Dani Rodrik's paper analyzes the economic growth of South Korea and Taiwan, challenging the traditional export-led growth narrative. While export orientation is often cited as the key to their success, Rodrik argues that it played a limited role. Instead, he emphasizes the significant investment boom that occurred in both countries during the early 1960s. This investment surge was driven by government policies that increased the private return to capital, including subsidies, coordination of investment decisions, and administrative guidance. The effectiveness of these policies was bolstered by the relatively equal distribution of income and wealth, which reduced rent-seeking behavior and allowed government intervention to be more effective. Rodrik also highlights the role of initial conditions, such as a highly educated labor force relative to their physical capital stock, which made both countries ready for economic take-off. However, market forces alone were insufficient to generate the large, coordinated investments needed for sustained growth. This coordination failure was addressed through government intervention, which helped to align investment decisions and stimulate economic development. The paper also challenges the notion that export growth was the primary driver of economic growth. While exports did increase, their relative profitability did not significantly rise until the mid-1960s, and they were not the main factor in the initial growth spurt. Instead, the increase in investment and the subsequent rise in exports were more closely linked. The growth in exports was a result of the increased demand for capital goods, which was driven by the investment boom. Rodrik's analysis suggests that the key to the economic success of South Korea and Taiwan was not export orientation but rather the combination of favorable initial conditions and effective government policies that facilitated investment and economic growth. The paper concludes that the traditional export-led growth narrative is incomplete and misleading, and that a more nuanced understanding of the role of investment and government intervention is necessary to explain the economic success of these countries.Dani Rodrik's paper analyzes the economic growth of South Korea and Taiwan, challenging the traditional export-led growth narrative. While export orientation is often cited as the key to their success, Rodrik argues that it played a limited role. Instead, he emphasizes the significant investment boom that occurred in both countries during the early 1960s. This investment surge was driven by government policies that increased the private return to capital, including subsidies, coordination of investment decisions, and administrative guidance. The effectiveness of these policies was bolstered by the relatively equal distribution of income and wealth, which reduced rent-seeking behavior and allowed government intervention to be more effective. Rodrik also highlights the role of initial conditions, such as a highly educated labor force relative to their physical capital stock, which made both countries ready for economic take-off. However, market forces alone were insufficient to generate the large, coordinated investments needed for sustained growth. This coordination failure was addressed through government intervention, which helped to align investment decisions and stimulate economic development. The paper also challenges the notion that export growth was the primary driver of economic growth. While exports did increase, their relative profitability did not significantly rise until the mid-1960s, and they were not the main factor in the initial growth spurt. Instead, the increase in investment and the subsequent rise in exports were more closely linked. The growth in exports was a result of the increased demand for capital goods, which was driven by the investment boom. Rodrik's analysis suggests that the key to the economic success of South Korea and Taiwan was not export orientation but rather the combination of favorable initial conditions and effective government policies that facilitated investment and economic growth. The paper concludes that the traditional export-led growth narrative is incomplete and misleading, and that a more nuanced understanding of the role of investment and government intervention is necessary to explain the economic success of these countries.