How South Korea overcame poverty
by - Wednesday, July 18, 2007 - 13:56:51

There were both similarities and differences in the manner South Korea and Taiwan transformed themselves from poverty to prosperity. Their industrialisation programmes were initiated under military rulers.

In case of Taiwan it was Generalissimo Chiang Kai-Shek, in South Korea it was General Park chiang Hee. Both countries lived under constant threat from their neighbours. Taiwan was threatened by attack from the People’s Republic otherwise known as mainland China while South Korea was threatened from North Korea. Both countries were receiving massive development aid from the United States, but the US had given advance notice that this aid would be only for a time and could be withdrawn.

The rulers of the two countries therefore decided to achieve a measure of self-support before their benefactor withdrew. This is one lesson some African countries have not yet learned. They think and act as if donors will always be available to give them a helping hand. But priorities of a benevolent rich fellow do change.

According to Collins Concise Dictionary South Korea has an area of 98, 477 square kilometres (38,022 square miles). Hence we are talking about a country that geographically is no bigger than our country and yet has made economic transformations that make it walk tall among the world’s economic giants. How did the Koreans do it?

The push to industrialisation in South Korea started in 1960 following a military coup. General Park Chung Hee emerged the strongest man in the country with an iron will to succeed. He became the chief executive officer (CEO) of the Korean economy. Tough, autocratic and absolutely committed to economic development, he was supported by energetic young military officers who were willing to work hard and the whole nation willingly submitted to his discipline to achieve the common goal of eradicating poverty through accelerated economic development.

While Chiang Kai Shek of Taiwan entrusted the economic management to about five supertechnocrats park carried on the management directly by taking the major decisions himself. From the outset he decided to set up or support large scale corporations as engines of growth. He targeted six industries for support: steel, petrochemicals, nonferrous metals, shipbuilding, electronics and machinery.

Out of these industries emerged the chaebols or holding companies now known world wide such as Hyundai, Samsung, Lucky Goldstar and Daewoo. Government supported these firms with low interest loans, tax incentives and other advantages to enable them to grow bigger, diversify and compete in world markets. Their products were protected not only from foreign but also domestic competition.

In managing the economy he adopted an extreme form of management by objectives (MBO). Each new year he visited all his ministers and made them draw up programmes to be undertaken during the year. The following new year he would return to the ministers and review the promises, reading sentence by sentence. Those ministers who had failed to achieve 80 per cent of what they had promised he dismissed instantly.
Park insisted that the Chaebols should attain international standards in all products they manufactured and exported. There was constant consultation between representatives of private enterprises and the government’s equivalent of Japan’s Ministry of International Trade and Industry (MITI).

Park travelled throughout the country in a helicopter not to address political rallies but to see that programmes were being carried out, removing impediments, making threats and thus keeping things on the move.

The programmes were carried out with extraordinary dedication. One manager put it thus ‘Koreane overcame poverty with hardwork and discipline.’ Listen, oh Malawians and fellow Africans.’

Government work was highly regimented. People of all classes worked almost 60 hours a week. Of all Asian countries South Korea was the country that most consciously imitated Japan’s industrial policy. This was partly because of and partly despite the previous relations of the two countries. Japan had occupied the whole Korean peninsula for nearly 40 years. Though many Koreans were glad to go to Japan and study in colleges there long after most of them harboured intense resentment of Japan for its alleged brutal rule.

South Korea was prone to violent ways of changing leaders. In October 1979 president Park was assassinated by one of his security men who had felt Park intended to dismiss him.

Thereafter the management of the economy was under the guidance of an intellectual Kim Jae-IK with a PH.D in economics from Stanford University, USA. Kim decided to reduce government intervention in the economy and create a more level playing field on which small and medium sized firms could flourish. In 1983 Kim was also assassinated while he was on a visit to Rangoon, Mynmar (Burma).

Despite these hiccups South Korea’s rate of growth according to Ezra Vogel “was unrivalled, even by Japan in the speed with which it went from having almost no industrial technology to taking its place among the world’s industrial nations”. He adds ‘No nation has come so far so quickly from handicrafts to heavy industry, from poverty to prosperity, from inexperienced leaders to modern planners, managers and engineers.

South Korea like Taiwan was organised for success. Wishing is not enough, you have to be committed to achieving results.

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