"Since the 1980s, Spain and South Korea have experienced a dramatic transformation from middle-income to advanced economies. How did Spain and South Korea upgrade? While market liberalization and globalization were important forces for change, and states continue to be central in the organization of the Spanish and Korean economies, the liberal and the developmental state perspectives do not provide an understanding of critical elements of these transformations. Building on a combination of historical institutionalism and international business literatures, this book argues that upgrading was underpinned by cooperative models based on interdependencies and quid pro quo exchanges between national governments and large firms. The negotiated nature of these arrangements opened the door to institutional variation and enabled Spain and Korea to pursue different strategies. Spain pursued an integrational approach based on foreign direct investment, technological outsourcing, and regional integration. Korea pursued a techno-industrial strategy that prioritized self-sufficiency and the development of local technological capacity. These strategies enabled Spanish and Korean firms across multiple complex sectors to reach the efficiency frontier, but resulted in different productive specializations in complex services and manufacturing respectively. Through this comparative study of transformation in Spain and Korea, this book shifts our perspective on the political economy of economic transformation from markets or states to state-firm coordination as a driver for economic transformation, from one to at least two different pathways to upgrading, and from a world divided into emerging economies and world leaders to a more nuanced perspective that recognizes the perspective of new advanced economies"-- Provided by publisher.