Gerschenkron Case Study

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1. Compare catching-up patterns in the semiconductor industry between South Korea and Taiwan. What are their relative merits and demerits?

The Gerschenkron model is a framework that views the catching up process of countries in the “historical and comparative perspective” (Shin, 2005). It states that the differences in the degree of backwardness affects the strategies and institutions undertaken by the countries. However, while South Korea and Taiwan were both extremely backward countries, they adopted different catching up strategies; with the former adopting the substituting model and the latter adopting the complementing model that resulted in different strengths and weaknesses which will be elaborated further later. The difference
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Chaebols were the key player during the process of industrialization. From the 1980s, they were responsible in taking up new large scale, high risk projects. On the other hand, Taiwan’s economy was built on four main actors: public enterprises, SMEs, quanxiqiye (local business groups) and MNCs. In contrast to Korea which was mostly nationalist, SMEs and MNCs played a bigger role in Taiwan. Taiwan’s economy grew through an increase in the number of firms which reflects the importance of SMEs and MNCs accounted for a bigger proportion of exports in Taiwan as compared to Korea …show more content…
During the development period, the President wanted Korea to be economically independent from Japan and US and politically independent from the US. Hence, Korea ventured into heavy and chemical industrialization (HCI). It promoted HCI, old technologically dynamic industries and the electronics industry (Ibid). Their main priority was to make its local companies internationally competitive. In contrast, Taiwan’s model can be understood as a semi internationalist complementing model (Ibid). Unlike Korea, Taiwan did not promote its local companies as aggressively. This is because Taiwan did not participate in the HCI as much as Korea. Instead, it shifted its economy to technologically dynamic

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