Development Cooperation and the Legacy of the Developmental State: Government Initiative and State-Business Partnership in Korean Development Cooperation with Mozambique and Rwanda

This paper investigates how the legacy of the Korean developmental state influences the way the country conducts its development cooperation policies. We want to understand what drives Korean development cooperation and find out about the origins of tensions between Korea style development cooperation and Western dominated global norms in this field. We argue that while institutions of the developmental state have been seriously weakened at the domestic level they remain instrumental in structuring Korea’s cooperation with the developing world. By looking at two country case studies of Korean development cooperation and investment projects in Mozambique and Rwanda we show that state initiative and strong state-business partnership are defining elements of Korean development cooperation. At the same time both cases show substantial differences when it comes to type of project, type of state-business partnership in the Korean approach as well as national ownership and quality of governance in the recipient countries.

Methodologically the paper builds on concepts of path dependency and change developed within the research on comparative capitalism. At the same time the paper extends the investigation of path dependency and change into new fields. Unlike most studies of comparative capitalism we do not follow established institution of the Korean developmental state in traditional areas such as industrial policy, economic planning, technology, financial regulation etc. Instead we are interested in investigating how these institutions and practices extend to new policy fields such as development cooperation. We want to find out how much of the Korean state-led model of capitalism can still be found in the new policy field of development cooperation. We argue that central elements of the Korean developmental state that have lost relevance in Korean domestic policies and are severely criticized within Korea continue to play an important role in shaping Korean development cooperation.

To describe this extension of established institutions into a new arena we want to propose a new term of institutional retreat. Institutional retreat means that institutions that became anachronistic and dysfunctional in their established areas are retreating to other policy fields. Institutional retreat is similar to what Thelen called institutional conversion. The difference is that in the case of institutional retreat goals, functions and purpose of institutions remain largely the same but merely the policy field has changed. The elements of the developmental state we found in the field of development cooperation still have the same goal of expanding industries and facilitating investment but these goals are now pursued not domestically but internationally. At the same time institutional retreat can also be distinguished from institutional spill-over in which successful institutions are extended from one policy field to the next because retreat implies that the institutions have become less successful in their original area and in order to survive have to retreat into a new area. Most importantly, actors, interests and ideologies connected to institutions that are pushed out of their traditional fields are now finding new niches in which their specifically structured relationships can survive.