East Asian Economic Models: Cultural Values and State-Led Innovation Drive Billions in Growth

A recent social media post by user "santi" has sparked discussion regarding the distinct economic development trajectories of Taiwan and South Korea, attributing their success to internal cultural and design principles rather than blind imitation of external models. The tweet highlights elements such as Confucian ethics, developmental state policies, export discipline, and a strong focus on engineering, contrasting these with the potential pitfalls of financialization and deindustrialization that can arise from uncritically adopting foreign economic blueprints.

Taiwan's economic ascent, often dubbed the "Taiwan Miracle," transitioned from an agriculture-based society to a high-income, industrialized nation. A cornerstone of this transformation is the Hsinchu Science Park, established in 1980. This government-backed initiative fostered a high-tech ecosystem, attracting significant investment and becoming home to global leaders like Taiwan Semiconductor Manufacturing Company (TSMC), which alone accounts for over 50% of the global advanced semiconductor market. The park's success is attributed to strategic government support, investment in R&D, and a highly skilled workforce, leading to a 66% higher productivity rate for firms within the park compared to those outside.

Similarly, South Korea's "Miracle on the Han River" was propelled by a state-chaebol alliance under President Park Chung-hee. Large family-owned conglomerates, or chaebols, like Samsung and LG, received substantial government support, including subsidies and tax incentives, on the condition they met export targets and invested heavily in R&D. The Korea Advanced Institute of Science and Technology (KAIST), founded in 1971, exemplifies the nation's commitment to scientific and technological education, producing the engineering talent vital for these industrial giants. These policies enabled South Korea to become a global leader in heavy industries and, later, in technology-intensive products such as semiconductors and mobile phones.

A common thread in both nations' development is the influence of Confucian ethics. This cultural framework emphasizes values such as hard work, thrift, respect for education, and collective responsibility, which translated into high savings rates, a disciplined workforce, and a strong societal drive for academic and technological excellence. These values, combined with a proactive "developmental state" approach where the government strategically guided economic sectors, fostered an environment conducive to rapid industrialization and export-oriented growth.

The tweet cautions against the "cipayo" mentality—blindly venerating and importing foreign models—which it argues can lead to negative outcomes like financialization and deindustrialization. Both Taiwan and South Korea consciously adapted their strategies to their unique historical and cultural contexts, prioritizing national sovereignty and long-term industrial development over immediate financial gains. Their experiences suggest that sustainable economic success requires a tailored approach that integrates local values and strategic state intervention to cultivate robust, innovation-driven economies.