Export-oriented industrialisation

A development strategy that replaces import substitution, which builds domestic industry behind a wall to serve the home market, with industry built to sell abroad. Korea made the switch in the 1960s. Exports rose from roughly 3 percent of its economy in 1960 to over 30 percent by the early 1980s.

The reason it matters here is not the growth rate. It is that the test is external. A protected domestic producer can survive making things nobody particularly wants, because the alternatives have been kept out. An exporter cannot. That external test is what makes the strategy usable as a condition on credit, and it is why the strategy and the developmental state arrive together rather than separately.

The cost is written into the design and has to be quoted with it. If the competitive advantage is price, then wages are part of the strategy rather than an unfortunate side effect. Korea suppressed labour organising and held wages down deliberately during the export push. Anybody recommending the strategy is recommending that clause too, whether or not they say so.

Source: The strategy and its Korean application are set out with their figures in section 1.2 of the Hope cases research map, which names Alice Amsden (1989) and Ha-Joon Chang (2002) as the owners of the scholarly argument and flags both as paid books this course has not read from the source. The wage suppression is recorded in the same section as a deliberate element of export strategy rather than as an incidental abuse.

First used in: 4.1 · In 1960 the Filipino was the richer one