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Accepted Paper:

Frankensteins or Industrial Commons? An Exploration into the Role of Business Groups in High-Income Transition  
Nahee Kang Kyunghoon Kim

Paper short abstract:

In this paper, we explore the role of industrial business groups in high-income transition by undertaking a comparative institutional analysis of Indonesia's Salim and South Korea's Samsung.

Paper long abstract:

For emerging economies, worries over "middle-income trap" loom large. And while the Silicon Valley model has become the standard policy response to innovation-led high-income transition, the role that large business groups can play remains under explored. Business groups in middle-income economies are often viewed as the problem — i.e., "Frankensteins" relying on rents that the industrial polices generate — rather than an ecosystem for building "industrial commons" that can enhance economic diversity and complexity. To explore their role in high-income transition, we examine business groups in Indonesia's Salim and South Korea's Samsung as exploratory case studies. Our argument is that whether business groups become Frankensteins and industrial commons depends on the coalitions that are able to infuse "patience" into their corporate governance regimes. Our findings open new avenues for studying the middle-income trap that go beyond the Silicon Valley model.

Panel P52a
The Politics of Economic Transformation: Finance and Industrial Policy I
  Session 1 Wednesday 6 July, 2022, -