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In spite of the apparent parallel experiences followed by export growth in Mexico and South Korea, the authors argue that the two countries have followed radically contrasting economic and social development paths. The aim of this paper is to examine some of the strategic dimensions of the two paths in an attempt to demystify the aura of success created around the Mexican case.
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Differences Behind the Appearances:
Export Growth, Technological Capabilities,
and Development in Mexico and South Korea
Raúl Delgado-Wise and
Noela Invernizzi
ABSTRACT In spite of the apparent parallel experiences followed by export growth in Mexico and South Korea,
the authors argue that the two countries have followed radically contrasting economic and social development paths.
The aim of this paper is to examine some of the strategic dimensions of the two paths in an attempt to demystify the
aura of success created around the Mexican case.
RÉSUMÉ — La croissance des exportations a suivi des voies apparemment parallèles au Mexique et en Corée du
Sud. Les auteurs soutiennent toutefois que le développement économique et social y a emprunté des voies radicale-
ment différentes et opposées. Le but de leur article est d’examiner certaines dimensions stratégiques de ces deux voies
pour tenter de démystifier l’aura de succès qui entoure le cas mexicain.
Introduction
At the onset of the 21
st
century, Mexico has managed to position itself as the leading export power in
Latin America and as seventh in the world, with an export platform comprising 84% manufactured
goods, of which 39% are classified as “high technology. Similarly, South Korea is among the most
successful exporting economies of Southeast Asia, with an export platform that is 92% manufactured
products, of which 32% are classified as “high technology. Both economies are further characterized
by their high levels of openness (imports and exports as a percentage of GDP): 60% in the former,
and 87% in the latter. Moreover, of the member countries of the Asia-Pacific Economic Cooperation
agreement, Mexico and South Korea are among those that reported the highest annual rates of
g
r
owth in their export volumes over the last decade (1990–2000): 16.1% and 10.2% respectively.
O
v
e
r and above the apparent parallel paths followed by export growth in Mexico and South
Korea, it is undeniable that they have undergone radically different and contrasting economic and
s
o
c
i
al d
evelopment experiences. The aim of this paper is to examine some of the strategic dimen-
sions of the two paths in an attempt to demystify the aura of success that certain sectors have tried to
create around the Mexican case. Our main interest is to reveal the true nature of the country’s export
growth and to contrast it with the South Korean experience which, in a number of ways that we will
attempt to illustrate, represents the antithesis of the neoliberal path chosen by Mexico.
A
t the heart of our argument is the hypothesis that one of the key elements in differentiating the
tw
o experiences lies in the nature, characteristics, and scope of the form of state interventionism
CANADIAN JOURNAL OF DEVELOPMENT STUDIES, VOLUME XXVI, N
o
3, 2005
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f
ollowed, with South Korea adopting, in contrast to Mexico, a long-term approach with a deeply
nationalistic view of the development process wherein scientific and technological development and
education play a central role.
For the purpose of this analysis, the paper has been divided into four sections. The first highlights
some basic features of the industrialization strategies followed in Mexico and South Korea prior to
the 1980s. We then examine the contrasting forms adopted by export growth in the two nations in
the context of neoliberal globalism. The third section illustrates the major differences in the training
of human resources for learning and innovation in the two countries. Finally, the fourth section
offers a critical comparison of the two experiences, with emphasis on their social implications.
I. Two Alternative Paths Toward Late Industrialization
B
etween the Second World War and the 1970s, Mexico, like other Latin American countries,
followed a path of planned industrialization fostered by the state and based on the Economic
Commission for Latin America and the Caribbean-inspired principle of “import substitution.With
the support of a highly protectionist structure and major incentives for industrialization, encour-
agement was given toward the domestic production of goods that were previously imported, in the
hope of progressively advancing domestic production from consumer goods to intermediate goods
and, ultimately, capital goods.
With respect to this approach it should be noted that, first, even though it allows high rates of
industrial growth — 6.4% per annum between 1940 and 1960 and 8.6% during the 1970s — it
generates increasing deficits in the balance of trade, compounded by startling levels of foreign debt.
Second, although industrialization favoured a sector of the national bourgeoisie, it also stated the
conditions for the entry of foreign capital on a significant scale in the form of large transnational
corporations.
Finally, far from creating an industrial base with the ability to compete on international markets,
this industrialization path fostered inefficient industries with high levels of obsolescence and practi-
cally no capacity for innovation. All this leads to what Fajnzylber (1985, 150) characterizes as a
process of truncated or precarious industrialization.
Disregarding certain similarities that some authors detect between the import substitution
model followed by Mexico and the development model adopted by South Korea (López Villafañe
1
9
99), the two countries clearly represent two alternative paths toward late industrialization, with
significant contrasts in their theoretical basis, scope, and results. In fact, Estrada and Robles Báez
(
1995) suggested this when they comparatively analysed the economic and commercial reforms
carried out by South Korea and Mexico over the 1980s.
T
h
us,
as pointed out by Amsden (1989), in the 1960s South Korea began its industrialization
process using an approach that emphasized learning. With that, it was able to achieve rates of annual
growth even higher than those reported by Mexico: 9% from 1962 to 1971 and 10% from 1972 to
1979, in conjunction with a moderate and decreasing deficit in the balance of trade.
Several institutions supported this path:
1. An interventionist and authoritarian state that decisively fostered the process of capitalist and
industrial development with a long-term, nationalist outlook and that gave priority to education
and training, together with a careful, selective, and intelligent protectionist policy and the grad-
ual promotion of exports.
2.
Chae
bo
ls
,
l
arge family business groups created with strong state encouragement and support,
which operate as executing agencies for industrialization plans and strategies (L. Kim 2000, 18).
 -  
XXVI#3 GALLEYS 7/27/05 10:09 PM Page 410
A
s Chibber (2004) suggested when comparing Indian and South Korean developmental states,
the political elite of the latter was successful in harnessing domestic capitalists to their agenda. It
should be noted that this process was accompanied by restrictions placed on direct foreign
investment. In addition to encouraging technology transfers, this fostered an aggressive policy for
the accumulation of technological capabilities and (unlike what happened in Mexico and other
Latin American countries) prevented foreign multinational corporations from becoming the
hegemonic agents of the accumulation process.
3. An expanding supply of executive-level human resources (managers) with a high proportion of
engineers operating as the guardians of technology transfers (Amsden 1989, 9).
4. An unusually productive, qualified, and disciplined workforce to feed the industrialization
process. This workforce was also subjected, particularly at the start of the process, to the longest
working days in the world, in a context of authoritarianism and repression. At the same time,
w
orkers received certain productivity bonuses in the form of moderate wage increases. It is worth
noting that average manufacturing wages in South Korea stood at US$0.32 per hour in 1975 and,
although they had risen to $0.96 per hour in 1980, they were still among the lowest in the world:
one-seventh of prevailing wages in the United States and slightly less than half those found in
Mexico. This cheap and productive workforce became a decisive factor, a
sine qua non compara-
tive advantage, in the success attained by the first phase of the South Korean industrialization
process. Adelman (1997, 6) states that in addition to the long working days, during the first stage
of Koreas industrialization there was a substantial increase in industrial accidents, indicating the
intensified use to which the workforce was put.
One key aspect of this path is that it is underpinned by what L. Kim (2000) calls “imitative dupli-
cation.By means of reverse engineering, mature technology products and those that are labour-
intensive, such as textiles and toys, are copied and produced efficiently and effectively. As noted by
Rosenberg (2002, 5), the activities of engineers and technicians were a determining factor, adding
new knowledge to mature processes and technologies and thereby generating the advantages of effi-
ciency needed to compete on the global market.
During the 1970s, the same strategy was applied to heavy industries, including automobiles, iron
and steel, machine tools, and shipbuilding, and this enabled them to compete on the global market
against consolidated producers. In addition, because of its defence and economic interests, the South
Korean government encouraged the accelerated development of chemicals and heavy industry, and
th
is w
as decisive both in the foreign technology assimilation process and in securing the competi-
tiveness of other industries (L. Kim 2000, 19).
I
n addition to the different patterns of state intervention, the point to be emphasized with
respect to the two alternative paths toward industrialization is that they are based on diametrically
o
p
p
osed ideas about the meaning and importance of technology and technological innovation in
the development process (Delgado-Wise 1996). While in the import substitution model, technology
is seen as just another commodity (always available for purchase and liable to be replaced at any
time), in the industrialization through learning model it is considered a key strategic ingredient of
the industrialization process. In the first case, the process is visualized statically as that which culmi-
nates with the substitution of capital goods without taking into consideration that at every step
along the way innovation disrupts the entire structure established earlier. The situation is very
different from the paradigm of industrialization through learning, where the goal is to construct
dynamic comparative advantages” (Amsdem 1989, 268). Indeed, late industrialization is a case of
p
u
re learning, a case in which,“for the first time in history, backwards countries industrialized
w
ith
-
out proprietary innovations”
(2).
         
XXVI#3 GALLEYS 7/27/05 10:09 PM Page 411
R
eference must be made to certain historical and geopolitical elements that are intimately tied
with South Koreas industrialization process. The occupying Japanese forces, when they withdrew in
1945, left behind the rudiments of industry installed in the country. The Cold War then established
a more than appropriate context by making the region a bulwark against the Communist advance
and enabling it, on the one hand, to receive significant financial support from the United States and
almost unrestricted access to that country’s domestic market and, on the other, to establish a more
balanced relationship with Japan vis-à-vis trade, investment, loans, and official development assis-
tance. No less important was the Western support for a degree of social homogenization to prevent
the dissemination of the Communist ideology, which took the form of agrarian reform, mass educa-
tion campaigns, and the professionalization of the bureaucracy (López Villafañe 2002, 805; Dabat,
Rivera, and Toledo 2001, 956).
1
All this is in sharp contrast to the deeply asymmetrical relations
established between Mexico and the United States.
II. Contrasting Modes of Export Growth
Under the aegis of the so-called neoliberal globalism, as noted above, both the Mexican and South
Korean economies are characterized by the high level of dynamism in their manufactured exports,
with “high technology” goods constituting a major component. The similarities in the export mixes
of the two countries are shown in Figure 1.
The commonalities, however, stop there; investigating more deeply reveals that the export
dynamism is not only based on very different industrialization strategies (substitution versus learn-
ing); it also reflects two radically contrasting forms of export growth.
To disentangle Mexicos experiences, sight must not be lost of the extremely rapid growth of the
maquiladora export sector. Between 1982 (when the country’s reorientation toward neoliberalism
began) and 2004, this sector’s foreign sales increased by a factor of 26, accounting in the final year for
more than half of the entire manufactured export volume. Maquiladoras are intended to be assembly
plants tied with internationalized productive processes and almost no integration with the domestic
economy. They are thus characterized by importing most of the components they use and selling
most of their output abroad (Dussel 2003; Dussel, Galindo, and Loría 2003) and by reducing their
catalyzing impact to a meagre trickle of wage incomes. In addition, a process of disguised maquila
has been seen emerging in other areas of export manufacturing, such as the automobile industry
(C
y
pher 2004; Delgado-Wise 2004).
2
N
o
te that the total of temporary imports was equal to almost
80% of total exports over the past decade, between 1993 and 2000 (Dussel 2003).
T
his is compounded by the overwhelming preponderance of intra-firm trade with the United
States, estimated to be between 65% and 75% (Arroyo 2003; Durán and Ventura-Dias, 2003; Baker
1
9
95). In addition to contravening the “free market dynamics” preached by the neoliberal ortho-
doxy, this underscores the extreme plundering of the Mexican economy that is thus taking place. It
 -  
1. According to Adelman (1997, 6), unlike most developing countries, South Korea experienced redistribution before
growth, thanks to its agrarian reforms in the 1950s and the universal coverage of basic education it achieved in the mid-1960s.
Thus, during the first stages of growth, there was a relatively uniform distribution of wealth. However, this situation began to
change in the 1980s.
2. Fujii (2000, 1014) noted this characteristic in the following terms: “The dynamism of the export sector does not pull
the rest of the economy along with it; instead, it is filtered abroad, chiefly to the United States.” Supporting this line of analy-
sis
,
C
ypher (2001, 12) holds that “Mexicos export ‘miracle’ can be largely explained by globalization strategies created in
D
etroit — the US auto industry accounted for approximately one out of every five dollars of Mexicos non-oil exports during
1997.
XXVI#3 GALLEYS 7/27/05 10:09 PM Page 412
s
hould not be forgotten that the concept of shared production inherent in intra-firm trade does not
mean shared profits. Export prices in commerce of this kind are set artificially by the companies
without declaring profits, which not only allows a net transfer of potential earnings abroad but
also enables each job created to be subsidized and the bill for those subsidies to be passed on to the
Mexican economy.
In addition to showcasing the fragility and volatility of the export dynamic, the foregoing
comments require that we assess, in its true dimensions, the nature and scope of what the country
actually exports. Thus, it is clear that the lions share of Mexican foreign trade — that which makes
up intra-firm trade and covers most of the maquiladora sector — is not accurately described as
manufactured exports; as Carlos Tello (1996, 50) insightfully points out, what is being sold abroad is
labour force, without it having to leave the country. Consequently, the veil of supposed progress in
export manufacturing conceals the contraction of a part of the Mexican economy, which is reduced
and c
ompelled to serve as a supplier of cheap labour and a labour reserve for foreign capital, princi-
pally for American foreign capital.
Two additional comments serve to flesh out this point. First, in addition to its workforce (which
is by far the country’s chief export good, with a net contribution to the balance of trade in excess of
US$35.7 billion in 2004),
3
Mexico exports natural resources (primarily oil) and assets. This latter
element — the acquisition of assets at knock-down prices through the privatization of state-owned
companies and from mergers with and acquisitions of domestic companies — has been targeted by
a significant amount of direct foreign investment, underscoring not only the non-productive nature
of this type of investment but also its acknowledged contribution to the processes whereby large
multinational companies concentrate and centralize capital. It is worth adding that these investments
have been channelled into acquiring the country’s financial sector through the purchase of Mexico’s
largest banks: Bancomer, bought by Banco Bilbao Vizcaya, and Banamex, bought by Citibank
(Villarreal 2004).
Second, the best illustration of the extremely restricted nature of the process of capital accumu-
lation in Mexico is the ruthless transfer of surpluses that takes place in the neoliberal context under
the hegemony of the United States. In this regard, John Saxe-Fernández and Omar Núñez (2001,
150–51) estimate that the total volume of surpluses transferred out of the country — chiefly to the
United States — between 1982 and 1997 was, at constant 1990 prices, some US$457 billion.
4
The true
dimensions of this figure, which does not include net transfers of profits through direct and indirect
e
xp
orts of labour, become apparent if we consider that Latin America is the underdeveloped world’s
leading tributary region and that, within that region, Mexico is the leading country.
I
t should also be noted that in such circumstances, the states actions are considerably limited by
the international financial agencies — the World Bank, International Monetary Fund, and the Inter-
A
m
e
r
ican Development Bank (Petras and Veltmeyer 2001) — following the neoliberal prescription
to the letter (liberalization, deregulation, and privatization) and abandoning all undertakings related
to the development process. In turn, all this leads to an extreme process whereby the domestic
market contracts and a good proportion of the domestic industrial base, constructed during the
import substitution phase, is dismantled and destroyed (Katz 2001).
         
3. This estimate includes both the added value of the maquiladora sector as an approximate indicator of indirect labour
exports, and the remittances sent home as a result of direct labour exports. See <http://www.banxico.org.mx>, accessed April
20
0
4.
4
. This figure mainly encompasses the external debt payments and transfers made through losses in the exchange rates
of export products.
XXVI#3 GALLEYS 7/27/05 10:09 PM Page 413
S
outh Koreas experience contrasts sharply with that of Mexico. Instead of breaking with the
prior phase of industrialization, what occurred in the Korean case was the evolution from duplicative
imitation to creative imitation. That means a qualitative step forward, apparent in the reorientation
of its export mix toward technology-intensive products such as computers, semiconductors, VCRs,
electronic systems, and high-definition televisions. This occurred against the backdrop of the so-
called computer revolution and placed South Korea in a position to dispute privileged niches of the
global market for key products in the new sphere of capital accumulation comprising the electron-
ics and computer sectors (Dabat, Rivera, and Toledo 2001, 957). Thus, for example, the Korean
corporation Samsung is currently the world’s largest producer of memory chips; in recent years,
South Korea has ranked first or second among the world’s producers of cellular telephones, and it
has secured a leading position in the development of wireless Internet services (Rosenberg 2002, 3).
Clearly, these achievements are based on a much more thorough development than that of
M
exico of its technological capacity in pursuit of building the ability for independent innovation.
According to L. Kim (2000), the encouragement given to the following five complementary strategic
lines lies at the heart of this successful transition.
1. Transfers of advanced technology. In light of the increasing difficulty of securing sophisticated
technology, it was decided to obtain them formally through licensing arrangements.
2. Reversing the brain drain. A successful policy to repatriate highly trained workers from abroad
and put them to work in the research and development (R&D) centres of Korean companies was
pursued.
3. Major investment in R&D, with growing private sector involvement (around 80%). As essential
cogs in the machinery of industrialization through creative imitation, companies begin to estab-
lish major research and development facilities with a view not only toward assimilating
imported technology but also toward innovation and the creation of new knowledge. Note that
in other countries that followed a late path to industrialization, such as Mexico and Brazil, prac-
tically no such advances were made.
4. Investment and changes in the university system. Low standards in the university system and its
orientation toward teaching began to be addressed through investments and reforms in the 1980s
(Lee 2000). In consideration of the difficulties inherent in making universities places for research,
the government created a new agency, the Korea Advanced Institute of Science and Technology,
to focus on science and engineering research.
5
.
Creation of several public research institutes. These institutes were directly geared toward the
needs of industry and toward producing the experts needed by the companies’ expanding
r
esearch and development centres. Another aspect of this policy was the promotion of scientific
cities, first with the construction of the failed Seoul Science Park and, later and more successfully,
th
e Da
e
d
uck Science Town (L. Kim 1993, 380–81).
In recent years, South Korea has taken its first steps in the arena of innovation. In this incipient
third phase of the process of late industrialization, Korea is placing itself as a producer at the cutting
edge of technology in certain fields, such as semiconductors, and has even overtaken Japan.
5
The
competitive challenges are redoubled since as the country becomes a stronger competitor it encoun-
ters greater obstacles in securing foreign technology. In this context, in addition to the importance
given to the public research institutes, the greater R&D efforts being made by companies, and the
 -  
5
. Korea’s shipbuilding industry has also managed to challenge Japans dominant position (Dabat, Rivera, and Toledo
2001, 955).
XXVI#3 GALLEYS 7/27/05 10:09 PM Page 414
corporate alliances for joint R&D with foreign corporations,
6
the government maintains that the
function of the universities as the producers of new knowledge and of human resources for research
is still of strategic importance.
In spite of the relative success of the South Korean experience, Suh (2000, 22) notes that the
country is quite dependent on flows of foreign technology, the weight of which can be felt in its
balance of payments. In addition, in the post-Cold War era, the geopolitical relationship between
Korea and the United States is changing. The latter is increasingly interested in deregulating Korean
and other late industrializing economies, and in breaking down their barriers to the broader global-
ist agenda that prefers corporations be headquartered in those countries (Pempel 2004, 4). However,
the industrial development already achieved and the installed capacity for R&D place Korea in an
advantageous position to go on with its industrialization and technological development goals.
Over and above the regional and sectoral imbalances seen in the South Korean productive appa-
ratus, which is excessively centralized around large corporations (
chaebols),
7
the country’s progress
toward creating a system of independent innovation should be emphasized.
It is clear that South Koreas export growth bears little resemblance to the neoliberal export
growth of Mexico. While the former aims at evolving toward capitalist development, the latter
implies a deepening of the country’s underdevelopment. In turn, this is associated with their very
different regional integration models (with their respective blocs) and patterns of participation on
global markets. One case leads to greater dependence on and subordination to the imperialism of the
United States,
8
while the other represents an option for integration with a more open context of
competition. Indicators on the apparent similarities between these processes can be seen in Table 1,
while the following sections contain a series of indicators that showcase their contrasting results.
Table 1. Export Growth in Mexico and South Korea, 1990–2002
Mexico South Korea
1990 2002 1990 2002
Exports of goods and services (as % GNP) 19 27 30 39
Percent of manufactured goods in total exports 43 84 94 92
Percent of high-tech goods in total exports 8 21 18 32
Source: UN HDI Report 2004
         
6.
W
ith the goal of constructing the knowledge base needed for positioning themselves as producers of new technol-
o
gy, many Korean companies have adopted the strategy of “globalizing” their research and development activities. This has
been done by establishing R&D centres in the United States, Japan, and various European countries through mergers with and
acquisitions of foreign high-technology companies, and by entering into strategic alliances with leading multinational corpo-
rations (L. Kim 2000, 24). In 1996 Korea already had 32 R&D centres in the United States, including 10 for semiconductors and
seven for computers (Rosenberg 2002, 8).
7. Dabat, Rivera, and Toledo (2001, 955) note that Koreas industrial structure “has some extremely critical aspects, such
as the exaggeratedly dominant position of the chaebols, which, because of their strategy and size, are highly biased toward
s
up
e
r-production in very specialized sectors that demand enormous economies of scale.
8
. “Neo-Monrovian”is what John Saxe-Fernández (2001, 171) calls the form of integration and subordination imposed
on Latin America under the aegis of neoliberal globalization.
XXVI#3 GALLEYS 7/27/05 10:09 PM Page 415
III. Human Resources for Innovation
The apparent parallels between the two development models are weakened by an analysis of the
process whereby human resources are trained in order to sustain learning and industrial innova-
tion. The most remarkable feature is the rising curve followed by the education growth in South
Korea since the 1950s, under the initial impulse of the reconstruction process that followed the end
of the war (K.S. Kim 1999, 1). One salient feature of this growth is that, faced with a scarcity of
resources and the decision to concentrate them on industry, encouragement was given toward the
development of an education system wherein the private sector played a leading role. This, however,
as occurred with industry, took place under the influence of a high degree of state intervention with
respect to both economic factors (fees, etc.) and course contents (Adelman 1997, 4); as K.S. Kim
(1999, 10) notes, this ultimately converted the
de jure private universities and schools into de facto
public institutions.
During the first half of the 1960s, the literacy rate rose from 30% to 80% with two-thirds of
education costs covered by the private sector. In 1966, universal primary education was established,
and Koreas level of tertiary education admissions surpassed that of the United Kingdom (Adelman
1997, 5), thus satisfying the demand for labour required by the industrialization process in its phase
of imitation or reverse engineering.
During the 1970s, the pressure to expand secondary education increased; it was consequently
expanded, at a faster rate than had happened with primary schooling, until universal coverage was
attained (see Table 2). This led to a surplus of qualified labour and unemployment; however, as noted
by L. Kim (2000), the surplus served as a strategic reserve that was later absorbed as the country
evolved from imitative industrialization to the creative phase. This latter phase relied on qualified
workers at all levels, from the factory floor to the executive echelons now required to pursue innova-
tions and the development of science and technology.
Table 2. Student Advancement through Schooling Levels in South Korea, 1970–1998
Student advancement though levels 1970 1980 1990 1998
Elementary to Initial Secondary Education* 66.1 95.8 99.8 99.9
Initial Secondary Education to High
Secondary Education* 70.1 84.5 95.7 99.4
Hi
gh Secondary Education to College 31.9 44.0 46.0 83.7
Source: K.S. Kim (1999, 2)
*Elementary Education: six years; Initial Secondary Education: three years; High Secondary Education: three years.
The 1990s saw the beginning of the harmonious development of the three levels of the Korean
e
d
uc
a
tion system with an increasingly marked trend toward universal higher education. In 1998, 84%
of secondary-school graduates enrolled in tertiary education (K.S. Kim 1999, 2; L. Kim 2000, 18).
Although it must be admitted that pressure within the system — that is, the pressure brought to
bear by one cycle of schooling on the subsequent level — played a major role in the accelerated
development of the education system and that factors such as the incentives given to meritocratic
competition (aspects stressed by K.S. Kim 1999) are behind the most recent expansion of the univer-
sities, it is also true that Koreas achievements in the field of education cannot be explained without
a
cknowledging the ever-increasing demand for qualified workers created by the industrialization
process and the development policies pursued by the Korean government. And while it is undeniable
tha
t th
e sta
tes close control over the education apparatus served the ideological goals of the military
 -  
XXVI#3 GALLEYS 7/27/05 10:09 PM Page 416
g
overnment (Amsdem 1989), there is no question that it attained a high level of academic quality.
One indicator of this is the performance of Korean pupils in the evaluations of science, mathematics,
and reading and comprehension skills carried out in the secondary schools of 24 industrialized
countries, in which South Korea has been ranked first among the OECD nations, followed by Japan
(Asia Times 29 November 2002).
9
The Mexican experience reports highly unequal growth in the different education levels, with
universal coverage only in primary schooling. At the secondary level, enrollments cover 57% of
young people in the corresponding age group, with only 19% at the tertiary level (UNESCO 2002).
Figure 2 clearly shows how the gap between the two countries’ education systems — as reflected in
the proportion of people in school to the population as a whole — widened between 1970 and 2000.
It is obvious that Mexicos education system is incapable of providing as many qualified workers
as South Koreas system. An historical analysis of the industrialization processes of the two countries
r
eveals that a labour force such as Koreas was never demanded by the Mexican productive apparatus,
which was, as seen above, notably inclined toward maquila assembly work.
1
0
In contrast to Koreas experiences, Mexicos industrialization bears little or no relationship to
processes of learning or innovation. That is the reason why, while Mexico has 214 scientists and
engineers engaged in R&D for every million inhabitants, South Korea has 2193 (OECD 2001); this
fact serves only to illustrate, with crystal clarity, the role played by higher education in Koreas
industrial development where, on the one hand, universities act as the generators of trained experts
for fuelling that process and, on the other, industry tends to absorb them into its R&D activities.
Thus, while South Korea spends 2.46% of its GDP on R&D — a level close to that of the United
States, which invests 2.64% of GDP in R&D — Mexico spends a paltry 0.43% (1999 figures). Unlike
many countries, particularly newly industrialized ones, spending on R&D in Korea is mostly private
(73% of the total).
It is important to underline that such passive behaviour of the Mexican private sector regarding
R&D investment is clearly related, on one hand, to the high presence of multinational companies,
which perform their R&D activities abroad and, on the other hand, to the maquila character of most
Mexican export industry, which is mainly the assembly of imported parts.
IV. Export Growth and Social Development
A
ltho
ugh the two countries have reported similar export growth curves, the implications of that
growth in terms of social development are clearly different. This can be seen in indicators such as per
c
apita GDP, the human development index, the Gini index, and workers’ wage levels.
In 2000, Mexicos per capita GDP stood at US$9023, while South Koreas was $17,380. In addi-
t
io
n, the human development indices (HDI) for the two nations placed them at 27th and 51st,
respectively (UN 2002 HDI Report). There has been a pronounced widening of the gap between the
two during the past quarter century: in 1975, the two countries’ HDIs were similar, at 0.688 and
0.687, while in 2000 they had changed to 0.796 and 0.882.
         
9. These evaluations are performed by UNICEF and involve two tests: Program for International Student Assessment
(PISA), and Trends in International Math and Science Study (TIMSS).
1
0.
I
t is still worth noting that in recent years, due to management innovations related to quality control, there is a
t
endency toward demanding — albeit at levels comparatively more limited than Korean standards — higher levels of school-
ing among the country’s workforce.
XXVI#3 GALLEYS 7/27/05 10:09 PM Page 417
S
imilarly contrasting are the levels of social inequality that exist in the two countries. The coun-
terpoint to the disfigured face shown by the Mexican economy under the scaffolding of export growth
within which it clearly resembles an enclave”
1
1
(Delgado-Wise and Mañán 2000) — is provided,
on the one hand, by the growing disarticulation, contraction, and dismantling of the domestic sphere
of accumulation and, on the other, by the impoverishment of most of the population, the accentuation
of social inequalities, and the creation of a burgeoning mass of workers who are unable to find
employment within the country’s formal job market. Note that Mexico is “the country with the fastest
growth in the number of multi-millionaires and in the number of people in conditions of poverty in
the world”(González Casanova 2001, 127). In just one decade — from the mid-1980s to the mid-1990s
its Gini coefficient rose from 49 to 55 (Oxfam 2002, 136), leading to a mass of poor people who,
according to officially sanctioned figures, total 53.7 million (SEDESO 2002).
In contrast to Mexico, South Korea reported a Gini coefficient of 30.8 in 1989, which fell to 28 in
1
993 and remained in that general area, with minor ups and down, until the 1997 crisis. It then rose
to 32 in 1999 (Korea Labour & Society Institute 2001). Although Korea has developed successful poli-
cies for eliminating absolute poverty, some authors are critical of the country’s capacity to reduce
inequality at the same rate as economic growth. They argue that while the early phases of industrial-
ization entailed more equal growth, since the 1980s there have been greater inequalities, regardless of
the significant increase in average incomes and other standard-of-living indicators (Adelman 1997,
12; Chiang 2001, 6). Even so, it remains true that the levels of inequality recorded in Mexico are
substantially higher than Koreas, and that they are growing at a faster rate.
Finally, there are also considerable disparities in the wages earned by the workers on whom
the two countries’ export growth is based. According to data from the U.S. Department of Labor,
whereas manufacturing wages in Mexico remained practically unchanged between 1980 and 1999
(some slight variations did occur), falling from US$2.21 to $2.12 per hour, over the same period
the South Korean figure rose from $0.96 to $6.71. Moreover, by 2001 it had risen to $7.77 per
hour, making South Korea the country with the highest manufacturing wages among the newly
industrialized nations of Southeast Asia. This differential between earnings in the two countries
must be seen in relative terms in that there are differences in the costs of living in each. Thus, for
example, Chiang (2001, 12) shows that the high price of land in South Korea erodes the purchas-
ing power of wages.
12
It should be noted that wage levels also depend on the unequal capacity for
organization of the two working classes. But this sizeable gap also reveals the reproduction cost of
w
o
rkers with very different productivity standards, an issue wherein training time is of different
length in each of the countries.
T
he democratization of South Korea changed the situation of its workers, affecting labour costs.
Now unionized and less “submissive than in more repressive times, Koreans no longer work as hard
as th
e
y use
d to in decades past. Wages have been increasing constantly although, at the same time,
temporary and per-day employment arrangements are becoming more common (Korea Labour &
 -  
11. Strictly, it should be noted that we are not using the concept of “enclave as it is traditionally accepted. We are using
the term to refer to the plundering and expropriation of a portion (and not necessarily a small one) of the nation’s territory by
foreign capital by means of a construct that brandishes highly destructive “macroeconomic conditions” that restrict the
domestic economy.
1
2
.
The author shows that while the relationship between real wages and consumer goods prices displayed continuous
g
rowth between 1974 and 1989 (the result of a threefold increase in purchasing power for consumer goods), the purchasing
power of wages with respect to property prices remained constant (Chiang 2001, 11).
XXVI#3 GALLEYS 7/27/05 10:09 PM Page 418
S
ociety Institute 2001). With the production of technology-intensive goods, the comparative advan-
tages associated with cheap, qualified labour have been relegated to the past (Suh 2000; L. Kim 2000).
Table 3. Mexico and South Korea: Contrasting Social Development Indicators
Mexico South Korea
Gini coefficient (Mexico, year 2000; Korea, year 1998) 54.6 31.6
Per capita GNP in 2002 (PPP US$) 8970 16,950
Combined gross enrollment ratio for primary, secondary, and
tertiary schools (%) 2001–02 74 92
Manufacturing wage per hour in 1999 (US$) 2.12 6.71
Relative Position in UN Human Development Indicators Index in 2004 53 28
UN Human Development Index in 2002 0.802 0.888
Sour
c
e: Korea Labour & Society Institute 2001; UN HDI Report 2004
Conclusion
Through a comparative analysis of the export growth processes of Mexico and South Korea, we
sought to demonstrate that behind the apparent similarities in the two countries’ export sector
performance were fundamental differences in the forms of development implemented and in their
impact on the social development of the two nations. On the one hand are the pronounced asymme-
tries and inequalities in the construction of their respective scientific and technological capabilities.
This helps explain why, their apparently similar performances notwithstanding, there is such a large
gap in terms of technological progress with, according to the UN classification, Mexico and South
Korea ranking 32
nd
and 5
th
, respectively (UN Human Development Report 2002).
On the other hand, the two countries’ social indicators confirm that two strongly divergent devel-
opment styles were adopted. The nationalist nature of Koreas development has had a greater impact
on social development than Mexicos foreign-oriented and clearly neoliberal-inspired export growth.
The comparison of the Mexican and Korean cases does not presume to offer “recipes” for devel-
opment, which, as we know, are difficult to transfer from one context to another. However, it is
important for underscoring the fact that the planned and systematic construction of such a techno-
logical capability is impossible without active participation by the state. State intervention in South
K
o
rea was crucial for successful industrial development and for the scientific, technological, and
educational policies that supported industrialization. The Korean late industrialization process is, in
m
any ways, the antithesis of the neoliberal path experienced in Mexico as well as in other Latin
American countries, a path strongly supported by international agencies and that is leading to
in
c
r
e
ased inequality and underdevelopment.
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It is rare when an academic book gets reprinted nearly fifteen years after its original appearance. Robert Wade's Governing the Market is a worthy recipient of that honor. Its core argument remains compelling as well as critical to ongoing debates about comparative capitalism and strategies for economic development. Moreover, the book's message gains enhanced urgency in light of developments since Governing the Market first appeared in 1990. Among the most notable of these: over a decade of Japanese deflation, the Asian financial crisis of 1997-98, the Chang Mai Initiative of May 2000 and moves toward greater East Asian financial integration, and the U.S. foreign policy preoccupation with the Middle East. Wade's original argument should now be familiar. A number of countries across East Asia achieved phenomenal rates of national economic growth along with rapid improvement in the standards of living enjoyed by their citizens. The earliest and most noteworthy cases were Japan, South Korea, and Taiwan, and, to some extent, Singapore and Hong Kong. Thailand, Malaysia, and Indonesia subsequently joined the success parade. Such rapid improvements were exceptionally rare in comparative terms, and most developing countries since World War II remained stuck in patterns of slow or no growth, limited global market penetration by their products, and often stagnant if not declining standards of living for their populations. The multiple successes in Northeast and Southeast Asia, argues Wade—along with many others— deserve academic attention for challenging prevailing theory as well as for the lessons
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Why were some countries able to build "developmental states" in the decades after World War II while others were not? Through a richly detailed examination of India's experience, Locked in Place argues that the critical factor was the reaction of domestic capitalists to the state-building project. During the 1950s and 1960s, India launched an extremely ambitious and highly regarded program of state-led development. But it soon became clear that the Indian state lacked the institutional capacity to carry out rapid industrialization. Drawing on newly available archival sources, Vivek Chibber mounts a forceful challenge to conventional arguments by showing that the insufficient state capacity stemmed mainly from Indian industrialists' massive campaign, in the years after Independence, against a strong developmental state. Chibber contrasts India's experience with the success of a similar program of state-building in South Korea, where political elites managed to harness domestic capitalists to their agenda. He then develops a theory of the structural conditions that can account for the different reactions of Indian and Korean capitalists as rational responses to the distinct development models adopted in each country.
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The author analyzes Mexico's economic "recovery," looking beyond rosier views to argue that it is a fiction. He argues that the so-called recovery was bolstered by the unprecedented IMF/U.S. Treasury loan and a strong U.S. economy, which led to increased U.S. imports from Mexico and U.S. investment. Cypher debunks the popular notion that a strong manufacturing base has aided Mexico's recovery. He finds that employment in nonmaquiladora manufacturing shows a steady decrease as maquiladora employment booms, indicating that workers will fall from permanent workers to contingency workers with few benefits, no union representation, and low wages. Indeed, Cypher argues that the Mexican economy is becoming increasingly disarticulated and wonders whether it can survive without external support. In addition, he argues that because emerging markets are in deepening crisis, the global financial community may be less likely to bail Mexico out as it did in 1995.
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The North American Free Trade Agreement (Nafta) is the reference point for the FTAA, so it is crucial to analyze the Mexican experience. A balance of the results is necessary not only in terms of its social impact, but above all on the basis of the macroeconomic objectives of its promoters. The criticisms and the mobilization against neoliberal globa-lization have obliged its promoters to recognize that there are as yet no positive social results. What this article attempts to demonstrate is that the negative social effects are intrinsic to the strategy and the theory underlying these treaties, which, apart from their social impact, have not even achieved the objectives outlined by their promoters. The criticism is, of course, not based on a nostalgic vision of the past. Nor does it imply an isolationist posture. It seeks rather a proposal for integration which reflects the interests of the popular sectors and which has been elaborated by a team from the Continental Social Alliance.