From Rags to Riches: Korea’s Development as One of the Biggest 20th Century’s Mysteries?

 

Today September 22, 2010, Koreans are celebrating “Chuseok”. It is by far the biggest and most important holiday in Korea that reunites family members from far and near to share food and stories and give thanks to ancestors for the abundant harvest, sharing the abundance with family and friends. Let me think of it as a celebration of Korea’s triumphant victory over poverty won through a previously untraveled path. But wait a minute…did I just say abundance? What harvest? What victory?

About a century ago, it had been predicted that Korea was one of the nations that was going to permanently disappear from the face of the earth. In fact, it was one of the most miserable nations on earth, surviving on a per capita income of less than US$ 100 (similar or lower to that of countries like Ghana at the time). Heavily reliant on foreign aid transfers for survival, it is even claimed that some of the current poorest countries in Asia and Africa offered the nation financial aid. The outbreak of the Korean War (1950 – 1953) only worsened an already bad case. The nation was turned up side down, millions of people killed and wounded while thousands of families were separated or relocated. And with complete desperation, a large rural peasant economy with almost no natural resources and dangerously trapped in an ugly urn of hopelessness and desperation, all that had remained of the nation was probably only its name. It was simply so bad that even the United States that had been the biggest provider of financial aid to Korea, started scaling down its financial assistance, believing that the country would not grow. The new policy was to provide support only to keep low consumption levels and maintain basic survival.

This is the story Koreans, from generation to generation have been eager to share with the world. A true story that tells of how food was the rarest but most precious commodity to have; how in the springtime, poor people would scour the hills for every edible herbs or plants after the autumn harvest had all been eaten before new crops could be gathered; how people traveled hundreds of kilometers from Pusan to Seoul in bush paths to file for jobs or follow up judiciary processes.

So how did a horrifying impoverished, crumbs dependent nation manage to become one of the world’s most wealthy nations in an Olympic record period of less that fifty years?

A single article would be insufficient to tell the whole story but before I even venture into summarizing it, let me first share with you just how wealthy and influential Korea is in present day global society. The about 50 million people nation is currently ranked as the 12 largest economy with a per capita GDP that has skyrocketed from US$ 85 in the 1950s to almost US$ 30,000 in 2010, doubling 17 folds in 2008 that of Ghana it had trailed in the 1950s. A good number of its industries now boast as the world’s best, including electronics (semiconductors), steel, automobile, shipbuilding, construction and petrochemical industries. In fact, in electronic technology for example, the country is so advanced that I usually go with this feeling that Korea is two years ahead of the world all the time! It prides itself as the country with one of the best mass transit systems in the world, with a sophisticated subway network that transports an estimated 7 million passengers daily within cities over 9 lines in hundreds of electrical air conditioned trains. The Korean Train Express (KTX) handles inter province traffic (Seoul – Busan and Mokpo) with bullet trains regularly plying the rails at a top speed of 305Km/h. Next generation trains are being developed that will upgrade this speed to 400km/h. Three basic things almost every Korean owns are: a bank account, mobile phone and personal computer with internet speed unrivaled in the world at 14.6Mbps. I’ve always joked that while elsewhere you wait for the computer to respond, in Korea, the computer waits for you! As if still not impressive enough, plans are already underway for the upgrade of this speed to 1GBps by 2012. A list of this nature would probably be endless but the key question remains: Just how did Korea do it?

Between 1910 and 1945, the Korean Peninsular had come under Japanese colonization, only able to liberate itself after the Japanese surrender in WWII, liberation that came with the temporal division of the Peninsular between the United States and Soviet Union geo-political spheres of influence. The Republic of Korea that had fallen on the southern half of the Peninsular was then established in 1948 with a civilian, Synman Rhee becoming its first President. Though shortly afterward the Korean War fought between United Nations forces (mostly US) and communist Soviet adversaries would devastate the new nation enormously, it would still be able to pursue expansive agricultural and land reform policies throughout the 1950s, mechanizing cultivation and making land distribution more egalitarian. It is often claimed that modern economic growth in Korea that began during the colonial period with the implementation of various industrial policies only gathered steam and pace after the Korean War when policy makers turned to economic growth stimulation in a policy known as “Import-Substitution Industrialization“ beginning with the promotion of indigenous industrial firms.  Government, it is said, selected firms in targeted industries and gave them privileges to buy foreign currencies and borrow money from banks at preferential rates. Tariff barriers were also erected and a prohibition was placed on manufacturing imports - a protectionist drive on domestic firms that was also aimed at offering them a chance to boost productivity through ‘learning-by-doing’ and importing advanced technologies.

The export-driven strategy of industrial growth that is known to have largely accounted for Korea’s economic prosperity started in the 1960s with the seizure of power by an authoritative military individual, Park Chung-Hee as second Korean President. With a high hand and strong political will, first, President Park replaced the Import-Substitution Industrialization Policy with an Export-Oriented Growth system that moved the nation through successive stages of Five Year Economic Development Plans seeking to increase wealth and strengthen political stability. In al, seven of such plans were carried out, three by the army General himself and the rest by succeeding presidents after the iron fisted leader was shot on the head and killed by his friend who was also head of the Korean Central Intelligence Agency (KCIA). The Plans started with investments in the textile industry to make the country less economically dependent on the United States and more self-reliant (1962-66) to investments in heavy industries that would make Korea more competitive on a global scale (1967-71) and then to investments in heavy chemical industries in the third five year development plan that was better known as Heavy Chemical Industrialization Plan (HCIP) or simply “the Big Push”. To pursue this, government resorted to heavy borrowing from foreign countries. The fourth and fifth Plans that stressed efficiency in manufacturing would see the country develop more industries that would effectively compete in international industrial markets (1977-81) and then move away from concentration on the heavy chemical industries to technology-intensive industries that required application of skilled labor (1982-86). Particular focus was on the products for which there was a huge demand around the world like electronics (television and VCRs, semi conductor related products and precision machinery. During this time, Korean exports started growing seeing a sharp growth. The Sixth Five Year Plan (1987-91) came with uniqueness in that it extended the Fifth and also emphasized Research and Development and also Manpower Training in all industries, meanwhile the last one (1992-96) was developed to promote the high-technology fields such as micro-electronics, new materials, bioengineering, fine chemicals, optics and aerospace.

How impressive, but could this be simply it? Seven five year economic development plans and a nation that had been on the verge of extinction host some of the best editions of the biggest and most prestigious international sporting events in the world in 1988 (Olympic Games) and 2002 (FIFA World Cup)? Seven five year economic development plans and the nation could join in 2006 the ranks of the Organization for Economic Cooperation and Development (OECD) as the first ever former aid recipient to join the advanced nations assistance club after its transition to donor and also the forum for international economic cooperation (G-20), even hosting it in November 2010?

True that political leadership had set the pace but it would appear to me that the ‘people factor’ was most critical in walking through the tight rope of development and continues to be so in contemporary times when the country is trying to consolidate its development and standardize itself as one of the world’s economic superpowers. The people had looked at themselves and wondered why 'they' couldn’t be like 'them' (the advanced nations like the US). Also, right from the colonial days to the inter Korean War period, and current day, Koreans have always found a strong attachment with the principles of peace. Conscious of its deficiencies in military resources, Koreans had found the best channel for its growth through the development of its soft power base. They were quick to realize in the post Korea War years that they had to take possession of their destiny; that in order to survive, they needed to act and for action to be meaningful, it had to be carried out together. This meant a commitment to working hard together, sacrificing material and self together and suffering together - in short surviving together!

The clearest illustration of this is attested by the New Community Movement Campaign (known as Saemaul Undong in Korean) which seeks to develop and modernize communities, making them wealthy for all. Some of its main principles include self-help, diligence and cooperation. Self-help means working not only for oneself but for his entire village and country; taking full responsibility and relying less on others not dreaming of random lucky fortune but utilizing one’s hands, knowledge and abilities to do things, ensuring they are done properly and defining your fate within the social structure. Diligence involves getting rid of the traditional and strong pessimistic views that often put people under the illusion that ‘poverty is our fate’ and that ‘it is impossible’ to move forward. It seeks to mentally discipline people, reforming them to believe in their power and the trust that their efforts would lead to a change. Cooperation is drawn form the assertion that one cannot do it all alone but must stand together, hand in hand in developing the community and country where lives, work and seeks happiness. Highly seen as successful, today Korea is generously sharing the Saemaul Undong experience and secrets with civil servants from interested developing countries, including DR Congo, Mongolia, Afghanistan, Indonesia, Madagascar, Tanzania, China, Russia, East Timor, Uganda, Philippines, Cameroon Vietnam, Iraq etc.  In one of the subsequent feeds on this blog, I’ll share with you further how this campaign was carried out and why it was largely successful.

A series of interconnected factors and actions therefore gave Korea its record mighty leap, political leadership  providing the prime basis. Successes recorded in each of the Five Year Development Plan facilitated the next helping to ensure success. The capital and resources generated during the first three plans were crucial  in developing the next plans that targeted heavy chemical and high technological industries. The matrix can better be put as: Energy, chemicals and steel developed in the first three were important in generating power for industries, manufacture of other capital goods like plastics, textile and glass and build industries respectively in the subsequent five year plans. Similarly, the shared problems of the people and the common realization of a common destiny generated the ‘we feeling’, which quickly gave rise to the ‘can do spirit’ that in turn brought to light action imbued in the values of hard work, sacrifice and commitment, all of which contributed in delivering the country from the ugly tenterhooks of mass poverty and underdevelopment, even daring it to raise its spectacle of hope as one of nations that would become most influential, dominating global agenda in the new world.

So goes the Korean story, a beautiful secret I’m privileged to have learned over the course of my years in the country and which I feel honored and proud to be able to share with the world, especially Africa. They say with ears you can listen but it only takes a mind to act.

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