Korean Model

By Ramesh Akkineni
from an article by Ha-Joon Chang in the Guardian
In my lifetime Korea has lived through one of the greatest development miracles – half a century ago, its annual per capita income was around £50, less than half that of Ghana at the time. Today, it stands at £12,000, putting it on a par with Portugal and Slovenia. How was this possible?

Korea of course did things that most people agree are important for economic development, such as investment in infrastructure, health and education. But on top of that, it also practised many policies that are now supposed to be bad for economic development: extensive use of selective industrial policy, combining protectionism with export subsidies; tough regulations on foreign direct investment; active, if not particularly extensive, use of state-owned enterprises; lax protection of patents and other intellectual property rights; heavy regulation of both domestic and international finance.

The Korean experience shows that sustainable export success over a long period of time, for which the country is justly famous, requires protection and nurturing of "infant industries" through selective industrial policy, rather than free trade and deregulation.

Popular posts from this blog

Niederhoffering The Curriculum

By Ramesh Akkineni
Charlie Munger says in a lecture - There was a wonderful example of gaming a human system in the career of Victor Niederhoffer in the Economics Department of Harvard. Victor Niederhoffer was the son of a police lieutenant, and he needed to get A’s at Harvard. But he didn’t want to do any serious work at Harvard, because what he really liked doing was one, playing world-class checkers; two, gambling in high-stakes card games, of which he was very good, all hours of the day and night; three, being the squash champion of the United States, which he was for years; and four, being about as good an amateur part-time tennis player as a part-time tennis player could be. This did not leave much time for getting A’s at Harvard so he went into the Economics Department. You’d think he would have chosen French poetry. But remember, this was a guy who could play championship checkers. He thought he was up to outsmarting the Harvard Economics Department. And he was. He noticed that the...
Read more

Losses from Home Equity Loans

By Ramesh Akkineni
from NYTimes The delinquency rate on home equity loans is higher than all other types of consumer loans, including auto loans, boat loans, personal loans and even bank cards like Visa and MasterCard, according to the American Bankers Association.
Read more