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Crony Capitalism: Corruption and Development in South Korea and the Philippines. By David C. Kang. New York: Cambridge University Press, 2002. Index, notes, figures, tables. Cloth, $60.00. ISBN 0-5218o8y-o.
Although South Korea and the Philippines struggled with "money politics" in the 196os and 1970s, the economy flourished in Korea but failed to develop in the Philippines. David C. Kang unravels the mystery of this disparity in Crony Capitalism, a "political story" about both countries in which politics dominates policy and politicians rule technocrats. A coherent "mutual hostage" state in Korea under Chunghee Park (1961-79) stands in contrast to the rent-seeking, fractured government of the Philippines under Marcos.
A balance of power between state and business in Korea reduced transaction costs, while "bandwagon" politics in the Philippines raised costs (p. 11). Moving beyond labels like "autonomous," "smart," or "embedded" to describe the Korean state, Kang argues that opportunism and exploitation in Korea have been mutually constrained by the close ties between a small set of government and business elites since 1961, resulting in a "hostage state."
His initial chapter takes up the theme of coherent versus fractured states, thus establishing the ground for his central theme: mutual hostages in Korea versus chaotic politics or rent-seeking in the Philippines. The background material on colonial legacies and comparative bureaucracies in two early chapters may prove more valuable for business historians. In the second chapter he highlights the two nations' remarkable similarities in education, manufactured exports, and savings as well as pointing out their differences in investment as a percentage of gross domestic product. He goes on to argue for similarities in the bureaucratic strengths of...