Event Report “Developmental State and Politics of Industrial Complex Development in South Korea”

Park, Daniel C. | October 3, 2015

A photo of Centre for the Study of Korea event on 24 September, 2015 | Image: Asian Institute, University of Toronto

The “Developmental State and Politics of Industrial Complex Development in South Korea: A Multi-Scalar Analysis of the Development of Masan Free Export Zone in the 1960s” was an event hosted by the Centre for the Study of Korea at the University of Toronto on 24 September 2015. At the event, Professor Bae-Gyoon Park (Department of Geography Education, Seoul National University) presented his paper “Relations between the State and the Local in the Construction of Masan Export Processing Zone (마산수출자유지역의 형성을 둘러싼 국가-지방 관계에 대한 연구)” published by the Korean Geographical Society (대한지리학회) in 2014.

Specifically, Professor Park aimed to assess whether the Developmental State Thesis (DST) was consistent with the Korean developmental state model by looking at the case of the Korean government’s decision to construct the Masan Free Export Zone (MAFEZ) in 1969. Contrary to DST’s idea of industrialization in East Asian countries as a state-led and planned process, the case of MAFEZ points to the idea that Korean industrialization involved multi-scalar forces and actors in and through Korea. This includes Japanese colonial economic legacies in Korea and local and transnational actors.

Professor Park first addressed why existing explanations on the development of MAFEZ, which follows the DST, is methodologically problematic. This includes (a) “National Actor Centered Explanations” and (b) “Explanations Based on Functionalist Deductions out of Ex-Post Results”. The former emphasizes the autonomous role of the Korean state and the influences of domestic capitalists like the Federation of Korean Industries (FKI). The latter indicates that the decision to construct a FEZ in Masan was due to the close geographical proximity between Masan and Japanese manufacturing firms heavily reliant on low skilled workers and labour-intensive production. Korea during the 1960s and 70s had an abundant supply of cheap labourers.

Professor Park points out that these explanations completely ignore the local processes that were associated with the construction of MAFEZ, and underestimate the impacts of path-dependent evolutionary processes and place-based emergent powers on the developmental processes of MAFEZ.

The Korean government’s planning and approval of the development of a FEZ in Masan initially starts in 1967 when the FKI sent a team to Hong Kong, Singapore, and Taiwan to conduct research on FEZs. Upon return, the FKI submitted several proposals (“Conception Plan for the Construction of Coastal Free Zone for Export Industries”) to the Blue House to construct FEZs in the coasts of Korea. The Blue House approved of all the proposals, and established the Export Free Zone Promotion Committee that made the final decision to locate the FEZ in Masan in late 1969.

On the surface, the account behind the development of MAFEZ is highly consistent with the DST. However, Professor Park points out that before the decision to locate the FEZ in Masan in 1969, the City of Masan already had started the construction of a “Coastal Industrial Complex (임해 공업단지)” or CIC in 1967.

This begs the question: Why and how did the City of Masan attempt to construct an industrial complex without government-led assistance? At the time, Korea had serious lack of resources and capital, and its government was highly centralized as well. Considering these factors, the attempt would have been extremely difficult.

Professor Park explains that the attempt was possible due to: (a) Path-dependencies of Colonial Industrialization; (b) Strong Local Entrepreneurialism; and (c) Trans-national Connectivity. Point A explains that Masan was a major industrial centre during the Japanese colonial period. As early as 1899, Masan was already designated as an open port area, a location of a Japanese Consulate, and a special settlement area for foreigners as well. Masan experienced high industrial and urban growth from a diversity of Japanese industries locating and constructing their manufacturing plants in the city. Prior to 1969, Masan was already one of the most industrialized and urbanized coastal cities in Korea.

Point B considers the fact that Masan was left unaffected by the Korean War. In fact, Masan served as a key port during the war, and continued to do so in the 1950-60s. Because Masan’s industrial and urban growth was never stagnated by the war, the local dependence on industrial development remained strong; and for these reasons, Masan also tended to attract more entrepreneurial spirits amongst its local communities as well.

Lastly, Point C emphasizes the strong transnational network between Masan and Japan that existed prior to 1969 primarily due to Masan’s colonial industrialization. This led businessmen who ventured in both Korea and Japan to be more inclined and provide their material support for the construction of a CIC in Masan.

Collectively, these factors led to the City of Masan’s approval of a CIC in the city. However, the construction of the CIC failed due to financial shortages, technical difficulties in reclaiming land, and most importantly, withdrawal of the City of Masan’s support from the project. The construction of a CIC in Masan was suspended indefinitely.

The failure of the CIC financially burdened the City of Masan. Because the failure occurred in 1967, the same year when the FKI was in the process of seeking approval for the construction of a FEZ in Korea, the local actors of Masan mobilized to convince the FKI and the Blue House to locate the proposed FEZ in their city.

Critically, the Korean government took over the unfinished construction of a CIC and redeveloped the project into the development of a FEZ. Masan Free Export Zone was the first FEZ in Korea.

Upon examination of the case of MAFEZ, Professor Park concludes that the development of MAFEZ was neither a response to the national capitalists of Korea or an outcome of the plan rationality of national bureaucrats – which are all points contended by those who subscribe to DST. Professor Park instead concludes that the development of MAFEZ was due to the City of Masan’s local industrial complex initiative and the strong path-dependent influences of colonial industrialization. Critically, Professor Park’s arguments denounce DST as a satisfactory model for explaining why and how industrialization took place in Korea.

Daniel C. Park is a 3rd Year student studying International Relations and Contemporary Asian Studies at the University of Toronto, Trinity College. Currently, Daniel serves as an Associate Editor-in-Chief for Synergy: The Journal of Contemporary Asian Studies.

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