Accurate, reliable information is a crucial element of successful collaboration between the state and business. Regular sharing of information between the state and businesses helps ensure that private sector objectives are met with public action and that local level issues are fed into higher level policy processes (Sen 2014). The greater the flow of information, the more accurately the government can predict the behaviour of the private sector in the case of a policy change, and the more likely that the policy will have the desired effect (Evans 1997, 2013). The private sector can identify constraints, opportunities, and policy options for creating incentives, lowering investment risks, and reducing the cost of doing business. The flow of information is also important in overcoming co-ordination failures in investment decisions. Co-ordination failures can result from the high costs of collecting and processing information for new products, technologies and industries (Sen 2013a).
The exchange of information between the state and the private sector depends on the technical capacity of the state to compile and analyse the data, and the willingness of the private sector to share it (te Velde 2013). By investing in information-collection and processing, and by making information about new industries freely available to firms, the state can facilitate the introduction of new products and the move to new industries, and help bring about structural change and technological upgrading in the economy (Lin and Monga 2010).
Information sharing between the state and the private sector in the Korean ‘growth miracle’
South Korea has been one of the fastest growing economies of the world since the 1960s. Central to Korea’s economic success has been the close and collaborative relationship between economic elites and political and bureaucratic elites, especially in the early decades of Korea’s industrial transformation (Evans 1997).
Private industrial elites were seen by the political elite as key collaborators in enabling industrial transformation, and as key sources of information regarding the feasibility of industrial goals. At the same time, the state provided information to the private sector about export opportunities, sectoral markets, labour market conditions and other issues that affected investment planning (Maxfield and Schneider 1997).
The close relationship between the state and the private sector allowed government officials to ensure that the right information was received by the right managers. These information flows shaped expectations about government intentions and enhanced credibility by giving investors signals about political commitments to certain courses of action (Doner and Schneider 2000).
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