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A tale of 2
Countries
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ComparativeDevelopmental Mode
South Korea and Argentina
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Summary
Show that South Korea has succeeded much moArgentina in development since 195
Analy!e their similarity and di"erences A di"erent outloo#
policy di"erences
underlying di"erences
Show the policy di"erences and how they e$plaidiscrepancy in development
Draw lessons for today%s developing countries
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Measures of Development
&D' per Capita
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(uman Development )nde$
y19*+ y199+ y2+++ y2++5 y2++* y2+1+ y2+11 y2+,+++
+,1++
+,2++
+,++
+,-++
+,5++
+,.++
+,/++
+,*++
+,9++
1,+++
(uman Development )nde$
Argentina (D) Korea 0epulic of3 (D)
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Similar (istories
4oth underwent alternative periods of dictatorshuasi6democracy7 South Korea under 'ar# ChungArgentina under 8uan 'eron and 8orge idela
4oth started o" as relatively undeveloped countthe post6war era
4oth pursued super:cially similar economic policstate driven industriali!ation
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'olitical >conomy
Key area of di"erence in policy )ndustriali!ation
?and eforms
>ducation
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(ave you heard of@,
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Di"erent utloo#
Argentina; populist outloo# 'andering to laor unions7 i,e the average Argentinian
day o" for every 2 day of wor# in the late 19-+s
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)ndustriali!ation
4oth tried to use import sustitution industriali!athe 195+s
Brom the 19.+s7 South Korea started to use >$industriali!ation
Among other things this allowed South Korea to avoid
crisis as in Argentinaoo# advantage of ooming 19.+s world economy wh
there%s a igger mar#et for their goods
4etter access to S mar#ets ecause of cold war
Argentinaonly started doing this in the 19/+s
4ut due to gloal economic crisis was far less success
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)ndustriali!ation 0cont,3
South Korea; Bocusing on laor intensive indusduring initial phase of growth; te$tiles7 toys etc
)ncrease employment; salaries goes towards greproportion of the population
4etter usage of factor endowments; plentiful la
of capital Argentina; Bocused on Capital intensive industr
Steel
>ven though Argentina lac#s capital7 s#ipped ovElowerF levels of industrial development
esulted in Chronic lac# of eGciencyHmoney losi
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Conseuences
4y the 19*+s7 Argentinawas devoting 25I of its e&J' to susidi!ing losses of state owned industries
&rowing inaility to service det and otain new on
(eavy ination7 reaching 17+++I at one point7 fueleconomic instaility
Ball in real income y 2+I etween 19/5 and 199+ Borced to accept )MB structural readLustment progra
neolieral reforms
Argentine :nancial crisisHdefault in 2++17 continuouination; 2+I per year today
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Conseuences 0cont,3
South Korea on the other hand7 was ale tosigni:cantly reduce6 its dets load due to oome$ports in the 19*+s7 i,e reduce it%s det to &D'2+I etween 19* and 19*/
Continuous growth in wealth
?ow rates of ination 02I6-I3 and stalemacroeconomic conditions
More money to go into social services and improliving standards
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?and eforms
)n 19-56-97 mass sei!ure of land from landlords South Korea7 over *+I of the country%s farmlaredistriuted to peasant farmers
)n Argentinathere were no signi:cant land refo
?and ownership y peasants increased their inco
thus reduced poverty in the South Korean case ?and owning peasants tend to e more productiv
tenant farmers per acre
4rea#s up the power of agrarian landlords7 who have vested interests against industriali!ation
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>ducation
South Korea devoted a large share of its &D' teducation7 i,e primary and secondary
Argentina7 while similarly focused on educationtendency of eing Etop6heavyF etc7 focusing on fniversities; -/I of its pulic education udget university
Creates situation li#e the fact that there are dofor every nurse in Argentina
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nderlying Di"erences
Strong State vs
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State strength
South Korea inherited a state from 2 historicallegacies; the Confucian ureaucracy7 and the 8apcolonial administration
4oth of which lends itself to strong7 centrali!ed swith institutions capale of carrying out policies reforms
Argentinacame from the )erian tradition ofdecentrali!ed7 wea# state7 which has trouleimplementing its policies
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?and lords
he power of the landowning class in South Koe"ectively ro#en y
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&eopolitics
4ecause of its pro$imately to Communist powersSouth Korea received signi:cant economic aid the S
At one point7 the S provided 5+I of the entire Korean udget
Allowed South Korea unfettered access to S maeven while South Korea #ept high tari" walls
Argentinadid not receive similar preferentialtreatment
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Conclusions