Rent-sharing: Organizational and technological innovations under military regimes in South Korea and Turkey

The concept of the developmental state suffers from its weak provision of an economic explanation as to why bureaucratic efficiency was the reason for the phenomenal economic growth in South Korea (19601990s) and Turkey (1990s2000s), especially during military regimes. Although neoclassical economics emphasizes the superiority of the free market to efficient bureaucracy, it also fails to unveil the black box of innovation among developing countries, especially when they are experiencing strong control by the military governments. Instead of the bureaucratic efficiency or the free market, we analyse conglomerate innovation structures under the institution of rent-sharing in South Korea and Turkey during the developmental phase. In doing so, we also try to find the reason for the delayed economic growth in Turkey despite its successful political independence and reforms in the 1920s, much earlier than those of South Korea in the 1960s, in the statebusiness relations. In South Korea the institution of rent-sharing cleared the uncertainties of technological innovation by first mandating organizational innovation, whereas the Turkish institution of rent-sharing did not mandate organizational innovation as an initial prerequisite to technological innovation.