Economy & Institutions: The Success of South Korea and Taiwan

Charles W. King

If the failures of nation building projects in Vietnam, Iraq, and Afghanistan must serve as a warning to policy-makers what should they look to for an example of success? The Balkan nations that NATO intervened in the 1990s are a possibility; they are in the process of accession to the European Union and negotiating their own regional free trade agreement as the EU focuses on Brexit and refugee policy. But these nations are not yet finished building the institutions that will carry them forward, as demonstrated by the ongoing corruption probes in a number of Balkan states. The Republic of Korea and the Republic of Taiwan provide better examples of successful nation building projects. When they were founded in the late 1940’s they did not have the institutional foundations that facilitated the reconstruction of West Germany and Japan. Decades later South Korea and Taiwan have joined Germany and Japan on the world stage as major allies of the United States, and significant players in the global economy. They have transitioned from ‘developmental autocracy’, to borrow a phrase from Gregg Brazinsky of George Washington University, to democratic governments.

Two of the key factors in these successes were the development of state institutions and export economies. At their founding neither South Korea nor Taiwan possessed an industrial economy or plentiful natural resources that could fill national coffers and provide an easy road to prosperity. Forced to develop economies from scratch they elected to develop for export rather than to protect against foreign imports. Successful industrial export economies require an educated workforce for the research and development, and the high quality manufacturing that sustains them. It also requires independent courts and rule of law to limit corruption and provide stability and predictability to foreign investors and partners. This strong economic development at a precursor to democratization is a common historical development, not unique to South Korea and Taiwan.

South Korea and Taiwan have also each faced a single existential threat since their founding; North Korea and the People’s Republic of China respectively. This has substantially distorted the shape of their national institutions. Where the leaders of other ‘developmental autocracies’ have used Western liberalism as a post-colonial boogeyman, and made internal dissent the primary focus of their security forces, South Korea and Taiwan could afford to do neither. Confronted with these existential threats, their militaries developed as important and respected institutions of the state rather than as oppressors of the people.

Decades of economic and institution building under ‘developmental autocracy’ provided the foundations that South Korea and Taiwan needed to become prosperous democracies. They also represent two the longest and most expensive and expansive nation building commitments the United States engaged in during the Cold War. They are not the only ‘development autocracies’ the United States supported, but they are the most successful. Policy-makers should take a number of lessons from their examples; the nature of the economic development is important, and integrating the military and other state institutions as a part of the society is essential. Subsiding dictators in exchange for policy or resources will not lead to economic development or democratization but is sometimes necessary. By having a clear conception of their strategic objectives and an understanding of the differences between the successes in South Korea, Taiwan, West Germany, and Japan and failures in Vietnam, Iraq, and Afghanistan policy-makers can better determine what policies to implement and how much support they can commit to.

Further Reading

Gregg Brazinsky, Nation Building in South Korea: Koreans, Americans, and the Making of a Democracy, (Chapel Hill, NC: University of North Carolina Press, 2007).

Nancy Bernkopf Tucker, Strait Talk: United States-Taiwan Relations and the Crisis with China, (Cambridge, MA: Harvard University Press, 2009).

William Appleman Williams, The Tragedy of American Diplomacy, (New York, NY: W. W. Norton & Co., 2009).

James M. Carter, Inventing Vietnam: The United States and State Building, 1954-1968. (Cambridge UK: Cambridge University Press: 2008)

Mark Mazower, Dark Continent: Europe's Twentieth Century, (New York, NY: Vintage Books, 1998).