"Ready, Fire Aim" - Examples of Country Strategies
Korea is one of the best examples of rapid economic development. I do not knowhow much of their development can be explained by direct foreign investment, but it is probably useful to look at the climate their government created for businessmen to work in. Some believe that the Korean government if an example of a laissez-faire economy, but the truth is that the Korean government has been very interventionist. And the government's intervention has been effective.
The primary difference between the policies of Korea and the policies of other developing has been in the implementation of those policies. The following assumptions describe the Korean way of economic intervention:
1. There is no one best way to achieve a goal. The system should keep itself open for input from many sources of ideas - businessmen, politicians, and academics. Options should be chosen based on contingencies, not ideology. Do what works.
2. The executive branch of government should be committed to growth. Decisions should be based on expected economic outcomes. Executive branch decision makers should be free to make decisions without consulting the legislative or judicial branches of government. And these decision makers should be trained in economics and business.
3. The government executive should have the freedom to act with speed and flexibility, rather than with a slow planning process or debate. The simple plan should be "Ready, Fire, Aim." Ready, Fire, Aim meaning get started, do it and then make appropriate adjustments as needed.
4. The government executives should be given authority to enforce decisions through sanctions, such as, legal police action or withdrawing a privilege.
5. Policies should be highly specific rather than general to allow for fine tuning.
6. Because government management resources are scarce, the government should limit itself in three ways: (1) Government step in only when private enterprise fails; (2) Government should concentrate on large industry; and (3) Government should provide resources only for persons with proven track records.
Mexico
After World War II, Mexico began using tariff barriers and permit policies to encourage direct foreign investment. However, they found that multinational enterprises coming into Mexico during this time were more likely to buy existing Mexican firms rather than to introduce competition or new production. In 1973, as a response, the Mexican government formulated the "Law to Promote Mexican Investment and to Regulate Foreign Investment."
The goals of the law were to reverse the "de-nationalization" of the Mexican economy and to increase regulatory intervention by the government. Therefore, what had been two-part transactions between firms became three-way transactions with the government playing a role. Specific points of the Mexican law were designed to decrease the outflow of payments associated with foreign investment by controlling the payments for technology transfer, eliminating practices that reduced exports and encouraging local sourcing.
Go To Page: 1 2
