Chapter 7 Globalization, Inequality, and Development
104
become prosperous, such as South Korea, Taiwan, and Israel.
2. The semiperipheral countries differ from the peripheral countries in four main ways:
type of colonialism, geopolitical position, state policy, and social structure.
a. Type of Colonialism - In contrast to European colonizers of Africa, Latin
America, and other parts of Asia, the Japanese built up the economies of their
colonies, Taiwan and Korea, and established transportation networks and
communication systems. The Japanese-built infrastructure served as a springboard
to development for Korea and Taiwan.
b. Geopolitical Position - Countries with significant strategic importance to the
United States receive more help. By the end of World War II, the United States
began to feel its dominance threatened in the late 1940s by the Soviet Union and
China, therefore poured unprecedented aid into South Korea and Taiwan in the
1960s fearing these countries might fall to the communists. Israel also received
economic assistance for its strategic position in the Middle East.
c. State Policy - The Taiwanese and South Korean states developed on the Japanese-
model: low worker’s wages, restricted trade union growth, quasi-military
discipline in the factories, high taxes on consumer goods, limitations on the
import of foreign goods, and prevention of citizens to invest abroad. This
encourages their citizens to put their money in the bank, which created a large
pool of capital that the state made available for industrial expansion. From the
1960s on, South Korean and Taiwanese states gave subsidies, training grants, and
tariff protection to export-based industries.
d. Social Structure - Social cohesion and solidarity in Taiwan and South Korea is
strong and based partly on two main factors. The sweeping land reforms in the
late 1940s and early 1950s redistributed land to small farmers, eliminated the
class of large owners, and thus eliminated a major source of conflict. In contrast,
many countries in Latin America and Africa have not undergone land reform,
whereby the United States has often intervened militarily to prevent land reform
based on U.S. commercial interests in large plantations.
i. Taiwan and South Korea are both ethnically homogeneous, thus limiting the
ability of colonizers to instigate antagonism among the colonized. In contrast,
British, French, and other West European colonizers kept tribal tensions alive
to make it easier for imperial rule in Africa.
V. NEOLIBERAL VERSUS DEMOCRATIC GLOBALIZATION
A. Globalization and Neoliberalism
1. Resembling the modernization theorists of a generation ago, neoliberal globalization
is a policy that promotes private control of industry, minimal government interference
in the running of the economy, the removal of taxes, tariffs, and restrictive regulations
that discourage the international buying and selling of goods and services, and the
encouragement of foreign investment.
2. Many social scientists are skeptical of neoliberal prescriptions. Nobel Prize-winning
economist and former Chief Economist of the World Bank, Joseph E. Stiglitz argues
that the World Bank and other international economic organizations often impose
outdated policies on the developing countries, putting them at a disadvantage vis-à-vis
developed countries.
B. Neoliberalism as Development Strategy: Does it Work?