The car industry in Germany already makes a huge number of chips for cars -- they just aren't as sophisticated or as small as the ones made in Taiwan suitable for personal computers so by your own logic they have followed the South Korean model already.

I think the analogy might not fit here too well. While Germany hasn't had a current node fab in country for a while, they have in the recent past (AMD/Global Foundries Dresden comes to mind). I don't think it's at all like they're building an industry from scratch.

Dresden actually has a history with making chips:

https://en.m.wikipedia.org/wiki/VEB_Robotron

You do the cheap manufacturing to get from low-income to medium-income. Once at that level you need skilled workers to get to high-income. If you don't have these, low-cost jobs will move to other countries affected you are trapped. Germany already had a highly educated workforce and is high-income. No need to go back to square one.

Source: Invisible China by Scott Rozelle which does a great job explaining economic development and comparing different countries.

How do they know the latter works out better vs South Korea just executed better?

Like what if SK & Malaysia took the opposite approaches? How do we know that SK wouldn't still have been the successful one, and we'd be saying everyone should take the opposite approach because that's what SK did and it worked?

Ahistoric nonsense. Its just that south-Korea is at a empire gradient. One empire borders another empire. Which either means you gets you eternal proxy wars - or you get propped up, by the competition of the empires and can milk that sweet soft-power gradient for benefits. You get preferable trade-agreements, even if you use protectionism. You get other sweet deals. Look at all the countries who made it, dwelling along the fault lines of the past and the present. Germany. Turkey. Austria. Italy.Hungary. Greece. Japan. China. South-Korea. Soon Ukraine. The list goes on and the reason has little todo with strategy. You cant plan for location.

No comparison between the excellent economic growth of South Korea and that of Greece, Hungary, Austria, or Italy going back to either cold war or post cold war days, despite this hypothesis of "empire gradient". If you google "World Bank GDP growth <countryname>" you can find charts back to 1961.

South Korea exports consumer goods to the large US market, this has been a massive fuel for their growth. They followed in Japan's footsteps (and China, for a time at least, followed in theirs). I can't think of a single manufactured product out of Greece, Hungary, Austria and few from Italy to the US.

Being on an "empire gradient" is just an arbitrary way to look at a country.

You know who else is on an empire gradient? North Korea. Afghanistan. Belarus. You're not even specifying which side of the empire gradient. Maybe being on the authoritarian, communist side did not work out so well for many countries?

I think what matters for South Korea is moving steadily toward more democratic governance, embracing capitalism, and proximity and historic ties with Japan (not always pleasant, obviously, but ties nonetheless) at a time when Japan was developing robust trade with the US and when Japan's own consumer sector was booming, providing another market for Korean firms.

Korea has absolutely followed the pattern of moving steadily up the value chain, for example in consumer electronics, in autos.

Your post was very good. I take issue with one part:

    I can't think of a single manufactured product out of Greece, Hungary, Austria and few from Italy to the US.

I would strongly disagree with Austria, and modestly disagree with Italy. Austria is a low population manufacturing powerhouse. They are not making consumer goods. They are making "widgets" that other manufactures use to create finished products. B2B vs B2C, if you like. The northern half of Italy is similar, but less extreme. I also struggle to name more than a few consumer or high value products from Austria, but I recommend to look at their median income or GDP per capita and you will say "Wow, that is a rich country".

That’s interesting about Austria, thanks for that! I may have underestimated them. (I did check their growth rate and for whatever reason not as strong as S Korea…)

About growth rates: The higher your median income, the harder it is to have high growth rates. Think about it from the perspective of economic competition: You need to find new markets (hard at this point) or outcompete existing competitors in other countries to grow. It is crazy hard to grow once you are fully developed and rich, like Austria. It does not surprise me that Korea has a higher growth rate than Austria -- they are less developed.

Edit: To be clear: Please do not read this post as bashing Korea. I think they are doing an amazing job in the last 50 years growing themselves out of poverty. It is a crazy and amazing story.