"Of course one could cite many other reasons for Korea’s success, including land reform, foreign aid, being allied to the US, industrial policies, etc. But none of the other factors seem as powerful as the two points listed above."
Being within the US security umbrella was the prerequisite, the effect of this-or-that domestic factor is swamped by that effect. This is why we can find so many "recipes," to use Rodrik's language. It prevented various forms of security-obsessed nationalisms (communist or otherwise) from taking hold, and eliminated the imperial competitions that diverted resources from development to state power. That is the common factor with Taiwan and Japan within the "Confucian" sub-unit, it is a common factor with Poland in Europe, and it is not common with places like sub-Saharan Africa or parts of Latam that never had consolidated communist regimes in power yet still didn't develop. It is also why China and Vietnam started liberalizing after rapproachment with the US, and stopped liberalizing since the US has turned against the open economy.
Inclusive domestic institutions are downstream of the security environment. The US structured global security over the past 75 years, and the US prioritized open markets, so if you were within the security environment you received the benefit of open markets. If you weren't it was much harder.
It's a real shame (from the perspective of world development) that the US security apparatus has become extractive, beginning with the Bush years. Over the past 25 years worldwide democracy has declined, press freedom has declined, corruption has increased, public trust has declined, and global growth rates have slowed. It's not a coincidence.
The open global economy was a cosmopolitan liberal project with progressive aims, not a libertarian project, nor a Confucian project, nor a statist project. But there seem to be no more cosmopolitan progressive liberals around anymore, other than Mark Carney.
I agree that US protection was essential for South Korea, which otherwise would have fallen to the North. I'm not sure how important it is elsewhere. I doubt that US foreign policy has much impact on places like Argentina or Portugal or India, which are outside the zone of great power competition.
I didn't say inside the zone of great power competition, I said within the US's security umbrella. To trade more Korea needed trade partners, and the US security network provided those trading partners. Portugal was one of the poorest original members of NATO -- which predated the European Economic Community and probably provided a necessary precondition for it -- perhaps the very poorest, but it has not only converged economically under that security umbrella but liberalized politically too. The security umbrella was prior to all the rest. Argentina, meanwhile, refused to declare war on Nazi Germany, and the US took the UK's side in the Falklands War (contra the Monroe Doctrine); Argentina has stagnated significantly over the past 75 years, overtaken by countries like South Korea, but when times have been good in Argentina they've been the times when Argentina has been mostly closely aligned with the US geopolitically.
I don't know how to respond to a claim that India is outside the zone of great power competition, but it certainly is not within the US's security umbrella and as a consequence its domestic institutions and economic policymaking under the Raj were less liberal.
Or take Iran: it was wealthier when it was within the US's security umbrella, less wealthy when it wasn't. Its orientation towards trade is roughly the same. This generalizes through the Middle East: the countries aligned with the US are richer than the countries non-aligned or opposed, irrespective of domestic institutions.
Domestic institutions are not magic. They are created in response to systemic pressures, and they change in response to systemic pressure. Policy outputs are consistent with systemic priorities: if you rely on the Soviet Union for security you have a different choice set than if you rely on the US for security, and if you remained non-aligned then you had very few choices at all.
Mark Carney (and Keir Starmer) understand that domestic institutions are insufficient for building prosperity, that "Global Britain" is a non sequitur. Global coordination is required. American hegemony provided the coordination mechanism for a long time, mediated through multilateral institutions. That's gone now, so the middle powers have to scramble to reconstruct as many features of it as they can, as quickly as they can, or the domestic institutions will fail.
India ie the Raj had economic policies that tracked England. When England went socialist post-WW2 India went too. The same economists and advisors were working for both India and Britain. The policies came recommended by the best economic science of the day.
India and the "best" British economic science of the day, oh dear...
Nicely enabled a new class of bureaucratic nationalist kleptocrats keen on enriching themselves at the literal expense of the masses. So common in Africa, too.
Those new bureaucratic Indian nationalists could then ignore, in fact condone, and thus continue, the pre-British rule, uniquely Indian, uniquely backwards caste system.
Like the Chinese for many years, only outside India can Indians thrive fairly, unless thrown out like in most of post-colonial East Africa.
So much to unpack. So much of it unique, one-off, singularities.
(Russian here) For Poland's shock therapy, one question I have is what was the difference between privatization in Poland and in Russia? The former seems to be a success, but the latter is customary blamed for modern ills of the country.
Two subquestions here:
* What were, if any, _mechanical_ differences between the two processes? How they physically worked?
* What's the transmission mechanism for later economical and political outcomes?
I did a tiniest bit of research about this, and haven't found satisfactory answers. Would appreciate some links here!
I recall that there were complaints about corruption in Russia's program, but I don't know enough to have an informed opinion. Of course Russia started reforming several years later than Poland, so it took longer for things to start improving.
Poland stated a democracy, so kleptocrats can be thrown out of office, unlike Russia under Putin. Ukraine was going the same way until Putin decided that was a bad example, for him, personally.
China is different. Kleptocracy kept in check despite lack of democracy. Possibly, this is due to lack of natural resources relative to population size, unlike Russia where kleptocrats can get very rich and thus stay powerful by control of those resources without having to douch for the general population (like in smaller S American or African states).
Thanks for correcting a few misconceptions on my part. I had heard the case of Poland argued from the opposite position, with the framing relying exclusively on comparisons between Poland and post-Soviet Russia. Your analysis presents a far more rounded picture. On the industrial policy, do you think there is a specific exception for targeted industrial policy which is specific and encompasses an understanding of markets? Both South Korea and Singapore invested heavily in semiconductors. Are good industrial policies simply too difficult and multi-faceted for most governments with strong political factors to consider to accomplish? I know Germany and Japan in specific periods were cited in the original arguments against Friedman. I guess my question is: are they unlikely to work in most instances because Man of Systems requirements make them unobtainable to all but exceptional governments in exceptional periods?
A while back I looked at conditions for success for majority Muslim countries. Excluding the oil rich Gulf States, Turkey and Malaysia were the best success stories. Both operate a very threadbare and limited version of Sharia Law, mostly relating to personal and family law for Muslims.
I doubt whether industrial policy played much of a role in the success of Singapore or South Korea. I wouldn't rule out the possibility that it can help here and there, but I don't have much confidence in claims made by proponents of the idea. Even if a particular industry was helped, what was the opportunity cost of the aid? These are difficult questions.
Well, the sensible line seems to be something along the lines of assessing strategic needs, doesn't it? I did a deep drive on the steel tariffs because instinctively I was against them. However, from what I could gather the Trump Admin is at least *claiming* to be using the tariffs as a bridge to enable the industry to pivot to specialised steel. I don't how much stock I put in growth projections for specialised steel into the 2030s, but it's certainly a key strategic sector which has many downstream consequences.
I don't think anyone is paying enough attention to advanced chemicals. As a sector it naturally aligns with the oil and gas sector, and is critical for any number of specialised high tech applications. Important, given the potential inherent to metrics like Robots per 10,000 workers. Sir Jim Radcliffe is well worth a watch on the subject of advanced chemicals.
Germany is probably going to lose a large segment of their advanced chemicals capacity. Hormuz places a question mark over investing in Asia in advanced chemicals. Do you watch or read Doomberg? I was watching an interview with Peter Boghossian and was very interested in his take on Australia and the energy innumeracy of its political class.
My broader point is that I don't think most political leaders are getting advice which joins the dots. The combination of oil/gas with high automation potential is a game changer. Most of the ROI on AI actually appears to be from teams using the technology smartly, rather than the conventional workforce displacement everybody is obsessed with. Robots and automated facilities are another matter entirely. It's an argument for vertical integration and geographical locations which prioritise stability, especially in terms of supply chains, although friend-shoring is another option.
Sustained economic take-off requires some resilient combination of mass commerce (i.e., gains-from-trade transactions) and cheap energy. Argentina failed the resilient bit. (There is a line of Australian commentary about not being Argentina: we were both remarkably rich resource-exporting settler societies in 1900.)
If you can move peasants into factories en masse you can industrialise, provided the factories get built. Who gets the benefit, at what cost, and how sustainably, much larger questions. Command economies can industrialise in that way. Then the resilience of growth becomes a problem. (There can also be a fair bit of hidden commerce in such systems, which meant the Mises-Hayek economic calculation critique bit much more slowly than they anticipated.)
If there are various paths to some resilient combination of mass commerce and cheap energy, it is going to be hard to pin down crucial factors across cases. How to get from where you are is surely a very path-dependent matter because of the variety in starting points.
I understand the ‘Confucian’ culture usage. It makes me a bit nervous, however, because it is a bit chicken-and-egg: do Confucian ideas resonate due to underlying patterns in the culture? Japan, for instance, is “Confucian” in a rather limited sense.
It is also pretty clear that Japan was an early adopter of technic modernity because its institutions in 1868 resembled those of Western Europe in, say, 1468 way more than any other non-Western country, so “fast forwarding” history by adapting Western models was a lot easier. But that then did not apply to other successful take-off countries.
Good points. To be clear, I didn't mean anything specific by "Confucian", other than "East Asian". As an analogy, when people speak of the effects of Christianity on development it's never clear whether the mechanism is actual Christian doctrine, or just general cultural attitudes in regions like Europe.
Regarding international comparisons and path dependency due to different starting points, much of what the CCP did after 1978 was work out ways to “get there from here”.
Nevertheless, there are some striking parallels between post-1945 Japan and post-1978 China. Both had massive surges in economic growth with large industrial expansion. Both used financial repression. Both became the second-largest economy. Both peaked at around 17-18% of world GDP. Both generated commentary about how the US/West needed to learn from them. Both experienced mass asset crashes and serious debt overhangs.
Except China is doing it from a much lower income/wealth base, with worse feedback systems and much more corruption. (I am somewhat sceptical about China’s GDP and even demographic statistics: which is not at all to deny there has been decades of remarkable economic growth.) It is also doing it with a much larger military establishment (which has grown at about twice the rate of the economy), a regime obsessed with the collapse of the Soviet Union, and revanchist ambitions (Taiwan, South China Sea).
I am always puzzled by these statements. Anyone who has ever visited China can see that it's actually much richer than it's reported GDP. Reported per capita GDP in 2026 is below $15,000, vs. nearly $95,000 in the US. And yet any physical measure such as electricity production or total exports suggests a country at a higher level of development than $15,000.
Also, why is economic growth faltering in EU countries which are incidentally ranked very high in the global economic freedom indices? Are these indices like Heritage misleading? Economic freedom is certainly higher in EU relative to India, Bangladesh and Indonesia but the later three have been outperforming EU for decades.
Poor countries do have large informal sector which tends to be free of many onerous regulations. It may even be argued that, in net, India is freer economically than many EU countries. But the indices seem to rely more on formal sector.
It's much easier for a poor country to grow fast than for a rich country to grow fast.
"It may even be argued that, in net, India is freer economically than many EU countries"
This is very misleading. In many poor countries you are not able to achieve any sort of scale due to regulation. Yes, a tiny firm in India may be free from regulation, but grow to any size and you get crushed by heavy regulation. To be rich, you need a robust "formal sector".
Can we speak of contingency as the ruling factor? That Argentina went Peronist with its counterproductive economic ideas was a contingent fact as the Korea not falling to a leader of similar type.
Your article provides a highly logical framework. As a market analyst based in South Korea, I found your factual breakdown of the country's trade-led growth and institutional openness highly insightful. Thank you for the data-driven context.
"Of course one could cite many other reasons for Korea’s success, including land reform, foreign aid, being allied to the US, industrial policies, etc. But none of the other factors seem as powerful as the two points listed above."
Being within the US security umbrella was the prerequisite, the effect of this-or-that domestic factor is swamped by that effect. This is why we can find so many "recipes," to use Rodrik's language. It prevented various forms of security-obsessed nationalisms (communist or otherwise) from taking hold, and eliminated the imperial competitions that diverted resources from development to state power. That is the common factor with Taiwan and Japan within the "Confucian" sub-unit, it is a common factor with Poland in Europe, and it is not common with places like sub-Saharan Africa or parts of Latam that never had consolidated communist regimes in power yet still didn't develop. It is also why China and Vietnam started liberalizing after rapproachment with the US, and stopped liberalizing since the US has turned against the open economy.
Inclusive domestic institutions are downstream of the security environment. The US structured global security over the past 75 years, and the US prioritized open markets, so if you were within the security environment you received the benefit of open markets. If you weren't it was much harder.
It's a real shame (from the perspective of world development) that the US security apparatus has become extractive, beginning with the Bush years. Over the past 25 years worldwide democracy has declined, press freedom has declined, corruption has increased, public trust has declined, and global growth rates have slowed. It's not a coincidence.
The open global economy was a cosmopolitan liberal project with progressive aims, not a libertarian project, nor a Confucian project, nor a statist project. But there seem to be no more cosmopolitan progressive liberals around anymore, other than Mark Carney.
I agree that US protection was essential for South Korea, which otherwise would have fallen to the North. I'm not sure how important it is elsewhere. I doubt that US foreign policy has much impact on places like Argentina or Portugal or India, which are outside the zone of great power competition.
I didn't say inside the zone of great power competition, I said within the US's security umbrella. To trade more Korea needed trade partners, and the US security network provided those trading partners. Portugal was one of the poorest original members of NATO -- which predated the European Economic Community and probably provided a necessary precondition for it -- perhaps the very poorest, but it has not only converged economically under that security umbrella but liberalized politically too. The security umbrella was prior to all the rest. Argentina, meanwhile, refused to declare war on Nazi Germany, and the US took the UK's side in the Falklands War (contra the Monroe Doctrine); Argentina has stagnated significantly over the past 75 years, overtaken by countries like South Korea, but when times have been good in Argentina they've been the times when Argentina has been mostly closely aligned with the US geopolitically.
I don't know how to respond to a claim that India is outside the zone of great power competition, but it certainly is not within the US's security umbrella and as a consequence its domestic institutions and economic policymaking under the Raj were less liberal.
Or take Iran: it was wealthier when it was within the US's security umbrella, less wealthy when it wasn't. Its orientation towards trade is roughly the same. This generalizes through the Middle East: the countries aligned with the US are richer than the countries non-aligned or opposed, irrespective of domestic institutions.
Domestic institutions are not magic. They are created in response to systemic pressures, and they change in response to systemic pressure. Policy outputs are consistent with systemic priorities: if you rely on the Soviet Union for security you have a different choice set than if you rely on the US for security, and if you remained non-aligned then you had very few choices at all.
Mark Carney (and Keir Starmer) understand that domestic institutions are insufficient for building prosperity, that "Global Britain" is a non sequitur. Global coordination is required. American hegemony provided the coordination mechanism for a long time, mediated through multilateral institutions. That's gone now, so the middle powers have to scramble to reconstruct as many features of it as they can, as quickly as they can, or the domestic institutions will fail.
That's our project.
I guess I have no idea what you are talking about.
India ie the Raj had economic policies that tracked England. When England went socialist post-WW2 India went too. The same economists and advisors were working for both India and Britain. The policies came recommended by the best economic science of the day.
India and the "best" British economic science of the day, oh dear...
Nicely enabled a new class of bureaucratic nationalist kleptocrats keen on enriching themselves at the literal expense of the masses. So common in Africa, too.
Those new bureaucratic Indian nationalists could then ignore, in fact condone, and thus continue, the pre-British rule, uniquely Indian, uniquely backwards caste system.
Like the Chinese for many years, only outside India can Indians thrive fairly, unless thrown out like in most of post-colonial East Africa.
So much to unpack. So much of it unique, one-off, singularities.
(Russian here) For Poland's shock therapy, one question I have is what was the difference between privatization in Poland and in Russia? The former seems to be a success, but the latter is customary blamed for modern ills of the country.
Two subquestions here:
* What were, if any, _mechanical_ differences between the two processes? How they physically worked?
* What's the transmission mechanism for later economical and political outcomes?
I did a tiniest bit of research about this, and haven't found satisfactory answers. Would appreciate some links here!
I recall that there were complaints about corruption in Russia's program, but I don't know enough to have an informed opinion. Of course Russia started reforming several years later than Poland, so it took longer for things to start improving.
Poland stated a democracy, so kleptocrats can be thrown out of office, unlike Russia under Putin. Ukraine was going the same way until Putin decided that was a bad example, for him, personally.
China is different. Kleptocracy kept in check despite lack of democracy. Possibly, this is due to lack of natural resources relative to population size, unlike Russia where kleptocrats can get very rich and thus stay powerful by control of those resources without having to douch for the general population (like in smaller S American or African states).
Thanks for correcting a few misconceptions on my part. I had heard the case of Poland argued from the opposite position, with the framing relying exclusively on comparisons between Poland and post-Soviet Russia. Your analysis presents a far more rounded picture. On the industrial policy, do you think there is a specific exception for targeted industrial policy which is specific and encompasses an understanding of markets? Both South Korea and Singapore invested heavily in semiconductors. Are good industrial policies simply too difficult and multi-faceted for most governments with strong political factors to consider to accomplish? I know Germany and Japan in specific periods were cited in the original arguments against Friedman. I guess my question is: are they unlikely to work in most instances because Man of Systems requirements make them unobtainable to all but exceptional governments in exceptional periods?
A while back I looked at conditions for success for majority Muslim countries. Excluding the oil rich Gulf States, Turkey and Malaysia were the best success stories. Both operate a very threadbare and limited version of Sharia Law, mostly relating to personal and family law for Muslims.
I doubt whether industrial policy played much of a role in the success of Singapore or South Korea. I wouldn't rule out the possibility that it can help here and there, but I don't have much confidence in claims made by proponents of the idea. Even if a particular industry was helped, what was the opportunity cost of the aid? These are difficult questions.
Well, the sensible line seems to be something along the lines of assessing strategic needs, doesn't it? I did a deep drive on the steel tariffs because instinctively I was against them. However, from what I could gather the Trump Admin is at least *claiming* to be using the tariffs as a bridge to enable the industry to pivot to specialised steel. I don't how much stock I put in growth projections for specialised steel into the 2030s, but it's certainly a key strategic sector which has many downstream consequences.
I don't think anyone is paying enough attention to advanced chemicals. As a sector it naturally aligns with the oil and gas sector, and is critical for any number of specialised high tech applications. Important, given the potential inherent to metrics like Robots per 10,000 workers. Sir Jim Radcliffe is well worth a watch on the subject of advanced chemicals.
Germany is probably going to lose a large segment of their advanced chemicals capacity. Hormuz places a question mark over investing in Asia in advanced chemicals. Do you watch or read Doomberg? I was watching an interview with Peter Boghossian and was very interested in his take on Australia and the energy innumeracy of its political class.
My broader point is that I don't think most political leaders are getting advice which joins the dots. The combination of oil/gas with high automation potential is a game changer. Most of the ROI on AI actually appears to be from teams using the technology smartly, rather than the conventional workforce displacement everybody is obsessed with. Robots and automated facilities are another matter entirely. It's an argument for vertical integration and geographical locations which prioritise stability, especially in terms of supply chains, although friend-shoring is another option.
Sustained economic take-off requires some resilient combination of mass commerce (i.e., gains-from-trade transactions) and cheap energy. Argentina failed the resilient bit. (There is a line of Australian commentary about not being Argentina: we were both remarkably rich resource-exporting settler societies in 1900.)
If you can move peasants into factories en masse you can industrialise, provided the factories get built. Who gets the benefit, at what cost, and how sustainably, much larger questions. Command economies can industrialise in that way. Then the resilience of growth becomes a problem. (There can also be a fair bit of hidden commerce in such systems, which meant the Mises-Hayek economic calculation critique bit much more slowly than they anticipated.)
If there are various paths to some resilient combination of mass commerce and cheap energy, it is going to be hard to pin down crucial factors across cases. How to get from where you are is surely a very path-dependent matter because of the variety in starting points.
I understand the ‘Confucian’ culture usage. It makes me a bit nervous, however, because it is a bit chicken-and-egg: do Confucian ideas resonate due to underlying patterns in the culture? Japan, for instance, is “Confucian” in a rather limited sense.
It is also pretty clear that Japan was an early adopter of technic modernity because its institutions in 1868 resembled those of Western Europe in, say, 1468 way more than any other non-Western country, so “fast forwarding” history by adapting Western models was a lot easier. But that then did not apply to other successful take-off countries.
Lots of big questions raised by a great post.
Good points. To be clear, I didn't mean anything specific by "Confucian", other than "East Asian". As an analogy, when people speak of the effects of Christianity on development it's never clear whether the mechanism is actual Christian doctrine, or just general cultural attitudes in regions like Europe.
Regarding international comparisons and path dependency due to different starting points, much of what the CCP did after 1978 was work out ways to “get there from here”.
Nevertheless, there are some striking parallels between post-1945 Japan and post-1978 China. Both had massive surges in economic growth with large industrial expansion. Both used financial repression. Both became the second-largest economy. Both peaked at around 17-18% of world GDP. Both generated commentary about how the US/West needed to learn from them. Both experienced mass asset crashes and serious debt overhangs.
Except China is doing it from a much lower income/wealth base, with worse feedback systems and much more corruption. (I am somewhat sceptical about China’s GDP and even demographic statistics: which is not at all to deny there has been decades of remarkable economic growth.) It is also doing it with a much larger military establishment (which has grown at about twice the rate of the economy), a regime obsessed with the collapse of the Soviet Union, and revanchist ambitions (Taiwan, South China Sea).
"I am somewhat sceptical about China’s GDP"
I am always puzzled by these statements. Anyone who has ever visited China can see that it's actually much richer than it's reported GDP. Reported per capita GDP in 2026 is below $15,000, vs. nearly $95,000 in the US. And yet any physical measure such as electricity production or total exports suggests a country at a higher level of development than $15,000.
https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)_per_capita
Otherwise those are interesting comparisons, although I don't think China has experienced a mass asset crash, more like a leveling off.
An outstanding post, Scott. As one who follows both you and Noah on substack, this was a post with lots of good insights, and points to reflect on.
Also, why is economic growth faltering in EU countries which are incidentally ranked very high in the global economic freedom indices? Are these indices like Heritage misleading? Economic freedom is certainly higher in EU relative to India, Bangladesh and Indonesia but the later three have been outperforming EU for decades.
Poor countries do have large informal sector which tends to be free of many onerous regulations. It may even be argued that, in net, India is freer economically than many EU countries. But the indices seem to rely more on formal sector.
It's much easier for a poor country to grow fast than for a rich country to grow fast.
"It may even be argued that, in net, India is freer economically than many EU countries"
This is very misleading. In many poor countries you are not able to achieve any sort of scale due to regulation. Yes, a tiny firm in India may be free from regulation, but grow to any size and you get crushed by heavy regulation. To be rich, you need a robust "formal sector".
Can we speak of contingency as the ruling factor? That Argentina went Peronist with its counterproductive economic ideas was a contingent fact as the Korea not falling to a leader of similar type.
After wading thru McCloskey and his hockey stick formulation and a non-economic solution
This comment accidentally posted- please disregard.
But why was Korea poor in 1960? Poorer than India in fact? That is certainly curious.
War, followed by really bad policies in the 1950s.
Your article provides a highly logical framework. As a market analyst based in South Korea, I found your factual breakdown of the country's trade-led growth and institutional openness highly insightful. Thank you for the data-driven context.
Good piece Scott.
Wow. Good job, Scott. It is amazing how hard people try to acknowledge the benefits of freedom.
What does this mean?
I think he meant "try not to"