Korean Economy and Chaebols

I and II industrial revolution: new products & processes were introduced. England
pursued industrialization on basis of invention, while U.S and continental Europe on
basis of learning and innovation. Late industrializers (20th century) based their production
structures and increased per capita incomes on borrowed technology, competing thru
“learning”. Speed of industrialization based on role of state, institutions.
Inherent conflicts of market forces evident in developing countries. Countries with low
productivity require low interest rates to stimulate investment and high interest rates to
induce people to save. They need undervalued exchange rates to minimize the cost of
foreign debt repayment and of imports—not just imports of raw materials, but also of
intermediates and capital goods, which poor countries alone are unable to produce.
Relationship between small and large scale industries and drivers of growth in Korea and
Taiwan. Hypothesis that leading firms in industrializing countries must adopt pro-active
production and operations management policy; assign high quality managers to the shop
floor and inspire them to develop skills of the work force.

Role of modern Industrial enterprise or Chaebol: President of chaebols do the following 3

functions: strategic decisions for the group about which initiatives of the government to
follow and how; power over the purse, decide how to shift funds among group members;
exhorted work forces to work harder and made key personnel decisions including which
top managers to hire. Government decides what, when and how to produce.