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1 MIRACLE ON HAN RIVER
SECRET OF SOUTH KOREAS RAPID PROGRESS
Lessons for Developing Economies From Korean-Model-of-Rapid-
Development, which integrated the economy, ecology and
environment.
Korea has of late become the 12th largest economy of the world,
one of the wealthiest nation, one of Asias Fastest Tiger Economy,
with GDP of US$ 1.2 trillion, 8th largest trading nation with a
total trade of US$ 1.2 trillion in 2012. Its foreign reserves
standing at over US$ 300 billion making Korea the aid donor
country, member of OECD, organizer of Seoul Olympic Games 1988,
World Cup 2012, APEC and G-20, Nuclear summit in 2010. South Korea
is most affectionately referred to as Miracle On the Han River
which was made a reality by a Heavy-Chemical-Industry-Drive and
Top-Four-Multinationals. Korea is remarkably outstanding in shaping
its future, a burning example of modern-scientific-transformation
of a country. South Korea is an extraordinary lesson for developing
economy like India, China, Brazil, Russia and many other developing
countries for high speed growth and development. Can India leg
behind in emulating its own model ?..A K SINGH
The kingdom of Goryeo, currently known as Korea was the
stronghold of three united realms of dominion on Han river a
millennium ago. Ravaged by Mongols for too long, crushed by feudal
lords for centuries together, a fragile and broken empire crumbled
under the vicissitudes of poor natural resources, smashed amid
skirmishes of local czars, shattered in enslavement of deprived
souls, devastated by coup-de-etats of local monarchs and rival
kings was left with nothing in 11th century than Tripitika-Koreana
a Buddhist scripture in huge wooden blocks enlightening the people
of Korea with a message to assert themselves for they will be
blessed in doing so by the lord Buddha. Samadhi-movements were
unleashed to establish Prajna-society whose goal was to form an
innovative community of disciplined, pure minded practitioners in
deep and dark mountains of east Asian Korean peninsula. Monasteries
were erected in pursuit of ecstatic dealings between gradual and
sudden mode to practice the enlightenment which were charted by
doctrine of sudden enlightenment followed by gradual practice in
relatively concise and accessible transcript with aid of meditation
which is taught in the Korean society even today. Later on sharp
and confrontational methods were evolved opposing Buddhist
philosophy of observing action, piety and conscience. Thereafter
strong understanding towards Confucianism and Taoism led to
increasing influence of Chinese scheme of official education. 16th
century onwards Korea was invaded by Japanese led forces which were
defeated by Ming Chinese troops who had to withdraw subsequently.
Korea was ruled by Japan from 1910 to 45 AD which at the end of
the
world war II surrendered to the Soviet and US forces. Despite
desperate attempts in unifying Korea from 1943 onwards under the
influence of cold war hostility between Soviet Union and United
States eventually led to formation of separate two independent
states dividing Korea into half each with own philosophy of
communism and seeds of capitalism sown in the soils of South Korea
in the
course of struggle for survival. Both
the governments
kept on repressing the
political opponents
within their territory seeking for re-unification of Korea.
South Korean part of the peninsula was supported by United Nations
council but denied the military support by US whereas North Koreas
military was strongly supported by Soviet Union. North and South
Korea kept on bullying each other with grim spectacle of war since
1953 onwards resulting in more than 1 million people dying at the
altar of long seething enmity between the two opposite doctrines of
right and left wing. At this time South Korea was reduced to one of
the poorest countries in the world with per capita income less than
US$-100 plaguing the country with war, poverty, endemic disease,
coup-d-etat, dictatorship, street demonstration, police brutality,
human rights violation and wandering orphans in each of the
streets. Sough Korea started struggling for its
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2 survival unlike other countries for economic prosperity, for
politically free democratic set up, for being a socially-inclusive
and culturally-vibrant country amidst poor natural-resources of
snow clad mountains and dry small plains. Resurrection of Korea
started when its two great leaders one Park-Chung Hee in 1965 and
another Chun Doo-Hwan 1980 emerged from darkness whose visionary
and charismatic leadership led to the formulation of historic
economic-development plan borrowed from Richard Nixons doctrine of
initiation of heavy-and-chemical-industrial development in the
early years of 1970s amid oil crisis and economic stabilization in
the early years of 1980s. During this time Korea suffered a severe
blow from Asian Financial Crisis which compelled the South Korea to
exert in its outstandingly remarkable effort for globalization of
Korean economy. President Parks fist and second five year plans
1962-71 embracing The Economy First Principle emphasized on the
development of light industries, export oriented expansion,
investment in infra-structure and growth of key industries like
fertilizer, shipping, cement and steel when Koreas financial
resources both domestic and foreign were very much limited.
National Tax Service was mobilized in 1966 in order to encourage
the inflow of foreign financial resources for which Bank of Korea
provided repayment guarantees for foreign loans. Large efficient
and diligent labor force of Korea endowed with lessons of Buddha,
Confucius and Tao deployed on labor intensive light export oriented
industries with its relentless and unremitting hard work promoted
export which increased by 20 times within 10 years between 1961 to
70. Per capita income of Korea from US$ 82 shot upto $ 253 by 1970.
Average annual GNP growth rate pummeled to 9 percent as against
expected 7 percent which ushered in an era of the Miracle on the
Han River. Eventually heavy reliance on light industry could not
sustain Koreas rapid economic transformation any further nor
prepared Korea for self-defense as US signaled its disengagement of
armed forces from Korean peninsula. Then the modus operandi changed
from Light-Industry to the Heavy Chemical Industry announced
therefore in May 1973 which propelled promotion of steel,
petro-chemicals, ship building, machinery, electronic-goods and non
ferrous metal industries. Economy gradually started improving. To
promote the plan further, monetary and financial support was
designed to give preferential interest rate far below the inflation
rate as well as special tax reduction and exemption. This
industrial policy expedited the growth of South
Koreas business-financial corporations called chaebols.
Assassination of Korean President Park Chung Hee in 1979 caused
macro-economic-imbalance due to over investment in heavy industries
which led to chronic inflation, imbalance in current account, large
foreign debt and distortion in investments. Similar situation was
faced by India prior to 1991. South Korean government was in
shambles and again plunged into major economic and political
crisis. Korea then was one of the poorest countries in the world
with per capita income of less than $ 100
during mid of the last century, no infrastruct
ure, no housing,
power deficient,
no road networking, poor rail-
roads and dreary basic civic amenities. South Korean economy
needed a major overhaul with dynamic and vibrant economic policy
for practical implementation, stability and steadfastness. The so
called Three Lows, low oil price, low exchange rate and low
interest rate also helped South Korea in restoration of its cutting
edge competition in global market. South Korea announced a new
ambitions Economic-Five-Year-Plan to liberalize the financial
market. Koreas per capita income escalated to $10,000 thus Korea
became capable for OECD membership in 1956. With the occurrence of
International financial crisis straddling fear of world wide
economic meltdown surfaced from Thailand adversely affected South
Korea. The vicious circumstance again compelled South Korea for
rescue package of US $ 576 billion which was paid back by South
Korea much advanced, three years ahead in 2001. To deal with the
international financial crisis an open, competitive and more
liberalized-capital-market was wrought to enable Korea to overcome
the financial crisis. Again the Korean surface was marred by the
economic downturn of 2008. Greater, much tactical maneuverability
was required to tackle this monstrous-financial-crash. The
tradition of high ranking-bureaucratic officials with proven track
record of scholastic achievements became a major hallmark in
reviving the gradually deteriorating financial crisis. Korean prime
minister Dr Han Seung
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3 Soo as a special envoy travelled widely worldwide to solicit
the support of the world leaders and the there was an opportunity
to work together to adapt to the effects of the climate change,
production of clean energy, global warming and environmental
stability. World leaders found themselves in need of each other
seizing upon the same opportunity. Iron was pathetically hot and it
was a right to strike it harder, tougher with much foresight,
precaution and prudence this time. Current level of efforts
globally were not commensurate with the challenges of reducing
green house gas emissions. Continuing support that leaders shared
for the principles of United Nations Framework Convention on
Climate Change proved to be vigorous, resilient and enduring over
the years for east Asia. Principle of Common but Differentiated
Responsibilities and recognition of the Special Circumstances for
Developing Countries not only inspired new economic growth
trajectory, to prevent environmental degradation but also to adapt
to climate change and to reduce global warming. This was a time for
showing charisma of sharp, indefatigably inexorable leadership to
translate these goals into practical policy action so that it could
bring about perceptible change. It was a giant leap towards
achieving the goal of transforming South Korea into a global
leader, a true responsible member of the international community.
Lee Myungbak President of Korea after G-8 Summit on Climate Change
in Tokyo Japan 2008 declared to tackle climate change, acting as
bridge between developed and developing countries, to refine Kyotos
market mechanism to join forces to reduce carbon emissions
voluntarily, to unleash East Asian-Climate-Partnership with an
award of 200 million US dollars for more intensive programs for
major carbon emitters: China, India, Japan, Korea, Indonesia etc.
Thereafter Low Carbon, Green Growth, Clean Energy, Green business
and quality oriented growth models with new, innovating ideas and
state of the art technology were launched. Goal of low carbon and
green growth targeted to kill three birds with one stone: creating
new engines of high growth, ensuring climatic and environmental
stability and contributing to the international negotiations to
fight against global warming and climate change. Due to Lehman
brothers collapse of 2008 and economic downturn, Korean economy had
to grapple with ripple effects of ups and downs, as a result
consumer confidence remained low while anxiety levels continued to
soar. Road ahead seemed to be long and arduous. Success was
illusory depending upon all the stake-holders performing their part
of the role. Each citizen of South Korea sacrificed his personal
life, liberty and hard work focused towards new
national vision of Low-
Carbon-Green-Growth to
address catastrophic
financial crisis. Beyond creating
enabling conditions for green growth, it
sought to stimulate jobs, building infrastructure, expanding
growth through innovation, revitalizing fiscal stimulus aiming
transition towards greener economy as a combination of
neo-classical supply side economic policy with Keynesian demand
oriented strategic actions, focusing on green-growth as the major
economic tool. This green-economy received favor from United
Nations Environment Program and HSBC which unleashed 80% package of
green growth targeting purely public works which registered
positive growth during 2009. Thereafter six highly ambitious green
projects of renewable energy, low carbon energies, LED
applications, green mass transit, water management,
State-of-Art-Green-Cities were launched enthusiastically. Later
another six enthusiastic programs aiming
Fusion-Technology-Industries were hurled including IT-Fusion with
Manufacturing such as Robotics, Nano-Fusion-New-Material,
Bio-Medicine and Value-Added-Food-Industries. Another six projects
on high value-added-job-creating-industries such as Green
Financing, Software-Content-Development, MICE and Tourism were
launched with much fanfare. Greater emphasis was thrust upon
Creative-Economy with Social Inclusiveness all that was gambled
giving a contemplated chance based upon well-planned strategy and
cutting-edge-global-competition facilitating the job-opportunities.
Giving a well calculated chance to the working community of South
Korea in an anticipation of projection of high
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4 aspirations of skilled work force to succeed in global market.
However, South Korea faced glitches in Korean society showing the
signs of ageing with fertility rate fallen down, affecting future
working force, adversely impacting domestic demand. House hold
savings came down to 3% of the lowest disturbing domestic
investment adversely making South Korea to rely heavily on foreign
financial resources. Discrepancy between largest conglomerates and
small and medium scale companies had grown over the years whereas
multinational conglomerate Chaebols became more globalized and
integrated with world economy. SME suffered shortage of
entrepreneurial capability and innovation. Service sector needed
revamping amidst stiff international competition thereby pushing
education and health sector further with much care and concern. How
could the Korean economy refurbished so quick with so much fast
growth and transformation as compared to other developing countries
? It was nothing more than high level leadership, vision and
innovative policy framework to galvanize the nation to aspire to a
higher standard of modern living in a record time. South Korea is
indeed ranking as one of the highest and most successful developing
countries in the world to have graduated to a big league of
industrialized powers over the last 30 years. With committed,
strong and clean political leadership armed with an inspiring
national vision, huge challenges could be met and daunting
vulnerabilities mitigated. Education lies at the center stage of
remarkable transformation of South Korea which proved vital to the
economic growth and human development, therefore Korea ranked 12th
among 121 countries. High educational standards, quality upbringing
of younger work-force in developing technical-know-how,
skill-up-gradation and capacity building by Korean Institute of
Science and Technology 1960s which attracted foreign experts,
technocrats, scientists and engineers back to Korea registered a
huge reverse brain drain. Early global market access with tie up
linkages greatly contributed to the growth potential with the
fundamentals of successful market economy firmly established
through export-oriented-industrialization strategy of 1960-70s of
course with the powerful support from USA transforming Korean
economy fully integrated into the global market. Banking and
Financial sector reforms, strengthening of the
international-framework and corporate-governance made the Korean
economy more resilient, transparent throbbing with productive
efficiency. Spreading income and wealth among the common people
unlocking human potential by an instrument of
social-inclusiveness giving individual liberty and dignity in
profession and freedom of expression resolved the growing
difference in income and living standards. As a result of such
conscious efforts Korea became free from large scale poverty,
income inequalities, gender-discrimination and inaccessibility to
education. Good governance and clean politics in tune with well
developed infra-structure integrating professional ethics and
effective public administration in league with enterprising, down
to earth and resourceful entrepreneurs added to South Koreas
economic success. Lee Byung-Chuls Samsung Corporation global leader
in manufacturing DRAM memory chip, TV, smart phones, among others
Chung Ju Young who built up Hyundai Group of Ship Building,
automobile and construction, Park Tai-Jun of Phang Steel, the
founders of LG, GS, SK among others are the entrepreneurs who
contribute greatly to the Koreas rapid economic development.
Visionary leadership, high standards of education with quality
consideration, intervention of innovative ideas, integration of
local economy with global market, social inclusion and good
governance together with effective public administration,
enterprising, creative and resourceful entrepreneurs are driving
force for any developing economy which must learn lessons from
South Korea.
A K Singh is the member of Indian Forest Service 1997 serving in
the Ministry of Forest, Ecology and Environment of the Government
of Karnataka Views portrayed here are personal which are expressed
in the wake of references cited hereinafter. Contact:9481180956.
[email protected]
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State Back,
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Learning, Asia Next Giant:
South Korea and Late Industrializaiton Oxford University Press
1989
6. Michael Breen: The Koreans: Who They Are, What They Want,
Where Their Future Lies ?
7. Cumings Bruce: Koreas Place in The Sun, New York 1997. 8.
Hart Dennis: From Tradition to Consumption: Constructing a
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Korean Entrepreneurship: The Foundation of
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