The emergence of a post-developmental state in variegated capitalism? Industrial and regional development policies for the shipbuilding and semiconductor industries in South Korea

Abstract

Despite claims about the convergence of capital accumulation regimes in the late twentieth century, each country’s economic activities remain persistently differentiated by their geographical and historical settings and pathways. The ‘developmental state’ is conceptualised as one particular actor that has driven the rapid economic growth and industrialisation of East Asian countries since WWII. The concept explains how countries developed into advanced economies within the global capitalist system in a relatively short period of time through a particular configuration of their internal political economic organisations as well as external conditions. Claims have been made that such developmental states underwent neat transition to ‘post-developmental’ state status following the economic crisis of the 1990s and the resultant neoliberalisation. Critically scrutinising this transitional process, this study examines whether post-developmentalism has emerged in South Korea, and does so from a perspective of Evolutionary Economic Geography blended with Geographical Political Economy. In so doing it considers whether South Korea still has developmental attributes. Contrary to conventional discussions that emphasise neoliberalisation of state developmentalism, the study demonstrates the institutional continuity and path-dependency of the developmental state and argues that South Korea’s ‘post-developmental’ state is a product of the evolution of state developmentalism. Although neoliberalisation has accelerated in tandem with economic globalisation, strong developmental legacies remain. To examine the legacies and novelties that emerged during this period of state developmentalism in in South Korea, a cross-sectoral case study of focused on the industrial and regional development policies for the shipbuilding and semiconductor industries is undertaken herein. The case study finds, firstly, that a state-led strategic industrial nurturing programme, a key characteristic of state developmentalism, persists despite changes in targets, such as from shipbuilding to high-tech electronics. Secondly, it suggests that the Korean state has developmental corporate and industrial production strategies and it sustains to date. Industries and corporations that have grown in state-led ways during state developmentalism take an in-house production strategy to protect domestic industries and promote exports. In other words, these corporations have a limited tendency to participate in global production networks in both shipbuilding and semiconductor sectors. Thirdly, the study finds that the spatial unfolding and results of strategic industrialisation have led to the localisation of industries, creating strong local dependency on both industries and the central government. Local governments demonstrate dependence on the national strategic industries and even persistent dependence on the central government. These developments indicate that the role of the central government is still significant in terms of sustaining old industries and establishing new industries in the local areas. To conclude, the strong path dependence of industrial and institutional configurations and strategies formed during the developmental era of the 1960s to the 1980s created strong and enduring continuities which underpinned a lock-in to the developmental configurations and strategies and led to gradual evolution to an open-ended post- developmental state. This gradual evolution across two important economic sectors in South Korea reflects strong institutional path dependence in the face of neoliberalising pressures.