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Compressed development, decompression, and diverging convergence in South Korea: which varieties of capitalism in contemporary Korea?

Author

Listed:
  • Keun Lee

    (Seoul National University
    CIFAR (IEP))

  • Djun Kil Kim

    (Seoul National University)

Abstract

South Korea has achieved compressed growth and convergence of its income level to that of typical advanced economies. This paper adopts a narrow definition of compressed development as a form of late development that lacks political democracy and open markets, and then defines decompression as the process of democratization and economic liberalization. This paper applies this framework of “compressed development, decompression, and diverging convergence” to analyze the dynamics of Korean capitalism since the 1980s after the death of the modernizer-dictator, President Park. First, the middle class emerged in Korea in the 1980s as a result of compressed growth since the 1960s and served as a key intermediary in linking economic growth to democratization. The process of political decompression, or democratization, was peaceful because it was demanded and led not by the working class but by the middle class. Second, an ill-managed first wave of economic decompression (liberalization) led to a financial crisis, and then, the post-crisis reforms (the second, more radical decompression) imposed by the IMF planted the institutional seeds for convergence with Anglo-American capitalism. Third, Korea is experiencing the end of the East Asian miracle, as evidenced by slowing growth and rising inequality, and is undergoing a multifaceted convergence toward different varieties of capitalism. In terms of life expectancy and crime rates, Korea joins Japan, Italy, and Spain in the “safe capitalism” group, while it is an extreme outlier in terms of its large gender wage gap and long working hours. In terms of unemployment and long-term employment rates, Korea is closer to the Anglo-American model, but closer to Europe in terms of the degree of active (or passive) labor market policies and legal protection against layoffs. Korea seems to be realizing “divergent convergence” as it remains distinct from any particular form of Western capitalism.

Suggested Citation

  • Keun Lee & Djun Kil Kim, 2024. "Compressed development, decompression, and diverging convergence in South Korea: which varieties of capitalism in contemporary Korea?," Review of Evolutionary Political Economy, Springer, vol. 5(1), pages 173-200, June.
    • Handle: RePEc:spr:revepe:v:5:y:2024:i:1:d:10.1007_s43253-024-00117-1
    DOI: 10.1007/s43253-024-00117-1
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    References listed on IDEAS

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    1. Haggard,Stephan, 2018. "Developmental States," Cambridge Books, Cambridge University Press, number 9781108449496, September.
    2. Lee, Keun & Lee, Chung H., 2008. "The miracle to crisis and the mirage of the postcrisis reform in Korea: Assessment after ten years," Journal of Asian Economics, Elsevier, vol. 19(5-6), pages 425-437.
    3. Chan‐Yuan Wong & Keun Lee, 2018. "Projecting the Arena of Inclusion: The Case of South Korea in Pursuing a Phased Inclusive Growth Process," Review of Policy Research, Policy Studies Organization, vol. 35(4), pages 590-616, July.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Varieties of capitalism; Korea; East Asian miracle; Convergence; Anglo-American capitalism;
    All these keywords.

    JEL classification:

    • N15 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Asia including Middle East
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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