ke wh a t hap pen ed i n La t i n
Am er i ca p ro t ec t i on has a m arke d b i as in
favour of the agr icu l tural sector , which has
be e n in te ns i f ie d in the l ast dec ade . In 1968, the
lev el of nom inal pro tect ion for the agr icu l tural
sec tor w as 17%, wh i le i t was 12% for the
m anu fac tur i ng sector ; in 1978, in cont ras t , i t
ha d r i se n to 55% for the agr icu l tural sector
w hi le i t was only 10% for the ma nufac tur ing
secto r . Th is ref lect s , as in the case of Japa n, the
pr ev al en ce of th e cri terio n of food self-suff 'i -
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120 CEP AL REVIEW No.15 /December
1981
Table 7
T A I W A N : C H A N G E S I N T H E C L A S S I F I C A T I O N O F V A R I O U S
C A T E G O R I E S O F I M P O R T E D M A N U F A C T U R E S , 1 9 5 3 - 1 9 7 8
1953
1956
1960
1966
1968
1970
1972
1974
1975
1976
1978
Permissible
280
252
506
4.93
5 541
5 612
10860
12
645
12
688
12
846
15773
%
55.23
48.10
53.72
52,34
57.92
57.08
82.09
97.71
97.52
97.16
97.57
Controlled
185
241
381
395
3 770
4 030
2 365
293
318
362
375
Number o'items
%
36.49
45.99
40.45
41.93
40.05
40.99
17.87
2.26
2.24
2.74
2.32
Prohibited
28
25
33
36
191
190
5
4
4
13
17
%
5.52
4.77
3.50
3.81
2.03
1.93
0.04
0.03
0.03
0.10
0.11
Others
14
6
22
18
_
-
-
_
-
-
-
2.76
1.14
2.33
1.91
-
-
-
-
-
-
-
Total
507
524
942
942
9 412
9 832
13230
12942
13010
13
221
16 165
%
100.0
100.0
100,0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
Source: Kuo-Shu Liang and Ching-ing Hore Liang,Trade Strategy and the Exchange Rate Policies of Taiwan, National
Taiw an U niversity an d National Chengc hi University of'Taiwan, 1980, p. 40.
" T h e p r i n c i p l e w h e r e b y t h e d o m e s t i c
avai lab i l i ty of a product jus t i f i es cont ro l of
import s of s imi lar goods i s an important par t of
t h e Ta i w an p ro t ec t i on s y s t em , a s i n m any o t he r
d e v e l o p i n g c o u n t r i e s / '
1 4
The bas ic cr i t er ion used was that local
m a nufa c t u r es wh o des i r e d p ro t ec t i on m us t
show that the quant i ty and qual i ty of thei r
pr od uc ts w er e suff ic ien t to sa ti sfy dom est ic
demand and that the cos t of the imported raw
ma ter ia l s to ma nufa cture such produ cts local ly
did not exceed 70% of the to ta l cos t of produc
t ion . T he ex -works pr ice of the produc ts wh ose
i m p or t a t i on was r e s t r i c t ed cou l d no t exceed t he
p r i ce s o f com pe t i n g i m por t s by m ore t han 25%
in 1960. In 1964 th i s margin was reduced to
1 5 % , in 1968 to 10% , an d in 1973 to 5% .
V
T h e role of th e s ta te
Sta te act io n is pr es en t in al l four of the coxintries
ana l y s ed , a l t hough wi t h d i f f e rences o f i n t en
s i ty and involv ing d i f ferent forms of in terven
t ion . Ev en in the c i ty S ta tes of S inga pore and
Hong Kong , h i s t o r i ca l l y cond i t i oned t o p l ay a
ro l e a s cen t r e s o f i n t e rna t i ona l t r ade d i s t r i bu
t ion , there are c lear indicat ions that the pos twar
14
Kuo-Shu Liang and Ghing-ing Hore Liang.
Trade
Strategy and the Exchange Rate Policies of Taiwan,
Na
tional Taiwan University and, National Chengchi Univer
sity, Taiwan. 1980, p. 14. Pacific Trade and Development
Conference, Seoul, 1980.
indus t r ia l i zat ion s t ra tegy was the resul t not
only of the act ion of the in tern at ional ma rket
forces , but of the adopt ion of a s t ra teg ic de
ci s ion by ar t i cu la ted in ternal nucle i of the
res pec t i ve S t a t e s :
" I n S i ngap o re , t he Go vern m e n t p l ays a
key ro l e i n econom i c deve l opm en t . I t no t on l y
i den t i f i e s t he s ec t o r s wh i ch d i s p l ay p rob l em s ,
formulates su i tab le pol ic ies and grants the
nec es s a ry i nv es t m en t i ncen t i ves , bu t a l s o p l ays
a real par t in a wide range of economic act iv i
t i es . . . The pub l i c s ec t o r m akes a cons i de rab l e
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121
co n t r ibu t ion to cap i t a l fo rmat ion . Of the to t a l
g ross domes t i c cap i t a l fo rmat ion i t i s respon
s ib le fo r be tween a quar t e r and a th i rd . "
1 5
In Hong Kong the p resence and ac t ion o f
the S ta t e re f l ec t t he ex i s t ence o f domes t i c
e n t r e p r e n e u r i a l n u c l e i w h i c h h a v e a n h i s t o r i
c a l c o mp o n e n t a s s o c i a t e d w i t h t h e l o n g p e r i o d
du r i ng w hic h th i s c i ty -Sta t e has p lay ed a s ign if i
can t ro l e in in t e rna t iona l t rade in t e rmedia t ion
re la t ions in As ia . Th i s componen t , d i s t i l l ed
over the space o f more than a cen tu ry , i s
a c c o mp a n i e d b y t h e c o n t r i b u t i o n i n t e r ms o f
e n t r e p r e n e u r i a l c a p a c i t y a n d s k i l l e d l a b o u r
w h i c h H o n g K o n g r e c e i v e s a s a c o n s e q u e n c e o f
the soc ia l t rans fo rmat ions t ak ing p lace in
Ch ina . In the words o f Tzong-B iau L in and
Y i n - P i n g H o :
"The infras t ructure is a legacy of his tory.
H on g Ko ng 's hun dr ed years o f por t ac t iv i ty
prov ided the c i ty wi th an ex tens ive phys ica l
a n d c o mme r c i a l i n f r a s t r u c t u r e : h a r b o u r a n d
warehous ing ins t a l l a t ions , va luab le t rade l inks ,
and wide exper i ence in t rad ing . Al l t h i s ,
toge ther wi th i t s e f f i c i en t bank ing , insu rance
and sea t ranspor t sys t ems , have c rea ted an eco
no m ic s t ruc tu re whic h i s ex t rem ely su i t ab le fo r
the d ev e l op m en t o f expor t trade in the l igh t
ma n u f a c t u r e s w h i c h a r e t h e f u n d a me n t a l e l e
m en t in i ts p res en t g rowth . I t i s per fec t ly t rue
to say tha t Hong Kong 's expor t i ndus t ry was
st imulated in the f i rs t p lace by the great f low of
l a b o u r , c a p i t a l a n d e n t r e p r e n e u r s f r o m Ch i n a
in the late 1940s and early 1950s. During this
period, a group of industr ial is ts arr ived from
S h a n g h a i w h o s e c a p i t a l a n d e n t r e p r e n e u r i a l
c a p a c i t y i mme d i a t e l y b r o u g h t a b o u t a n e x p a n
s i o n o f t h e t e x t i l e i n d u s t r y , w h i c h s p e a r h e a d e d
the f i rs t s tage in the industr ial izat ion of Hong
Kong after the war. Moreover, the big f low of
i mm i g r a n t s f r om C h i n a m o s t of t h e m y o u n g ,
indus t r ious and sk i l l ed prov ided a p rac t i ca l ly
u n l i m i t e d n u m b e r o f w o r k e r s i n r e l a t io n to t h e
leve l o f ec ono mi c ac t iv i ty then ex i s t ing . Unl ike
mos t o f the economies which have an excess o f
l abour , Hong Kong has a l abour fo rce which
^The Financing of Trade and Developm ent in the
ADCs: The Experience of Singapore. W ong Kum-Poh , Uni
ver s i t y o f S ing apo re , S inga pore , 1980 , p . 9 . Pac i f ic T rade
a n d D e v e l o p m e n t C o n f e r e n e t : . S e o u l . 1 9 8 0 .
do es n ot , as is usu al ly the ca se, com e from th e
agr i cu l tu ra l sec to r , bu t f rom immigra t ion . "
1 6
Th e fo rego ing ind ica tes tha t t he success ful
indu s t r i a l i z a t ion o f the se two c ity -Sta t es , Ho ng
Kong and Singapore , goes fa r beyond any ques
t ion o f be in g a mi r acu lo us resu l t o f the app l i ca
t ion oflaissez-faire, and confi rms the idea that
in o rde r to und ers t an d thes e p rocesses i t i s nec
essary to g ive due weigh t to the respons ib i l i t y
a s s u me d i n t h e m b y e n d o g e n o u s g r o u p s i n a
fo rm of soc ia l o rgan iza t ion genera ted in par
t i cu la r h i s to r i ca l cond i t ions , whose charac te
r i s t i cs mus t no t be over looked .
The fo rego ing de ta i l s regard ing the evo lu
t ion of protect ionis t pol icy in the case of
Ta iw an re f l ec t i n tu rn the ex i s t enc e of a p ro tec
t ionis t pol icy and an industr ial s t rategy wel l
d e f i n e d b y t h e G o v e r n me n t a mb i t , a mo n g t h e
main resu l t s be ing the re l a t ive d ivers i f i ca t ion
observed in indus t r i a l p roduct ion and expor t s
in the co urse o f the per iod , in wh ich g row ing
propor t ions o f p roduct s o f the chemica l , i ron
and s t ee l , and sh ipbu i ld ing indus t r i es a re to be
ob se rv ed . I t wo uld b e di ff icul t , if not impossi
b l e , to try to exp lain this divers i f icat ion towa rds
cap i t a l - in t ens ive sec to rs (pe t rochemica l s ) and
sec to rs mak ing in t ens ive use o f sk i l l ed l abour
and t echno logy (such as sh ipbu i ld ing) as a
m er e au tom at i c re f l ec t ion o f the sys t em of st a t ic
c o mp a r a t i v e a d v a n t a g e s a n d p r e s s u r e s b y t h e
advanced coun t r i es , wh ich in ac tua l fac t wi l l
themselves be a f fec ted by th i s indus t r i a l d iver
s i f i ca t ion o f Ta iw an . W hat i t is wi shed to s t res s
is that the industr ial s t rategy of Taiwan, as in
the other cases , i s due to a s ignif icant extent to
th e po l i t i ca l dec i s ion o f dom es t i c econ om ic
and soc ia l agen t s which came toge ther in the
def in i t ion o f the s t ra t egy fo rmula ted by the
Sta t e .
The case of Korea cal ls for special at ten
t ion , s inc e i t i s t he case which has bee n he ld up
perhaps mos t f requen t ly in La t in Amer ica as an
e x a m p l e o f t h i s n e w p a r a d i g m b a s e d o n o p e n
ing up to the in t e rna t iona l marke t and min imi
zat ion of the role of the State.
In a p re v iou s paragra ph i t was mad e c l ear
K
' Tzong-B ia i i L in and Yin-P ing Ho, Export Oriented
Growth and Industrial Diversification in Hong Kong, T h e
C hines e Univer s i ty o f Hong Kong , 1980 , p . 11 . Pac i f i c
T r a d e a n d D e v e l o p m e n t C o n f e r e n c e , S e o u l , 1 9 8 0 .
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CEPAL REVIEW No . 15/December 1981
how far the pro tect ionis t pol icy appl ied by
Ko rea wa s f rom the im age of i t wh ich has be en
p ro j ec t ed r ecen t l y i n La t i n Am er i ca .
A f i rs t express ion of the act ive par t i c ipa
t io n of th e pub l ic se ctor in the des ign of the in
du s t r i a l s t ra tegy i s to be s ee n i f we analys e th e
p l ann i ng s chem e pu t i n t o p rac t i ce i n Korea i n
1 9 6 2 .
The fi rst plan (1962-1966) had as i ts cen
t ra l object ive s the prom ot ion of the ex pans io n
o f s t r a t eg i c i ndus t r i e s , s t r eng t hen i ng o f t he
eco no m i c i n f r as t ruc t u re o f t he coun t ry , and
fu r t he r i ng i n pa r t i cu l a r of t he g rowt h o f p roduc
t iv i ty in the agr icu l tural sector .
The s econd p l an (1967 -1971) concen t ra t ed
on th e prom ot io n of the in tern al ar t i cu la t ion of
the indus t r ia l s t ructure and the s t imulat ion of
i ndus t r i a l expo r t s .
The th i rd p lan (1972-1976) had as i t s cen
t r a l ob j ec t i ves t he dev e l op m e n t of t he eng i
nee r i ng i ndus t ry and heavy i ndus t ry , a s we l l
a s i m pro ve m e n t o f t he ba l ance -o f -paym en t s
pos i t i on .
1 7
In o rde r t o i l l u s t r a t e t he em i nen t l y s e l ec
t ive nature of the indus t r ia l s t ra tegy and the
we i gh t exe r t ed by i n t e rna l dec i s i ons i n de f i n
i ng t he ro l e wh i ch ex t e rna l agen t s have p l ayed
in the indus t r ia l i zat ion of Korea, i t i s worth
exam i n i ng t he c r i t e r i a app l i ed i n e s t ab l i s h i ng
ru l e s on t he p res e nce o f fo re ign i nves t m en t .
T h e sectora l def in i t ion s fixed by the For eign
C ap i t a l Inducem en t Ac t t o r egu l a t e t he p res
en ce o f fo re i gn i nves t m en t a re de t a i l ed b e l ow
(see tab le 8) .
Apar t f rom i t s character of sectoral se lec
t i v i t y , d i r ec t i nves t m en t has p l ayed qu i t e a
m arg i na l ro l e com pared wi t h ex t e rna l i ndeb t
ednes s , and wi t h i n t he l a t t e r l ong - t e rm i ndeb t
ednes s has p redom i na t ed , t hus con f i rm i ng t he
ap pra i sa l that th i s i s a case of an indus t r ia l d e
ve l opm en t s t r a t egy p rope l l ed by i n t e rna l
agents . Except in the two years 1972-1973,
w he n d i r ec t i nves t m en t r ep res en t ed 12 . 3% o f
to ta l lo ng- term cred i t , i ts share in the res t of the
ll
The Republic of Korea s Experience..., op. cit.; Trade
and Industrial Policies..., op. cit.; Hon i l Lee , Industrial
Redeployment in Korea, S ep tember 1979 ; Pattern of
Growth and Changes in Industrial Structure of Korea,
1953-1973, Hak Chu ng Choo , Work ing P ape r 7506 , Korea
D e v e l o p m e n t I n s t i t u t e , 1 9 7 5 .
pe r io d 1968-1978 was belo w 10%, and in 1976-
1978 i t w en t dow n to 3 .3% (see tab le 9) .
Al though no sys temat ic informat ion i s
ava i l ab l e on t he r e l a t i ve we i gh t o f fo re i gn en
terp r i se s in th e indus t r ia l sector of thes e coun
t r i e s , the indicat ions regard ing thei r share in
indus t r ia l expor t s sugges t that , except in the
case of S inga pore , the i r re la t ive prese nce i s l ess
m ar ke d than in Lat in Am erica . If w e bea r in
mind the fact that in the South-Eas t As ian coun
t r i e s t he re has bee n a de f i n i t e and we l l -de f i ned
pol icy , as i l lus t ra ted ear l i er in the case of
Korea, of pr imar i ly t ak ing advantage of the
exp or t poten t ia l of the foreign enter pr i se s and
t o s om e ex t en t kee p i n g t he dom e s t i c m arke t fo r
na t i ona l g roups , i t m ay be conc l uded t ha t t he
sha re of foreign e nter pr i s es in to ta l indus t r ia l
product ion wi l l t end to be less than the share in
expor t s . In Lat in America , in cont ras t , the share
offoreign enterpr i ses in expor t s could be a su i t
ab l e a pp rox i m at e m eas u re o f t he i r we i gh t in
t o t a l i ndus t r i a l p roduc t i on .
B ear i ng i n m i nd t hes e cons i de ra t i ons and
th e info rmat ion g iven in t ab le 10 , i t may b e
conc l uded t ha t t he r e l a t i ve i m por t ance o f
dom es t i c en t e rp r i s es i n t he i ndus t r i a l p roduc
t ion of Korea, Taiwan and Hong Kong i s very
m arked l y g rea t e r t han i n t he s em i - i ndus t r i a l
i zed count r ies of Lat in America . This apprai sal ,
which d i f fers f rom the 'popular ' image d i ssemi
na t ed i n La t i n Am er i ca , i nd i ca t e s pe rhaps one
of th e spe cia l features of the Asian mo del ,
wh i ch , m oreover , r ea f f i rm t he ' J apanes e ' i n s p i
ra t ion behind thei r indus t r ia l s t ra tegy: the
dom i nan t cen t r a l i n f l uence and l eade r s h i p o f
the nat ional indus t r ia l sector and i t s duty and
abi l i ty to def ine s t ra teg ic opt ions for penet ra t
i ng i n t e rna t i ona l m arke t s and t hus c rea t i ng , by
dom es t i c e f fo r t s , t he ' com para t i ve advan t ages '
of th e fu ture . This w ou ld take us a very long
w ay f rom the k ind of mo del in wh ich coun t r ies
a re c on ver t ed i n t o pas s i ve ob jec t s o f t he i n t e r
na t i ona l m arke t fo rces and r enounce t he i n t e r
nal creat iv i ty and potent ia l for change provid
ed by the indus t r ia l sector .
T he be s t know n exp res s i on of t he pub l i c
act ion of the Korean S tate i s the vas t and
ge ner ou s r an ge o f expo r t i ncen t i ves , e s pec i a l l y
in clu di ng the fo l lowing: ( i) access to subs id
iz ed financing for inp uts , f ixed inv es tm en t and
ex po r t act iv i t i es ; (i i) exe mp t ion f rom indi re ct
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/Fernando Fajnzylber
123
T a b l e 8
S O U T H K O R E A : S E C T O R A L R E G U L A T I O N O F F O R E I G N P R E S E N C E
1. P E R M I T T E D F I E L D S
A . Export industries
I n d u s t r i e s w h i c h a r e r e q u i r e d t o e x p or t t h e i r e n ti r e p r o d u c
t i o n , u n l e s s t h e G o v e r n m e n t p e r m i t s t h e c o n t r a ry :
( a ) Fo od p roce s s ing (p r epara t ion and p r es erva t ion o f 'mea t,
etc. )
( b ) P r i n t i n g a n d p u b l i s h i n g
(c) Mi n in g and ex t r ac t ion (mi l l s and as s oc ia t ed indus t r i es )
(d) Sy nth et i c res ins (plas t ic ma ter ials , plas t ic fi lms , etc. )
( e ) Glas s p rod uc t s ( l i quor bo t t l es , imi t a t ion pear l s , e tc . )
( t ) C h em ica l p rod uc t s (co lo r an t s and in t e rm edia t e s , z inc
ox ide p igment s , e t c . )
( g) L e a t h e r p r o d u c t s
(h ) R u bb er p rod uc t s ( b i cyc le ty r es , vee-be l t s , e tc . )
( i) C h em ica l fe r t i l ize r s (u r ea , com poun d f e r t il i ze r s)
( j) Me ta l p rodu c t s ( door locks , e l ec t rop la t ing and g ild ing)
(k ) Ma chi ner y (hea te r s , bo l t s , r i ve t s , e t c .)
(1) Pho togr aph ic and op t i ca l a r ti c l es ( op t ica l l ens es , s pec
t ac l es and b inocu la r s )
(m) T ra ns p or t eq u ip m en t (b i cyc le par t s , ax l es and tr ans
mis s ions , e t c . )
(n ) E lec t r i ca l and e l ec t ron ic a r t i c l es ( r ad io , t e l ev i s ion ,
v ideo , aud io , e t c . )
( o ) F u r n i t u r e
(p ) Ot he r s (p i anos , o rgans , e t c. )
(q ) Tour i s m.
B .
Import substitution industries
I n d u s t r i e s a i m e d a t r e p l a c i n g i m p o r t s a n d , e v e n t u a l ly , e x
p o r t i n g :
( a ) Ha nd m ad e f ib r es (v is cos e and r ayon f ib r es )
(b ) Pa per and pa pe r p rod uc t s ( chemica l pu lp )
( c ) C h em ica l p roduc t s ( e thy len e g lyco l , pap er fo r fi lms
a n d s e n s i t i v e p a p e r )
(d) Bas ic me tals ( i ron an d s teel cas t ing s , etc. )
( e ) Me ta l p ro duc t s ( d rum s , s pec ia l e l ec t rop la t ing , e t c .)
(f ) Ma ch in ery (wate r t u rb ines s , gas o l ine motor s , e t c . )
(g ) E lec t r i c i ty and e l ec t ron ics ( e l ec t r i c motor s , genera to r s ,
etc. )
(h ) T ra ns p or t (mar in e eng in es , bu i ld ing o f meta l s h ips ,
etc. )
2.
R E S T R I C T E D F I E L D S
A. Prohibited by law in the public interest
( a ) C igar s
( b ) P r o c e s s i n g
(c) W ater s upp ly
(d) C o mp ani es es t ab l i s hed wi th the J apa nes e r epa t r i a t ion
fund
Restricted by law
( a ) Min ing
(b) Avia t ion
(c) F i s h ing and p roce s s ing
(d) Mar i t im e t r ans por t
Prohibited under the industrial policy
( a ) G e n e r a t i n g p l a n ts a n d d i s t ri b u t i o n
(b) R a i lways
(c) Gas s up p ly
(d) Coas tal f ishing
Prohibited in order to protect domestic enterprises
( a) W igs and f a ls e eye las h es
( b ) P l y w o o d
B. Others
T e x t i l e s
(a) Si lk fabr ics an d
tsumugi
f inishes
(b) Non-woven f abr i cs
( c ) Kim onos and f in i s hes
(d) S pe cia l fabr ics and f inishe s
( e ) C olo ran t s and f in i s hes
M e t a l p r o d u c t s
( a) F a r m i m p l e m e n t s
I ron and s t ee l
P r imary i r on and s t ee l
C h e m i c a l s
B a s i c p e t r o c h e m i c a l s
R e f i n i n g
B as ic o i l
( a ) Au tom obi l e motor s
(b) M otor par ts
( c ) B rake s ys t em
(d) C lu tch s ys t em
(e) E lec t r i c a l a r t i c l es
T r a n s p o r t a n d s t o r a g e
W a r e h o u s e s
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T a b l e 9
S O U T H K O R E A : L O N G - T E R M F I N A N C I A L M O V E M E N T S
(Millions of dollars)
N e t l o n g - t e r m
c a p i t a l
P u b l i c a n d
c o m m e r c i a l l o a n s
D i r e c t i n v e s t m e n t s
C o m m e r c i a l c r e d i t
P o r t f o l i o
i n v e s t m e n t s
O t h e r s '
Total
C r e d i t
101.6
68 .6
5.4
31 .0
0.9
105 .9
1 9 6 0 - 1 9 6 3
%
64.8
5 .1
2 9 . 3
0.8
100 .0
D e b i t
66 .3
2.7
0.4
1.2
4 .3
%
62.8
9.3
27 .9
100.0
C r e d i t
1171.4
1363.8
221 .1
214 .6
12.1
1812.6
1972-1973
%
75.2
12.3
11.8
0.7
100.0
D e b i t
463 .8
10.9
115.0
51 .5
641 .2
%
72.3
1.7
17.9
8.0
100.0
C r e d i t
2124 .7
2234 .6
185.7
645 .0
19.0
80 .0
3164 .3
1974-1975
%
70.6
5.9
20 .4
0.6
2.5
100.0
D e b i t
622 .5
2 8 . 1
349 .4
39 .6
1039.6
%
59.9
2.7
33 .6
3.8
100.0
C r e d i t
4 8 5 3 . 3
6630 .4
290 .4
1541 .7
186.2
230 .8
8 8 7 9 . 5
1976-1978
74 .7
3.3
17.4
2 .1
2.6
100.0
D e b i t
1935 .8
8 2 . 5
1657 .7
3 5 3 . 2
4 0 2 9 . 2
%
4 8 . 0
2.0
4 1 . 1
8.8
100.0
Source: Park Yung-Chul,Export Growth and the Balance of Payments in Korea, 1960-1978,Korea University, 1980, p. 6.
"Includes frozen loans, commitments to international organizations, fund covering transactions between head offices and foreign branches, bank
deposits, and advance paym ents for imports.
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126
CEPAL REVIEW No.15 /
December 1981
na l p ro du c t s how s a dec l i n e f rom 85% in 1963
to 78% in 1975. At the same t ime, the share of
e n t r e p r e n e u r i a l i n c o m e i n t h e p r o d u c t r o s e
from 6.4% in 1 963 to 10.9% in 1975.
2( )
Wi th
rega rd t o t he connex i on be t ween t he expo r t
pol icy and th i s regress ive d i s t r ibut ion of inco
m e ,
W on t ack Hong conc l udes t ha t t he m a i n
exp l ana t i ons a re as fo l l ows :
"F i rs t ly , the fact that expor t act iv i t i es en
j oy ed b i g s ubs i d i es m ea ns t ha t a cons i de rab l e
ren t m us t have been c rea t ed fo r t hos e pe r s ons
wi t h s pec i a l en t r ep reneu r i a l t a l en t and capac
i ty for expanding expor t s . Secondly , the fact
t ha t t he Governm en t r e s t r i c t ed t he a s s i gnm en t
o f s ubs i d i es t o a l i m i t ed num ber o f en t r ep re
neu r s i n o rde r t o t ake advan t age o f econom i es
o f s ca l e a l s o m eans concen t ra t i on o f wea l t h ,
wh i l e t he p re fe ren t i a l t ax s y s t em a i m ed a t g i v
i ng i nce n t i ve s t o en t r ep r ene u r s t o r e t a i n and
reinves t prof i t s , together wi th the ins igni f icant
l eve l o f t he i n he r i t a nce t axes l ev i ed , m ean s t he
pe rpe t ua t i on o f t h i s concen t ra t i on o f wea l t h .
S in ce in th e 1970s appro xima tely 25 % of to ta l
g o v e r n m e n t e x p e n d i t u r e w a s d e v o t e d t o g e n e
ra l adm i n i s t r a t i o n , 30% t o de fence , 25 % t o in
ve s t m en t ac t iv i t i e s a i m e d a t econom i c g rowt h ,
and t he r e s t t o s oc i a l deve l opm en t expens es
(p r i nc i pa l l y p r i m ary e duca t i on ) , i t m ay be s a id
i t has nev er bee n t he Korean Gov ernm en t ' s a i m
t o i m prove i ncom e d i s t r i bu t i on o r i nc reas e
pu bl ic w el fare act iv i t i es on the bas i s of a
sys tem of t axes and f i scal expendi tures . In
ot he r wor ds , i f ec ono mi c factors such as the
g rowi ng p ropo r t i on o f i ncom e i n r e s pec t o f
p ro f i t s have accen t ua t ed t he de t e r i o ra t i on o f
in co m e di s t r ib ut io n in the 1970s , the sys tem of
t a x e s a n d g o v e r n m e n t s p e n d i n g h a s n e v e r e m
ba rk ed on any ne w effor ts to reve rse th i s
t r e n d . "
2 1
In the cases of Taiwan and Hong Kong too ,
for w hi ch informa t ion i s avai lab le , we note an
inc re as e in real wa ges in sp i te of the wea k t rade
union act iv i ty . In the case of Hong Kong, the
G o v e r n m e n t d o e s n o t a p p l y a n y re g u l a ti o n s re -
a'Table 10.
2
Trade, Industrial Grow th..., op. cit.,
p. 3.
gard i ng m i n i m un wages , and t r ade un i on ac t i v
i ty appea r s t o be ex t r em el y s ke tchy .
22
W i t h r ega rd t o Korea , t he we l l -known
s t udy by W es t pha l no t es :
"W here t he governm en t has i n t e rvened i n
l abo u r m a rke t s i t has genera l l y bee n t o coun t e r
org an ize d la bou r force which as a resu l t i s not a
power fu l i n t e res t g roup . "
2 3
In Ta iw an t he un i t cos t of l abour appe ars to
ha ve r e m a i ne d cons t an t o r even gone down i n
the 1960s , beginning to grow in the fo l lowing
d e c a d e .
2 4
Although no preci se informat ion i s avai l
a b l e ,
i t may be assumed that in v iew of the
ind ex es of grow th of prod uct iv i ty in Ta iwa n a
s i m i l a r phenom enon t ook p l ace t he re t o t ha t
obs e rved i n Korea , where t he g rowt h o f r ea l
wages and r eg res s i ve i ncom e d i s t r i bu t i on t ook
place s ide by s ide . F rom the poin t of v iew of
s oc i a l t en s i ons , even l eav i ng as i de t he q ues t i on
of t he m a ch i ne ry o f r ep res s i on , concen t ra t i on
o f i ncom e pa ra l l e l w i t h g rowt h o f r ea l wages
aga i n s t a back g rou nd o f gene ra l i zed expec t a
t ion s of eco no mi c grow th is abso rbed re la t ively
eas i l y . The s i t ua t i on changes , however , when
(as appears to have taken p lace in Korea in the
se co nd half of th e 1960s) a si tuat io n of full e m
p l o ym en t i s r eac hed w h i l e a t t he s am e t im e t h e
p ros pec t s fo r g rowt h de t e r i o ra t e . The s i m u l t a
ne ou s ex i s t ence o f a s l owl y g rowi ng ex t e rna l
m arke t , p res s u res due t o g rowi ng t r ade un i on
act iv i ty and the coming to the surface of the
s oc i a l p rob l em s accum ul a t ed and kep t covered
up d u r i n g t he pe r i od o f g rowt h p robab l y go a
l ong way t owards exp l a i n i ng t he po l i t i ca l
con f l i c ts ob s e rv ed i n Korea i n r ece n t ye a r s . T he
topic of the ef fect s caused by the ent ry of th i s
long cycle of expans ion in to the recess ive
phas e wi l l be r e s um ed when we ana l y s e t he
i n t e rna t i ona l con t ex t i n wh i ch t he i ndus t r i a l i z
i ng en t r ep ren eu r i a l ac t i on o f t he S t a t e t ook p l a
ce i n t hes e coun t r i e s .
^Export Oriented growth, op. cit.,p . 9.
23
T/teRepublic of Korea's Experience, op. cit.,p. 375.
'^Trade Strategy and the Excha nge Rate..., op. cit.,
p. 41 .
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127
V I
The in t e rna t iona l con tex t
I n p r e v i o u s p a r a g r a p h s s t r e s s h a s b e e n l a i d o n a
se t o f in t e rna l fac to rs which appear to have
p l a y e d a d e t e r mi n i n g r o l e i n t h e r a p i d e c o
n o m i c g r o w t h e x p e r i e n c e d b y t h e s e c o u n t r i e s
af t e r the war : t he indus t r i a l i za t ion e f fo r t o f the
S t a t e , e x p r e s s e d t h r o u g h t h e s u b o r d i n a t i o n o f
the f in anc ia l sph er e to the ob jec t ive o f indus
t r i a l g ro wth ; the def in i t ion o f sec to ra l p r io r i t i es
a n d i n t e g r a l e c o n o m i c p o l i c ie s i n s u p p o r t o f t h e
s e l e c t e d b r a n c h e s ; t h e c l e a r a r t i c u l a t i o n w i t h
a n e n t e r p r e n e u r i a l s e c t o r h a v i n g t h e w i l l a n d
d e s i r e t o s e c u r e i n d u s t r i a l i z a t i o n ; t h e p a s s i v e
a t t i t u de o f th e l abo ur fo rce and the f rag i li ty o f
t r a d e u n i o n o r g a n i z a t i o n s , w h i c h i s e x p l a i n e d
bo th by po l i t i ca l and rep ress ive fac to rs and by
t h e h i g h d e n s i t y o f p o p u l a t i o n w i t h lo w p r o
duct iv i ty in the in i t i a l s t ages ; and the des ign
an d c l ear u t i l i za t ion o f a mas s ive po l i cy o f t ra in
ing l a bo ur . I n the cases o f the c i ty -Sta t es of
H o n g K o n g a n d S i n g a p o r e , t h i s i n d u s t r i a l i z a
t i o n w a s c o m p l e me n t e d w i t h t h e t r a d it i o n a l en
t r e p r e n e u r i a l c o m p e t e n c e a n d e x p e r i e n c e i n
the f i e lds o f t rade and f inance .
T h e s e i n t e r n a l f a c t o r s w e r e s t r e n g t h e n e d
an d s t im ula ted by a cer t a in in t e rna t ion a l
c o n t e x t , w h i l e b o t h e c o n o mi c a n d g e o p o l i t i c a l
c o n s i d e r a t i o n s a c t e d i n t h e d i r e c t i o n o f d e c i d
e d l y s t r e n g t h e n i n g i n d u s t r i a l g r o w t h o r i e n t e d
t o w a r d s i n t e r n a t i o n a l ma r k e t s .
In the economic f i e ld , we have seen in a
s t u d y
2 5
re fe r red to ear l i e r how the rap id g rowth
w hi ch wa s a fea tu re o f the per io d a ft e r the w ar
f a v o u r e d t h e a c c e l e r a t e d g r o w t h o f p r o d u c t i v
i ty , i n t ens i f i ca t ion o f in t e rna t iona l t rade , and
c o n s e q u e n t l y a l s o o f c o m p e t i t i o n b e t w e e n t h e
d e v e l o p e d c o u n t r i e s , w h i c h i n i ts t u r n h a d p r o
j e c t i o n s o n t h e i n t e r n a t i o n a l i z a t i o n o f i n d u s
t r i a l p roduct ion , wi th a p rogress ive increase in
t h e r e l a t i v e e x p e n s i v e n e s s o f l a b o u r w h i c h
s t i mu l a t e d t h e s e a r c h f o r e l e me n t s t o n e u t r a l
i z e t h a t t e n d e n c y , a m o n g t h e m t h e c o n s t r u c t i o n
of expor t p l a t fo rms in coun t r i es wi th cheap and
25
Fajnzylber, The Industrial Dynamic..., op. cit.
' d i s c i p l i n e d ' l a b o u r . T h i s f a c t o r o f " d e ma n d "
t h e n e n c o u n t e r e d a f u n c ti o n a l r e s p o n s e in t h e
in te rna l fac tors o f the As ian NIC s , wh ose en do
ge no us dy nam ism found a p rop i t ious f i eld in
t h e m a r k e t s o f t h e d e v e l o p e d c o u n t r i e s a n d e s
p e c i a l l y t h e U n i t e d S t a t e s a n d E u r o p e . T h i s
w a s a p e r i o d d u r i n g w h i c h t r a d e w a s l i b e r a l
i zed , p r inc ipa l ly in the t a r i f f f i e ld , and where
G A T T d i d n o t r e a l l y w o r r y t o o mu c h a b o u t t h e
e x p o r t s u b s i d y p o l i c i e s a p p l i e d in th e d e v e l o p
ing cou n t r i es , o r the me asur es o f p ro tec t ion in
spec i f i c sec to rs . T he in t ens i f i ca t ion o f com pet i
t i o n b e t w e e n d e v e l o p e d c o u n t r i e s , t h e in
crease in the cos t o f l abour in those coun t r i es ,
an d the g ene ra t io n o f fo rms o f ma rke t ing
t h r o u g h b i g c h a i n s o f s u p e r ma r k e t s f o u n d a
s t r ict ly funct ional response in the efforts of the
As ian coun t r i es to indus t r i a l i ze and expor t , and
t h e i r c o n c e n t r a t i o n o n c o n s u me r g o o d s . A t t h e
s a me t i me , t h e p r o f o u n d i n d u s t r i a l c h a n g e s
go ing on in Japa n , whic h pe rm i t t ed i t t o b r in g
abou t d ras t i c changes in i t s i ndus t r i a l and ex
por t s t ruc tu re , moving f rom labour- in t ens ive
p r o d u c t s t o p r o d u c t s ma k i n g i n t e n s i v e u s e o f
t ec hn o lo gy and cap i t a l , found in the exp ans ion
of the As ian coun t r i es an exped ien t to permi t i t
to offset i t s loss of compet i t iveness in labour-
i n t e n s i v e p r o d u c t s , b y c h a n n e l l i n g t o t h o s e
coun t r i es the cap i t a l goods requ i red fo r the i r
domest ic and export -oriented industr ial growth.
T h e c o n s i d e r a t i o n s o f a n e c o n o mi c n a t u r e
w h i c h a p p l y t o t h e d e v e l o p i n g c o u n t r i e s i n g e
nera l were accompan ied , in the case o f the
As ian coun t r i es , by cons idera t ions o f a geopo l i
t i c a l n a t u r e . T h u s , f o r w e l l - k n o w n g e o g r a p h
i ca l and h i s to r i ca l reasons th i s g roup o f coun
t r i es p l a ye d an impor tan t ro l e in the ideo log ica l
and mi l i t a ry conf ron ta t ion be tween Eas t and
Wes t in the per iod fo l lowing the war . In add i
t ion to the s t r i c t ly log i s t i c aspec t s connec ted
wi th the ex i s t ence o f mi l i t a ry bases , t he eco
n o mi c a n d mi l i t a r y s t r e n g t h e n i n g o f t h e s e
c o u n t r i e s a l s o b e c a me a n e s s e n t i a l o b j e c t i v e .
In the conf ron ta t ion wi th Ch ina , a dec i s ive ro le
w a s p l a y e d b y T a i w a n a n d H o n g K o n g , a n d t o a
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C E P A L R E V I E W N o . 1 5/
December
98
l ess ex tent S ingapore , whi le in the case of the
con f ron t a t i on wi t h Nor t h Korea and t he Vi e t
nam conf l ic t an important ro le was p layed by
S ou t h Korea .
In the cases of both Taiwan and Korea the
econom i c a i d p rov i ded du r i ng t he 1960s p l ay
e d an im po rtan t funct ion in that i t p ro vide d a
so un d bas i s in the cr i t i ca l phas e of the g es ta t ion
o f t hes e i ndus t r i a l i za t i on m ode l s . As a l r eady
noted , the t rade def ic i t in the 1950s and the
ea r l y 1960s r ea che d a cons i d e rab l e l eve l , and i t
was preci sely a t th i s t ime that Uni ted S ta tes a id
ca r r i ed ou t a dec i s i ve func t ion :
"Taiwan was the benef ic iary of a s t rong a id
pro gra mm e. I t was ass igned a to ta l of US$ 144 4
m i l l i o n i n t he pe r i od be t w een 1951 and 1965 ,
wh i ch i s equ i va l en t t o t en do l l a r s pe r i nhab i
t an t p e r yea r . Th i s a s s i s t ance p l ayed an i m por
ta n t ro le in the t ask of cont ro l l ing inf la t ion a t
th e be gi nn in g of the 1950s . Mo reove r , if i t had
not been for Uni ted S ta tes a id , the t rade def ic i t
o f Ta i wan wou l d have been a f ac t o r capab l e o f
s e r i ous l y l i m i t i ng t he coun t ry ' s econom i c de
ve l op m en t up t o t he ea r l y 1960s. Un i t ed S t a te s
a i d ove rcam e t h i s bo t t l eneck by i nc reas i ng t he
fo re i gn exchange r e s ou rces and p rov i d i ng s up
po r t fo r t he i m por t a t i on o f i nd i s pe ns ab l e i npu t s
w h i c h s e rv ed as a com pl em en t to t he dom es t i c
l abou r fo rce and o t he r com ponen t s o f i nves t
m en t . U p to 1951, the sha re of Un i ted S ta tes a id
i m por t s i n t o t a l i m por t s r em ai ned over 30%,
a l t h o u g h s u b s e q u e n t l y i t w e n t d o w n r a
p i d l y . "
2 6
With regard to Korea, a s imi lar s i tuat ion
w a s o b s e r v e d :
"Korea ' s r e l a t i ons h i p wi t h t he Un i t ed
S t a t e s obv i ou s l y i nc re as ed i ts fo rei gn ex change
e a r n i n g s t h r o u g h e x p e n d i t u r e s s t e m m i n g f r o m
th e s ta t ion ing of UN forces in Korea and , dur ing
t he w ar i n V i e t n am , f rom o f fs ho re p rocu rem en t
by th e U ni t ed S ta tes . As indic ated in t ab le 6
under ' r ece i p t s f rom governm en t t r ans ac t i ons ' ,
m i l i t a r i l y r e l a t ed expend i t u res ( t he s um o f t he
t wo co m p on en t s s hown) i n t he pas t accoun t ed
for a siz ab le fract ion of Kor ea's foreign ex
c h a n g e e a r n i n g s . "
2 7
The same author , in se t t ing out the con
c l u s i ons o f h i s we l l -known s t udy , h i gh l i gh t s
mbid.,
p. 3.
21 The Republic of Korea's E xperience, op. cit., p , 36 1.
t h e e n d o g e n o u s e l e m e n t s a m o n g t h e c o m p l e
m en t a ry f ac t o r s :
"The m os t obv i ous e l em en t was t he l eve l
of foreign ass i s tance dur ing the 1950s and ear ly
1960s , wh i ch c on t r i bu t ed t o bu i l d i n g t he i nf ra
s t ruc t u re fo r s ubs equen t g rowt h . "
2 8
An oth er analys i s of the balance-of-pay-
m en ts s i tua t ion of Korea s ta tes :
"F ro m t he ear ly 1950s , af ter the Korean
War, unt i l the mid-1960s , the t rade def ic i t , in
c l u d i n g i nv i s i b l e i t em s , was genera l l y covered
t h rough fo re i gn a i d and dona t i ons . In t h i s pe
r iod the inf low of capi ta l , whether shor t or long
t e rm , was ve ry s l i gh t. "
2 9
As regards the geopol i t i cal importance of
t he s e co un t r i e s an d i ts connex i on wi t h t he f ie ld
of t rade, i t may be of in teres t to quote a s ta te
m en t r ega rd i ng Hong Kong wh i ch s ays :
"O ne o f t he r eas ons why t he Un i t ed S t a t es
d i d no t t ry t o app l y m ore p res s u re t o Hong
Kong dur ing the 1960s wi th regard to l imi ta
t ions in the ques t ion of t ex t i l es was that the
Un i t ed S t a t e s needed t he i n t e l l i gence s t a t i on
wh i ch was u s e d to kee p t he P eop l e ' s R epub l i c
o f C h i na und er s u rve i l l ance . '
, 3
The econom i c and geopo l i t i ca l cons i de ra
t ions w hic h te nd ed to favour the pol icy of ex
por t indus t r ia l i z at ion of thes e count r ies are
i l l u s t r a t ed by t he m a ny cas es of l en i ency wi t h
wh i ch t he Un i t ed S t a t e s app l i ed t r ade r egu l a
t ions to these count r ies . Thus , in the speci f ic
f ie ld of the appl ic at ion of cus tom s classi f ica
t i o n s ,
t he m os t no t ewor t hy exam pl e a re t hos e
co nn ec te d w i th cases of c lass i fi cat ion of shoes
as rub be r s hoes o r non - rubb er s hoes , ya rn a s
cot ton yarn or synthet ic yarn , and te lev i s ion
s e t s a s a s s em bl ed o r s em i -as s em bl ed : a l l op
t ions wi th deci s ive tar i f f impl icat ions .
By wa y of i l lustr at io n, let us take the case of
foo t wear :
mbid., p.375.
2 i,
P ark Yung-Ch i l l , Export Growth and the Balance of
Payments in Korea, 1960-1978, Korea Univ ersi ty , 1980,
p .
3 . P ac i f ic Trade and Deve lopmen t Confe rence , S eou l ,
1980.
3 ( )
D . Yof'fie and R. Keohane, Responding to the 'New
Protectionism': Strategies for the Advanced Developing
Countries of the Pacific Basin, S tan fo rd Un ive rs i ty , Un i ted
S ta te s , 1980 , p . 12 . P ac i f ic Trade and De ve lo pm en t Confe
rence , S eou l , 1980 .
8/11/2019 FAJNZYLBER (1981) - Some Reflections on South-East Asian Export Industrialization
21/24
SOUTH-EAST ASIAN EXPOR T INDUSTRIALIZATION
/Fernando F ajnzylber
129
" I n
1976 the
K o r e a n s e x p o r t e d
to the
U n i t e d S t a t e s 44 mi l l ion pa i r s of n o n - r u b b e r
s h o e s
and
s t a t e d
in
Janu ary 1977 that thei r to tal
e x p o r t c a p a c i t y for the y e a r was 60 mi l l ion
p a i r s .
The
U n i t e d S t a t e s t r ie d
to
l o w e r
the
total
a c h i e v e d by K o r e ain 1976 and in fac t reduced
t h e l e v e l o f t h e K o r e a n q u o t ato 33mi l l ion pa i r s
fo r the y e a r e n d i n g in J u n e 1978. U s i n g the
var ious c l auses tha t permi t t ed g rea te r f l ex ib i l i
t y , h o w e v e r ,
the
K o r e a n s a c t u a l l y ma n a g e d
to
e x p o r t58mi l l ion pa i r s o f shoesin 1977 ."
3 l
T h e r e
are
a l s o ma n y e x a mp l e s
of
l en iency
o n the p a r t of the Uni t ed Sta t es towards the
A s i a n c o u n t r i e s w i t h r e g a r d
to the
evas ion
of
v a l i d r e g u l a t i o n s . An impor tan t case is tha tof
t r a n s s h i p m e n t , w h i c h s e e m s
to be
par t i cu la r ly
s i g n i f i c a n tin thet ex t i l eand footwear sectors :
" W i t h r e g a r d
to
t ex t i l es , c lo th ing
and
foot
w e a r ,thec l as s i cwayo f ge t t ing r oundthe quota
h a s b e e n t r a n s s h i p me n t . Bu y i n g f a l s e d o c u
m e n t s in H o n g K o n g , for example , cos t s on ly
o n e - t h i r d of the a mo u n t t h a t it would cos t to
a c q u i r e l e g i t i ma t e q u o t a s .
T he
goods
can
then
b e t r a n s p o r t e d in b u l k to I n d o n e s i a or Sri
L a n k a , w h i c h h a v e
no
q u o t a s ,
and can be
n e w l y
l a b e l l e d b e f o r e b e i n g s e n t on to the U n i t e d
S t a t e s . T r a n s s h i p m e n t i m m e d i a t e l y b e c a m e
m u c h in e v i d e n c e a f t e r the app l i ca t ion of the
me a s u r e s r e g a r d i n g f o o t w e a r . T a i w a n c o mp a
n i e s s e n t f o o t w e a r c o mp o n e n t s to Hong Kong
to
be
a s s e mb l e d t h e r e , w i t h
the
resul t that
H o n g K o n g ' s e x p o r t s of foo twear increased by
2 2 . 5 % i n l 9 7 8 . "
3 2
A n o t h e rway ofe v a d i n g e s t a b l i s h e d t r a d e
r e g u l a t i o n s
is the use of
th i rd coun t r i es
to
n e u
t r a l i z e the res t r i c t ions spec i f i ca l ly p l aced on
c e r t a i n s u p p l i e r s :
"As theyno l o n g e r h a v ethe oppor tun i tyto
expor t syn the t i c t ex t i l es ins t ead
of
cot ton
be-
c a u s e of the n e g o t i a t i o n of the mul t i f ibres
a g r e e m e n t s , T a i w a n , K o r e a
and
H o n g K o n g
ha-
b i t u a l l y e x p o r t b a t c h e s of such text i leto c o u n
t r i es l i ke
the
P h i l i p p i n e s
or
e v e n J a p a n , w h e r e
t h e w o r k ofm a n u f a c t u re is c o m p l e t e dand the
p r o d u c t s
are
t h e n s e n t
to the
Uni t ed Sta t es . "
3 3
T h e c o n s i d e r a t i o n s of an e c o n o mi c and
g e o p o l i t i c a l n a t u r e a l r e a d y me n t i o n e d a p p e a r
^bid.,y>. 15.
Klbid.,p. 17.
33/fcii/.,
p. 18.
t o h a v e p l a y e d a s ignif icant rolein the re l a t ive
i n d i f f e r e n c e s h o w n
by the
Uni t ed Sta t es
in ac-
c e p t i n g t h e s e s i t u a ti o n s :
" I n ma n y c a s e s , the evas ion of cus toms
r e g u l a t i o n s
was
e n c o u r a g e d
or
t ac i t ly appr ove d
b y the U n i t e d S t a t e s .At one s t ageof the Viet
n a m war, l a r g e r s h i p me n t s t h a n t h o s e p e r mi t
t e d w e r e e a s i l y a c c e p t e d , b e c a u s e d o me s t i c
p r o d u c t i o n was l e s s t h a n d e ma n d . The factof
a l lowing cer t a in p rov i s ions
to be
e v a d e d
may
have sa t i s f i ed some of the l eg i t imate com
p l a i n t s
of
c o u n t r i e s s u b j e c t
to
res t r ict ions ,
w h i l eat the s a me t i me ma i n t a i n i n gthe integri
ty
of the
p r o t e c t i o n i s t r g i me . Mo r e o v e r ,
the
U n i t e d S t a t e s has n e v e r put in to p rac t i ce an
ef fec t ive sys t em
of
sanc t ions .
The
h ighes t
a m o u n t p a i d by an i mp o r t e r for i l legal ly in-
f r i n g i n g
a
q u o t a
is US 10 000,
w h i c h
is not a
v e r y i mp o r t a n t sum c o mp a r e d w i t h the p o t e n
t ial profi ts ."
3 4
T h e i m p o r t a n c e of th i s in t e rna t iona l con
t e x t
in
e x p l a i n i n g
the
'As ian mi rac le ' became
e v i d e n t p r e c is e l y w h e n ,in the1970s, th is in ter
n a t i o n a l c o n t e x t u n d e r w e n t c h a n g e s .
The re-
c e s s i o n in the d e v e l o p e d w o r l d was project
ed d i rec t ly in to
the
s p h e r e
of
in t e rna t iona l
t r a d e , not o n l y t h r o u g h the e m e r g e n c e of p ro
t e c t i o n is t t e n d e n c i e s
in
cer t a in coun t r i es ,
but
a l s o t h r o u g h the c o n t e n t of the in t e rna t iona l
t r a d e n e g o t i a t i o n s
in
G A T T . F r o m
the
early
1 9 7 0s o n w a r d s , t h e r e b e g a nto be concern over
expor t subs id ies , p ro tec t ion po l i c i es , 'pub l i c
s e c t o r p u r c h a s i n g m e c h a n i s m s ' as an e l e m e n t
o f d o me s t i c p r o t e c t i o n , and in mo r e g e n e r a l
t e r m s ,
the
n e e d
for the
N I Cs a mo n g w h o m
t h e l e a d i n g r o l ewasp l a y e dby the As ian cou n
t r i e s
to
g ran t rec ip roc i ty
to the
d e v e l o p e d
c o u n t r i e s in t rade re l a t ions , which main ly af-
f e c t e d e x p o r t s u b s i d i e s
and
p ro tec t ion
of the
d o me s t i c ma r k e t . D u r i n g t h e s e y e a r s ,the main
i n s t r u m e n t s
of
th i s 'p ro tec t ion i sm ' fo rmula ted
b ythe d e v e l o p e d c o u n t r i e s w e r ethe 'vo lun tary
e x p o r t r e s t r a i n t s '
(VER) and the
'o rder ly mar
k e t i n g a g r e e me n t s ' ( O MA ) , i n t e n d e d ma i n l yto
g e t r o u n d
the
mos t - favoured-