How informative are the institutional diagnostics conducted on the IDP case study countries? South Korea seemed to offer an interesting basis of comparison. Would an institutional diagnostic made there at the time its level of development was close to that of the IDP countries today, that is in the 1960s and early 1970s, have anticipated the stellar development that would follow? This chapter describes an attempt at establishing an institutional diagnostic of South Korea in the early days of its take-off. Of course, this diagnostic had to rely on second-hand material in the literature rather than direct observation. Going through the early days of South Korean development under General Park, it turns out that the nature of the diagnostic would have much depended on the time it would have been made. Such instability would have essentially been the result of the uncertainty about the quality of the political leadership. In several instances, particularly after seizing power, Park’s strategy and institutional reforms indeed seemed extremely risky, not to say suboptimal. They worked because of his talent as a leader, especially his capacity tom onitor the business sector.

The same kind of backward institutional diagnostic as for South Korea was applied to Taiwan in its take-off days. An early diagnostic conducted just after the KMT settled on the island would have been rather negative in view of the very unfavourable initial conditions of Taiwan’s development, but it would have been strongly positive a few years later. This chapter explains why, while presenting an account of the development strategy deployeda nd the institutional setting developed by the newcomers. This second diagnostic would have been different from the one drawn for South Korea, even though in both cases development was strongly directed by a military authority headed by an authoritarian leader and ended up focusing on labour-intensive manufacturing exports. But the initial strategies and institutional structure of the two economies were quite different. On the one hand, Taiwan’s development was initially anchored in the modernisation of smallholder agriculture and the development of rural industries. On the other hand, an important role was paradoxically given to central planning, but combined strict market incentives for most economic agents.