This case by Professor Michael Witt, From Last to Fast: Political and Economic Transformation in Korea, 1961, provides contextual information for understanding how South Korea created the conditions for the economic growth that led the country from the world’s poorhouse in the 1950s to OECD membership in 1996. The principal focus is on the changing incentive structure for business in the 1960s and the political developments that underpinned them.
These are examined for their relevance to business development in the region and for their wider social and political implications. Witt examines the underlying logic of the eventual turnaround, mining the economic and social progress of Korea for lessons and tracing the historical roots of stasis through dynastic and diverse forms of republican rule in order to delineate its origins in detail. The case examines the history and politics of Korea under dynastic control and Japanese colonization, and shows how these influenced Korea’s identity in growth and self-development.
The analysis then concentrates upon the differing styles of republican rule, notably the third republic which was responsible for ushering in the conditions for trade and business to flourish, founded on a centralized structure of large enterprises under state organization. The case provides extensive analysis of these conditions and regulations to show the pertinence of the lessons of this longstanding structure, raising important issues in the context of business and political development in the Asian region. It explores the factors behind Korea’s economic and social progress to draw conclusions and estimate its relevance for other economies in the region.
The case illustrates two main points: (1) that there are close and interdependent connections among politics, the institutional business environment (“rules of the game”), and economic growth/development; and (2) that constructing good economic institutions requires political actors with the power, will, and skill to do so.