Similar opportunities, different responses: Explaining the divergent patterns of development between Taiwan and South Korea

Abstract

Taiwan and Korea are said to have shared many similarities during the postwar period (e.g. Japanese colonial legacy and postwar geopolitics), but most importantly, both countries are presented as showcases of the theory of the developmental state. The similarities imply a convergence in their development path during the postwar period, yet Taiwan and Korea have evolved very different patterns in organizing economic activities to compete internationally. What explains these differences despite the similarities? The arguments in this article are threefold. First, the differences lie in industrial organization. Second, the article demonstrates how such differences shape different paths of interaction with the world economy in Taiwan and Korea through a comparative case study of the bicycle industry. Lastly, it is argued that the origin of the differences has to do with the variations in the existing social structures that gave rise to different state— society relationships, and subsequently yielded divergent paths of development.