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In How Asia Works[0], they contrast how Malaysia tried to modernize by jumping straight to high-tech steel factoris with how South Korea modernized by starting

In How Asia Works[0], they contrast how Malaysia tried to modernize by jumping straight to high-tech steel factoris with how South Korea modernized by starting small – basically by making shitty cars – then scaled their way up. Turns out the latter simply works much better. My take, if you want to have a bleeding edge semiconductor industry in your country, first start by trying to build a boring, vanilla, outdated semiconductor industry. If you can do that, then try incrementally making it competitive with global markets. (Yes, this requires tariffs initially to bootstrap the process, otherwise nobody will by your shitty overpriced semiconductors.) [0] https://astralcodexten.substack.com/p/book-review-how-asia-works https://astralcodexten.substack.com/p/book-review-how-asia-w...

s_dev 3y ago
The car industry in Germany already makes a huge number of chips for cars -- they just aren't as sophisticated or as small as the ones made in Taiwan suitable for personal computers so by your own logic they have followed the South Korean model already.
- ckozlowski 3y ago
  I think the analogy might not fit here too well. While Germany hasn't had a current node fab in country for a while, they have in the recent past (AMD/Global Foundries Dresden comes to mind). I don't think it's at all like they're building an industry from scratch.
hutzlibu 3y ago
Dresden actually has a history with making chips: https://en.m.wikipedia.org/wiki/VEB_Robotron https://en.m.wikipedia.org/wiki/VEB_Robotron
ajmurmann 3y ago
You do the cheap manufacturing to get from low-income to medium-income. Once at that level you need skilled workers to get to high-income. If you don't have these, low-cost jobs will move to other countries affected you are trapped. Germany already had a highly educated workforce and is high-income. No need to go back to square one. Source: Invisible China by Scott Rozelle which does a great job explaining economic development and comparing different countries.
onlyrealcuzzo 3y ago
How do they know the latter works out better vs South Korea just executed better? Like what if SK & Malaysia took the opposite approaches? How do we know that SK wouldn't still have been the successful one, and we'd be saying everyone should take the opposite approach because that's what SK did and it worked?
PicassoCTs 3y ago
Ahistoric nonsense. Its just that south-Korea is at a empire gradient. One empire borders another empire. Which either means you gets you eternal proxy wars - or you get propped up, by the competition of the empires and can milk that sweet soft-power gradient for benefits. You get preferable trade-agreements, even if you use protectionism. You get other sweet deals. Look at all the countries who made it, dwelling along the fault lines of the past and the present. Germany. Turkey. Austria. Italy.Hungary. Greece. Japan. China. South-Korea. Soon Ukraine. The list goes on and the reason has little todo with strategy. You cant plan for location.
- mapgrep 3y ago
  No comparison between the excellent economic growth of South Korea and that of Greece, Hungary, Austria, or Italy going back to either cold war or post cold war days, despite this hypothesis of "empire gradient". If you google "World Bank GDP growth <countryname>" you can find charts back to 1961. South Korea exports consumer goods to the large US market, this has been a massive fuel for their growth. They followed in Japan's footsteps (and China, for a time at least, followed in theirs). I can't think of a single manufactured product out of Greece, Hungary, Austria and few from Italy to the US. Being on an "empire gradient" is just an arbitrary way to look at a country. You know who else is on an empire gradient? North Korea. Afghanistan. Belarus. You're not even specifying which side of the empire gradient. Maybe being on the authoritarian, communist side did not work out so well for many countries? I think what matters for South Korea is moving steadily toward more democratic governance, embracing capitalism, and proximity and historic ties with Japan (not always pleasant, obviously, but ties nonetheless) at a time when Japan was developing robust trade with the US and when Japan's own consumer sector was booming, providing another market for Korean firms. Korea has absolutely followed the pattern of moving steadily up the value chain, for example in consumer electronics, in autos.
  - throwaway2037 3y ago
    Your post was very good. I take issue with one part: I can't think of a single manufactured product out of Greece, Hungary, Austria and few from Italy to the US. I would strongly disagree with Austria, and modestly disagree with Italy. Austria is a low population manufacturing powerhouse. They are not making consumer goods. They are making "widgets" that other manufactures use to create finished products. B2B vs B2C, if you like. The northern half of Italy is similar, but less extreme. I also struggle to name more than a few consumer or high value products from Austria, but I recommend to look at their median income or GDP per capita and you will say "Wow, that is a rich country".

s_dev 3y ago

The car industry in Germany already makes a huge number of chips for cars -- they just aren't as sophisticated or as small as the ones made in Taiwan suitable for personal computers so by your own logic they have followed the South Korean model already.

ckozlowski 3y ago
I think the analogy might not fit here too well. While Germany hasn't had a current node fab in country for a while, they have in the recent past (AMD/Global Foundries Dresden comes to mind). I don't think it's at all like they're building an industry from scratch.

hutzlibu 3y ago

Dresden actually has a history with making chips: https://en.m.wikipedia.org/wiki/VEB_Robotron https://en.m.wikipedia.org/wiki/VEB_Robotron

ajmurmann 3y ago

You do the cheap manufacturing to get from low-income to medium-income. Once at that level you need skilled workers to get to high-income. If you don't have these, low-cost jobs will move to other countries affected you are trapped. Germany already had a highly educated workforce and is high-income. No need to go back to square one. Source: Invisible China by Scott Rozelle which does a great job explaining economic development and comparing different countries.

onlyrealcuzzo 3y ago

How do they know the latter works out better vs South Korea just executed better? Like what if SK & Malaysia took the opposite approaches? How do we know that SK wouldn't still have been the successful one, and we'd be saying everyone should take the opposite approach because that's what SK did and it worked?

PicassoCTs 3y ago

Ahistoric nonsense. Its just that south-Korea is at a empire gradient. One empire borders another empire. Which either means you gets you eternal proxy wars - or you get propped up, by the competition of the empires and can milk that sweet soft-power gradient for benefits. You get preferable trade-agreements, even if you use protectionism. You get other sweet deals. Look at all the countries who made it, dwelling along the fault lines of the past and the present. Germany. Turkey. Austria. Italy.Hungary. Greece. Japan. China. South-Korea. Soon Ukraine. The list goes on and the reason has little todo with strategy. You cant plan for location.

mapgrep 3y ago
No comparison between the excellent economic growth of South Korea and that of Greece, Hungary, Austria, or Italy going back to either cold war or post cold war days, despite this hypothesis of "empire gradient". If you google "World Bank GDP growth <countryname>" you can find charts back to 1961. South Korea exports consumer goods to the large US market, this has been a massive fuel for their growth. They followed in Japan's footsteps (and China, for a time at least, followed in theirs). I can't think of a single manufactured product out of Greece, Hungary, Austria and few from Italy to the US. Being on an "empire gradient" is just an arbitrary way to look at a country. You know who else is on an empire gradient? North Korea. Afghanistan. Belarus. You're not even specifying which side of the empire gradient. Maybe being on the authoritarian, communist side did not work out so well for many countries? I think what matters for South Korea is moving steadily toward more democratic governance, embracing capitalism, and proximity and historic ties with Japan (not always pleasant, obviously, but ties nonetheless) at a time when Japan was developing robust trade with the US and when Japan's own consumer sector was booming, providing another market for Korean firms. Korea has absolutely followed the pattern of moving steadily up the value chain, for example in consumer electronics, in autos.
- throwaway2037 3y ago
  Your post was very good. I take issue with one part: I can't think of a single manufactured product out of Greece, Hungary, Austria and few from Italy to the US. I would strongly disagree with Austria, and modestly disagree with Italy. Austria is a low population manufacturing powerhouse. They are not making consumer goods. They are making "widgets" that other manufactures use to create finished products. B2B vs B2C, if you like. The northern half of Italy is similar, but less extreme. I also struggle to name more than a few consumer or high value products from Austria, but I recommend to look at their median income or GDP per capita and you will say "Wow, that is a rich country".