Political Economy of the Third World Bilateralism

Abstract

The birth and development of extensive bilateral economic ties between Korea and Saudi Arabia, as we explained in Chapter Four, depended only partly on a set of preconditions conducive to the rise of such bilateralism. Industrial complementarity shaped by the precise timing of development sequencing provided both countries with various economic incentives to cooperate with each other. At the same time, their structural position in the international division of labor and the constraints resulting therefrom, combined with endogenous political and economic factors, had induced political elites of both countries to share a certain strategic consensus in their foreign economic policy which nurtured a feeling of mutual necessity. In this sense, it can be argued that both Saudi Arabia and Korea were endowed with a set of necessary conditions to promote bilateral ties. However, the mere existence of these necessary conditions alone does not offer a satisfactory explanation for the dynamic interactive processes which evolved around the Saudi Arabian-Korean connection. Certainly these preconditions define the parameters of the structure of bilateral interaction between two countries in terms of economic and political factors (i.e., comparative advantage and price, structural position in the international economic system and the range of policy choice, and domestic decision-making structure and the level of bilateral preference). It is from these preconditions that we can deduce a set of causal conditions leading to the rise of bilateral ties. Nevertheless, the process-level dynamics and the mechanisms through which this bilateral connection developed are not explained in these preconditions. In this connection, Chapter Two asserted that "the channel and process-level dynamics of inter-South bilateralism are a function of entrepreneurial dynamism (private) in general and the nature of business -state relationship in particular." In other words, since private entrepreneurs carry out economic transactions between two countries, it is essential to examine the role of private entrepreneurship in the evolution of the Saudi Arabian- Korean connection. Under standing the nature of entrepreneurial dynamism within the bilateral setting is not an easy task. However, Chapter Two identifies four behavioral and structural factors associated with business practices of private entrepreneurs: perception or monitoring capability of new markets, overall entry conditions in new markets, market penetration strategy, and the nature of a business connection as a structural determinant of the effectiveness of market penetration. This chapter's hypothesis is that the keener the perception of the new market the more effective the penetration strategy, and the more extensive the magnitude of business connections, the higher the level of bilateral economic transactions. once caveat is in order, however. The entrepreneurial dynamism involved in the Saudi-Korean connection is chiefly one way, rather than two way. While Korean businessmen were anxious to get into the Saudi market, Saudi entrepreneurs were less interested in Korea because their involvement with Korea was solely based on oil exports which did not require entrepreneurial efforts. We focus primarily, therefore, on the entrepreneurial dynamism exhibited by Korean businessmen and on the receptivity of Saudi entrepreneurs.