How have the developmentally oriented states of East Asia coped with the unprecedented levels of structural power that global companies now possess? This article argues that under conditions of intensifying knowledge-based competition, states with strategic industry objectives seek new ways of managing collaborative ties between public and private actors. The argument is developed by examining the development of the Korean telecommunications sector from the 1980s to the 2000s. The Korean state's relationship with the conglomerates or chaebol has been based increasingly on an equal partnership in which the chaebol themselves are expected to bear greater responsibility for promoting national techno-industrial competitiveness. These expectations have been translated into two main forms: (i) collaborating in state-sponsored efforts to promote the international standardization of Korean-developed technologies, and (ii) providing initial markets for the innovations created by fledgling high-tech start-ups who provide crucial sources of innovation in the pursuit of the Korean state's emphasis on transitioning towards innovation-led development.
The impressive economic transformation of states throughout East Asia over the past 50 years cannot be explained without understanding the role and relationship between governments and firms. In the case of Korea, the state created a system that supported the emergence of huge conglomerates, or the chaebol. However, it would be wrong to believe that this historical legacy has been overridden by the globalization of the world economy and the power the chaebol now possess as global companies. Instead, in an international environment marked by intensifying levels of knowledge-based competition, the continued growth of the most global companies will be highly dependent on the transformative capacity of their national governments.
In Korea’s case, the state continues to support firms in moving beyond catching up to a position of technological leadership by coordinating new forms of state–industry ties in which firms themselves assume a greater burden in promoting national techno-industrial competitiveness. The developmental state architecture is being employed to effectively support Korea’s global companies to globalize Korean technologies.