Developmental State, Business Concentrations and Financial Repression: the case of the Republic of Korea

The issue of whether a state has the ability to foster economic development despite what seems to be adverse conditions confronting it lies at the core of the field of international economics. Besides economic theory, public policy-making has a strong interest in such a debate. Why some states are more developed than others? How did public policies explicitly targeting economic growth succeed in certain cases and fail in others? Such an issue is critical not only for the developing countries but also for the developed countries one. The former are tempted to emulate a certain model. The latter are debating the role of public policies. This article criticizes the mainstream argumentation advanced in the international economics literature that not only accepts the possibility of a state to induce development but strongly promotes such a perspective. In the field of public policies, such a perspective lies at the core of the philosophy of international organizations such as United Nations (see the Millennium Development Goals) or World Bank (as its name remembers us, it is the International Bank for Reconstruction and Development). The scientific truth is that the only role a state can play in fostering development is to clearly define and enforce private property rights in accordance with natural ethics. Any other task performed by the state (which assumes the historic role of a “developmental state”) not only doesn’t promote development but actually it delays, blocks or distorts this natural process.