Monday, June 10, 2013

Korean Homework: Part Six

Michael Breen explores the Korean economic development subsequent to the North/South divide.  A reminder, his comments are based on his observations and research up to 1998; as such, a more thorough critique or well-rounded picture as of 2013 is not presented here.

"The Spectacle of Growth"
➡President Park Chung-hee, even in the face of significant opposition from the South's population, the National Assembly, and the World Bank, initatiated in 1968 an expensive construction project for a 424 km motorway between Seoul (capital city in the north) and Pusan (port city in the south).
▶Park was trying to develop the South's industry so as to 1) provide long-term defense against the North and 2) phase out dependence on the U.S.  He was convinced by the U.S. that long-term economic growth for the South needed to be linked with Japan (which would offend many Koreans, especially those for whom occupation was fresh on the mind) and thus the industrial regions of Seoul-Inchon needed to be significantly linked with Pusan.
▶Within 3 years of completion, the motorway hosted 80% of the South's vehicles and the cooridor it serviced produced 70% of the South's GNP.
▶Park "inspired, bullied, beat, cajoled, and enticed, Koreans out of the paddy fields and into the forefront of the industrial world."
➡Upon taking power, Park centralizing economic planning.  He harnessed the profit-hunting abilities of business leaders rather than suppressing them; banks were nationalized (failure to allow independence in later years is a contributing factor to the financial crisis of 1997.
▶Exporting became a priority: "export good, import bad".
▶Saemaul (New Village) Movement to modernize agriculture and raise rural living standards.
▶As job opportunities came people migrated heavily to the cities.
➡While cautious of appearances of imperial control, Park understood the importance of an alliance with the U.S. which has provided a security shield against potential conflict with the North and a market for Korean products.
➡Park ruled from 1961 until his assassination in 1979.  If he has a "fatal flaw" it would be focus of economic growth as the goal of everything he did.  The universal lesson tends to suggest that the goal of decent government is to bring happiness and a civilized life for the people; economics is a means to that end and not an end in itself.
▶In three decades, the South's economy grew and average of 9% per year; $2.3 billion in 1962 to $442 billion in 1997; per capita income of $87 in 1962 to $9,511 in 1997.
➡Chun Doo-hwan led a coup of a feeble attempt at democracy following Park's assassination.  While the economy boomed in this 1981-1988 rule he continued Park's tradition of postponing essential modern economic reforms.  Chun failed to guide reforms in keeping its the labor-intensive to capital-intensive shift because he didn't want to risk social turmoil which might provoke unions, citizens, and student groups into a collective anti-government coup.
▶Additionally, Chun failed to invest in social infrastructure (ports, roads, and rail) which were needed.  As a result transport and labor cost rose dramatically in the 1990s which forced up the price of Korean products on the international market thereby eroding its price competitiveness.
➡In 1988, now under the democratically elected Roh Tae-woo, the rest of the world was truly able to see its first good look at modern South Korea through th forum of the Summer Olympics; regarded by many as the best games to date.
▶Marked the moment of the South's ascendency over the North in the mind of all Koreans; contest was over regarding which ideology would win.
▶China and Eastern European communist regimes didn't boycott as North Korea had requested; within four years all communist or former communist countries had full diplomatic relations with the South.
➡Two primary obstacles have limited, or at least have initiated a question, regarding the economic hand of friendship of other developed countries as the South has tried to open business centers in other lands.
▶Corruption: for business survival it has often been practice to bribe government or party officials; companies have been ruthless so as to win contracts.
▶Physical abuse: disputes, in Korean society, are often solved by force, both verbal and physical

From my personal observations, much more economic development has continued to come from South Korea since this book was published.

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