A Comparative Study of Development Mechanisms in Korea and Taiwan: Introductory Analysis

This article is the introduction to a special issue of The Developing Economies which presented the results of a research project by the Institute of Developing Economies that examined the development mechanisms in Korea and Taiwan. Our conclusion in this article is that their development mechanisms, despite their similar development patterns of export-led industrialization, have been essentially different: a government-led mechanism in Korea as opposed to a market-led mechanism in Taiwan. We verified this difference through comparative studies of the two economies covering trade balances, the growth of total factor productivity, the scale of enterprises and business groups, and the development processes of individual manufacturing sectors. In our explanatory discussion we propose that the difference in the mechanisms is based on: 1) the amount of accumulation in the economy at the time postwar industrialization started, 2) the relationship between government and society, and 3) the mechanism of social network formation.

A Distributive Comparison of Enterprise Size in Korea and Taiwan

Research to date on the economic development of the Republic of Korea and Taiwan has frequently contrasted the two economies by depicting the former as centered on large-scale enterprises and the latter on small and medium-size enterprises (SMEs). The purpose of this study is to see if the appropriateness of this perception will also be verified by the statistical data. In Section I the authors utilized census data on the Korean and Taiwanese manufacturing sectors to compare the distribution pattern of the sizes of enterprises in the two economies. However, on examining the available data for making this comparison, the authors discovered that for Korea the statistics provided are those at the level of the establishment (a physical unit engaging in industrial activities such as a factory, workshop, office, or mine) while the statistics for Taiwan are those at the enterprise level. Mindful of this difference, the authors looked at the portion of the economy accounted for by large-scale establishments in Korea that employed 500 workers or more and by enterprises in Taiwan employing the same number of workers, and they discovered that the portion that these large-scale businesses account for, especially in the area of output, has steadily declined since the 1980s. When comparing the share of total production that these large-scale establishments/enterprises account for in the two economies, the authors concluded that those in Korea accounted for a larger share of that economy's production than did their counterparts in Taiwan. The authors then compared the portion of the economy accounted for by establishments in Korea and enterprises in Taiwan that employed less than ten workers, and they found that the portion of the two economies that these very small-scale production units accounted for has also been on the decline. Section II compares the portions of the two economies accounted for by large business groups. After comparing the percentage of GDP accounted for by the total sales of these business groups, the authors found that large business groups in Korea have played a far more important role in Korean economy than has been the case for such groups in Taiwan. This difference in the importance of such business groups in the two economies has also played an significant part in fostering the perceived dichotomy of large-scale enterprises playing the important role in Korea versus SMEs being the important players in Taiwan. Section III compares the percentage of total exports accounted for by SMEs, and shows that SMEs in Taiwan account for a larger share of exports than do their counterparts in Korea. This section also shows that in Taiwan the share of export sales for SMEs has consistently exceeded that for non-SMEs, while in Korea the relationship between enterprise size and the rate of export sales has been directly proportional. This difference in the size of the major export players is another factor fostering the perception of the Korean economy being centered on big business while Taiwan's is on SMEs. Although there were difficulties and limitations when comparing the data of the two economies, the statistical comparison undertaken in this study shows that in general big business has played the major role in the development of the Korean economy while in Taiwan's economic development this role has been played by SMEs. Thus the statistical data also verifies the perceived dichotomy of these two economies.

Reforms in Moldova: Moderate progress and an uncertain outlook for the future. OSW Commentary No. 100, 2013-01-22

After coming to power in September 2009, the Alliance for European Integration (AIE)1 coalition began implementing a wide-ranging programme of reforms, with a view to bringing Moldova closer to the European Union, and ultimately to ensure the country’s full membership of the EU. Today, Moldova is considered a clear leader in European integration among the members of the EU’s Eastern Partnership programme. This, however, has less to do with the concrete reforms introduced by the Moldovan government, and more to do with, on the one hand, Chișinău’s excellent public relations with Brussels, achieved through effective diplomacy; and on the other hand, the growing disillusionment with the lack of progress in other Eastern Partnership countries, particularly in Ukraine. Attempts to evaluate Moldova’s reforms have proven rather problematic. On the one hand, the ruling coalition has managed to make significant progress in the areas of civil liberties, human rights and electoral reform. The government has also successfully implemented regulations which have brought Moldova closer to signing a Deep and Comprehensive Free Trade Agreement (DCFTA) with the EU, and it has made headway in talks on visa liberalisation with Brussels. On the other hand, Chișinău has still not carried out the structural and economic reforms without which real change in the country will be impossible. No reforms have been introduced in the Ministry of the Interior, the Moldovan police force, or the judiciary. The AIE has also failed to decentralise governance and has had no real success in reducing corruption; its attempts to rebuild the country’s financial institutions have proved equally unsuccessful. The main reasons for this poor performance include mutual mistrust and conflicting interests among the coalition members, a shortage of financial resources, strong resistance to change by public administration staff, and significant pressure from those political and business groups whose interests could suffer as a result of the proposed reforms. It should also be noted that since the AIE took power, the international context of the reform efforts has undergone significant changes. On the one hand, the EU has been facing an economic crisis, which has had a negative impact on Moldovan exports and contributed to the worsening of the economic situation in the country; and on the other hand, Moldova has been offered membership of the Customs Union as a viable alternative to EU membership.

No other choice but co-operation. The background of Lithuania's and Latvia's relations with Belarus. OSW Commentary No. 99, 2013-01-04

For years now Belarus has been a key economic partner for Lithuania and Latvia. These two Baltic states have well-developed port infrastructure and thus provide what are the geographically closest and also the cheapest exit to international outlets for Belarusia’s petrochemical and chemical industries, both of which are export-oriented. As a result, the transit of Belarusian goods is one of the major sources of income for the state budgets of the two countries. This economic interdependence has affected the stance Riga and Vilnius take on Minsk at the EU forum. When in February and March 2012 the Council of the European Union was resolving the issue of imposing economic sanction on selected Belarusian companies which backed Alyaksandr Lukashenka’s regime, this triggered a discussion on what the point of such measures is and on possible economic losses in Lithuania and Latvia. As a result of firm resistance from Latvia (which was backed by Slovenia), the Council removed those companies which were most strongly engaged in co-operation with Latvian partners from the list of those to be covered with economic sanctions. Lithuania, which is more critical of the political situation in Belarus, did not express its official opposition to the sanctions. Despite some differences in the policies adopted by Riga and Vilnius, it turned out that Minsk could count on strong support from local business groups in both of these countries, as these groups fear impediments in this highly profitable co-operation and also retaliation from the Belarusian government. The existing economic bonds mean that neither Vilnius nor Riga have any other choice but to co-operate with Belarus. They must therefore adopt a carefully balanced policy towards Minsk. At the same time, being EU member states, they do not officially deny that a problem exists with the violation of human rights by Alyaksandr Lukashenka’s regime. It is for this reason that the governments of Latvia and Lithuania will be interested in maintaining the status quo in relations with Minsk. On the other hand, Belarus in a way also has no other choice but to use the ports in Lithuania and Latvia, and this will prevent it from excessively escalating tension in relations with these two countries.

Ukraine and Russia: a hindered rapprochement. OSW Commentary No. 44, 2010-12-15

The policy of rapprochement with Russia that President Victor Yanukovych and his entourage had been actively promoting in the first months of his presidency has slowed down notably. One of the reasons for this lowered pace is that current talks between Russia and Ukraine concern the spheres in which Kyiv is not ready to make concessions to Russia. Despite numerous top-level meetings, recent months have failed to bring a breakthrough in energy issues of key importance. First of all, no compromise was reached in gas issues where the divergence of interests is particularly large and where Ukraine has adopted a tough stance to negotiate the best conditions possible. Even though some agreements were signed during the October session of the inter-governmental committee presided over by the prime ministers (the agreement on linking the two states’ aircraft production and on the joint construction of a nuclear fuel production plant), these resulted from prior agreements. Economic negotiations will continue in the coming months but the observed deadlock is not likely to be broken any time soon. The results of these talks are likely to reflect the interests of both Russia and Ukraine, as well as the competition among Ukrainian business groups, some of which opt for closer cooperation with their Eastern neighbour. Ukraine’s consent to send oil to Belarus along the Odessa-Brody pipeline shows that the government in Kyiv is ready to engage in projects they consider profitable, even those that run counter to Russian interests. Ukraine’s adoption of this stance may trigger irritation in Moscow and lead to a cooling in bilateral relations.

Institutional governance systems and variations in national competitive advantage: An integrative framework

Creating competitive industries has become one of the key tasks of governments. Different adaptation outcomes in industries across nations cannot be accounted for fully simply by an emphasis on firm-level capabilities, market-driven policies, or state-level policies. We propose an integrative framework that draws on both the strategic management and political economy literature to explain variations in national industrial competitiveness.. We discuss differences with respect to institutional characteristics and capabilities, competitive outcomes, conditions of best fit, and who bears the cost of industry adaptation.

'Family' ownership, tunnelling and earnings management:a review of the literature

In this review paper, we bring together a number of aspects of family firms that are ubiquitous in a number of institutional contexts, often as part of larger business groups. We pay particular attention to the mechanisms by which families retain control over firms, and the incentives of the families in control to expropriate other stakeholders by way of tunnelling. We examine the role of earnings management in facilitating tunnelling, and evidence about the incidence of earnings management in family firms. Our review suggests that while the literature on these aspects of family control is rich, the contexts in which the empirical exercises are undertaken are relatively few, and hence there is considerable opportunity to expand it to other contexts, in particular in the form of cross-country comparisons of the relative impact of agency conflicts and institutions on these issues.

Spillovers from FDI and local networks:the importance of transactional linkages and vertical keiretsu in Japan

Purpose – The purpose of this paper is to explore the importance of host country networks and organisation of production in the context of international technology transfer that accompanies foreign direct investment (FDI). Design/methodology/approach – The empirical analysis is based on unbalanced panel data covering Japanese firms active in two-digit manufacturing sectors over a seven-year period. Given the self-selection problem affecting past sectoral-level studies, using firm-level panel data is a prerequisite to provide robust empirical evidence. Findings – While Japan is thought of as being a technologically advanced country, the results show that vertical productivity spillovers from FDI occur in Japan, but they are sensitive to technological differences between domestic firms and the idiosyncratic Japanese institutional network. FDI in vertically organised keiretsu sectors generates inter-industry spillovers through backward and forward linkages, while FDI within sectors linked to vertical keiretsu activities adversely affects domestic productivity. Overall, our results suggest that the role of vertical keiretsu is more prevalent than that of horizontal keiretsu. Originality/value – Japan’s industrial landscape has been dominated by institutional clusters or networks of inter-firm organisations through reciprocated, direct and indirect ties. However, interactions between inward investors and such institutionalised networks in the host economy are seldom explored. The role and characteristics of local business groups, in the form of keiretsu networks, have been investigated to determine the scale and scope of spillovers from inward FDI to Japanese establishments. This conceptualisation depends on the institutional mechanism and the market structure through which host economies absorb and exploit FDI.

Determinants of internal and external R&D offshoring: Evidence from Spanish firms

This paper analyzes the determinants of R&D offshoring of Spanish firms using information from the Panel of Technological Innovation. We find that being an exporter, international technological cooperation, continuous R&D engagement, applying for patents, being a for-eign subsidiary, and firm size are factors that positively affect the decision to offshore R&D. In addition, we find that a lack of financing is an obstacle relatively more important for inde-pendent firms than for firms that belong to business groups. For these latter, we also obtain that the factors that influence the decision to offshore R&D differ depending on whether the firm purchases the R&D services within the group or through the market: a higher degree of importance assigned to internal sources of information for innovation as compared to mar-ket sources increases (decreases) the probability of R&D offshoring only through the group (market).

O city marketing em Natal/RN e a construção da imagem da cidade

The growing importance of tourism in overall economic activity worldwide has favored the intensification of competition among cities that seek to create environments attractive to tourists and potential investors. It has been common practice to import characteristics of the business environment in the public management of cities. The city marketing is a key tool used by public leaders to promote a linkage between the tourism image and urban image and involves, in addition to promoting the image of the city, the planning of interventions in urban space, trying to formulate a positive image of the city able to facilitate the deployment of capital. This research seeks to understand the nature of city marketing as part of contemporary urban management and analyzes how is its application in decisions concerning the promotion of tourism in Natal/RN. The approach of this research is qualitative, exploratory and descriptive, in which respondents were the main leaders of two of the official tourism site, the Empresa Potiguar de Promoção Turística and the Secretaria Municipal de Turismo e Desenvolvimento Econômico. It was found that there is a strong articulation of public power with private enterprise in the design and conduct of the actions of urban marketing, that from the survey data show that the behavior of target markets provide guidelines for taking strategic decisions relating to tourism. Sun and sea are some key elements explored to form the image of Natal and to authorize the sale of the city as a tropical paradise. However, there is an increase in the diversification of tourism products, seeking to increase flow to the segments of ecotourism, adventure, business and culture. It s also growing the use of local culture as a tourism product, however, the cultural representation focuses on superficial values and does not bring to light the social and historical richness that the city has. Public authorities use the city marketing strategies as a means able to maximize the attractiveness of Natal urban space to investors, business groups and tourists. It can be observed that urban managers seek solutions that can continuously increase the tours, which often manifests in interventions that focus the tourist areas of the city, in oposition of those who do not contribute to a positive reading of the city, which ultimately generate the worsening of spacial and social inequalities

Chevrolet Convention at Cedar Point

Cedar Point was a popular location for business groups and conventions. In 1933, the resort hosted a Chevrolet convention which included a formal dinner for hundreds of conventioneers. The event took place on the second floor of the Grand Pavilion.

O city marketing em Natal/RN e a construção da imagem da cidade

The growing importance of tourism in overall economic activity worldwide has favored the intensification of competition among cities that seek to create environments attractive to tourists and potential investors. It has been common practice to import characteristics of the business environment in the public management of cities. The city marketing is a key tool used by public leaders to promote a linkage between the tourism image and urban image and involves, in addition to promoting the image of the city, the planning of interventions in urban space, trying to formulate a positive image of the city able to facilitate the deployment of capital. This research seeks to understand the nature of city marketing as part of contemporary urban management and analyzes how is its application in decisions concerning the promotion of tourism in Natal/RN. The approach of this research is qualitative, exploratory and descriptive, in which respondents were the main leaders of two of the official tourism site, the Empresa Potiguar de Promoção Turística and the Secretaria Municipal de Turismo e Desenvolvimento Econômico. It was found that there is a strong articulation of public power with private enterprise in the design and conduct of the actions of urban marketing, that from the survey data show that the behavior of target markets provide guidelines for taking strategic decisions relating to tourism. Sun and sea are some key elements explored to form the image of Natal and to authorize the sale of the city as a tropical paradise. However, there is an increase in the diversification of tourism products, seeking to increase flow to the segments of ecotourism, adventure, business and culture. It s also growing the use of local culture as a tourism product, however, the cultural representation focuses on superficial values and does not bring to light the social and historical richness that the city has. Public authorities use the city marketing strategies as a means able to maximize the attractiveness of Natal urban space to investors, business groups and tourists. It can be observed that urban managers seek solutions that can continuously increase the tours, which often manifests in interventions that focus the tourist areas of the city, in oposition of those who do not contribute to a positive reading of the city, which ultimately generate the worsening of spacial and social inequalities

Creación de marca mediante la utilización de mecanismos estratégicos comunitarios y marketing

El presente documento pretende mostrar la manera como se debe ejecutar la creación de marca mediante la utilización de mecanismos estratégicos comunitarios y marketing. El objetivo del estudio se basa en encontrar los mecanismos adecuados para el desarrollo y creación de una marca enfocándose en el análisis de las principales prácticas y modelos desarrollados en el área del marketing, examinando el impacto que la marca pueda generar en la comunidad en la cual la organización está incluida, estableciendo además un conexión directa con el modo de vida de los consumidores. Durante el desarrollo del documento se demuestra que las estrategias de marketing aplicadas por cada compañía, sirven para construir una relación estrecha y fuerte con todos los agentes involucrados en la construcción de una marca, principalmente con los clientes, ya que la forma más efectiva de establecer relaciones a largo plazo, es enfocándose exclusivamente en las necesidades desarrolladas por los consumidores, y a partir de ellas ajustar los valores (misión, visión, cultura organizacional, objetivos) de la organización. Estas estrategias comunitarias son también influenciadas por varios factores internos y externos a la organización, los cuales deben ser tenidos en cuenta al momento de elegir la estrategia adecuada. Los mecanismos estratégicos que desarrollan las empresas pueden cambiar significativamente de un sector comercial a otro, la importancia de las necesidades que se deben suplir y el consumidor final se deben evaluar desde un aspecto comunitario, entendiendo como comunidad como el conjunto de grupos sociales y comerciales que tienen relación directa o indirecta con la empresa. Con la investigación llevada a cabo acerca de las estrategias que deben aplicar las compañías se concluye que las marcas reflejan la imagen que la empresa transmite a sus compradores estableciendo una relación emocional entre los consumidores y la marca desarrollada, además de estimular la oferta y demanda del negocio. Se espera que por medio de la obtención de información teórica y conceptual, se pueda aclarar la manera como se puede desarrollar la creación de una marca por medio de la correcta utilización de mecanismos estratégicos comunitarios y de marketing.

Who cares about human relations? A selective and critical bibliography deeply concerned with the human relations of family, community, ethnic, and racial groups, religion, education, business, and industry.

Mode of access: Internet.