The Political Economy of Vortex in South Korea: The Limits to the Developmental State's Problem-Solving Capacity

Abstract

Even after almost fifty years since the publication of “Korea: The Politics of the Vortex,” the image of the vortex persists, potently characterizing the nation’s political system and politics. Despite the politics of the vortex or at least in part because of it, in fact, Korea has transformed itself from an aid recipient into the ranks of a donor country by the late 1990s. With its downward trend in long-term potential growth rate since then, however, Korea suffers from growing polarization problems in multiple dimensions: rising income and wealth inequality and widening gaps in earnings between large and small firms as well as in growth between more competitive heavy and chemical manufacturers and still backward light manufacturers or service sector operators. In short, while being increasingly haunted by a series of structural and institutional problems, the Korean political economy today finds itself unable to adequately deal with them. This paper argues that while Korea’s politics of the vortex or “top-downism,” characterized by vertical political structure, centralized decision making, and the dearth of institutionalized checks and balances, had led to rapid growth in the past, it has become dysfunctional over time, constituting a key causal factor behind the nation’s polarization problems. By analyzing the causal linkage through both quantitative and qualitative research methods, the present paper examines the limits to the developmental state’s capacity to resolve structural problems of its own. In so doing, it offers a fresh, alternative understanding of Korean development and a critique of the politics of the vortex.