LEARNING FROM SOUTH KOREA'S PROGRESS by Kamal Khanal

The fundamental twist and turmoil in global politics and ideology led to divide Korea into two occupation zones at the end of 1945, with the United States administering the southern half of the peninsula and the Soviet Union taking over the north dividing Korea exactly into two parts in 38th parallel. Now these separate nations have diametrically opposed political, economic, and social systems in the post-independence period.

The population of 48,508,972 (July 2008 est) South Korea is smaller than Nepal in geographical size. However, exceptionally productive workforce guided by sound government policies with disciplined work culture guided South Korea to shine in less than half of the century. This led to extraordinary economic growth from mere GDP of 3.3 billion dollars in 1962 to 957 billion dollars in 2007. Per capita income of a Korean reached $27,647 (IMF) in 2008 which slightly slowed down now due to economic recession worldwide. S Korea had a rapid economic growth averaged more than 8 percent per year. It had a massive transformation for twenty some years from the 60s to 80s. Earlier South Korean society was under feudalistic culture similar to Nepal with unequal distribution of wealth and land. As a part of modernization in the fifties, South Korea started the land reform program. The land reform retained the institution of private property confiscating and redistributing land held by the Japanese colonialists. Koreans with large landholdings were also obliged to divest most of their land. A new class of independent, family proprietorship was created.

A military coup was led by Major General Park Chung-Hee in 1961. During his regime, South Korea began to take a more confident role in international relations & the economy grew rapidly. The Park regime used the foreign aid from Japan and the United States and provided loans to export businesses. It supported the construction of Pohang Iron and Steel Company (POSCO) steel mill, which became one of the world's largest steel mill at later period. Park Chung Hee has been credited with the industrialization of South Korea through export-led growth, but also criticized for his authoritarian way of ruling the country. He was named "one of the top 100 Asians of the 20th Century" by Time Magazine.

The early South Korean economic plans emphasized the development of agriculture and infrastructure, at later period, it shifted to construction, light industry, electronics, and heavy and chemical industries. An export-driven economy developed. Incentives for exports included a reduction of income taxes for exporters, tariff exemptions for raw materials imported for export production, business tax exemptions etc. Public enterprises of 1960s concentrated in the areas of electrification, banking, communications, and manufacturing. By 1990s those enterprises were already efficient revenue-producing units. Privatization in S Korea began in the 80s, many government backed firms opened to the market to private parties, but the government remained the principal stockholder in each company such as in Korea Electric Power Corporation (KEPCO) and Pohang Iron and Steel Company (POSCO).

Foreign credit dependency of 60s to finance development decreased due to increased liberalization and internationalization. In the 1990s South Korea had greater reliance on domestic sources. In the late 1950s and early 1960s, South Korea was one of the first among developing nations in opening to the world trade. In 1960, country was one of the poorest spots on the planet. Today, South Koreans enjoy an immensely prosperous lifestyle compared to their parents and grand parents. Liberalization & openness helped to prevent the resources getting trapped in aging industries and to tap large
foreign markets for its emerging industries. The result, Korea is now a thirteenth largest economy worldwide, serving an example of a free market economy with little protectionism.
The successive Five-Year Economic Development Plan started in 1962 laid a foundation for industrialization from subsistence agriculture to modern manufacturing and export trade. Some of the aspects of country’s progress have been restructuring the chaebol- based system (family business associations), promotion of village-based industries, flexibility in the labor market, liberalization of the domestic market & promotion of foreign investment.
In 1973 Iron and steel works as well as Petro-chemicals were constructed. POSCO now is a symbol of national pride. With the strong Korean shipbuilding and automobile industry dependent on POSCO for steel, it has been seen as the bedrock of Korea's industrial development over the past 40 years. Construction of nuclear power plants beginning in 1978 helped to become self-reliant in energy. Giant conglomerates like Hyundai, Doosan heavy industries, Dawoo, Samsung, LG, SK were the dominant enterprises which led drastic economic growth of the country. The Samsung brand overtook Japanese rival Sony in 2005, and became top 21st global brand in 2008. It is also the leader in construction, finance, chemical, retail and entertainment field. Samsung Group accounts for more than 20% of South Korea's total exports, its revenue as large as some countries' GDP.

"Miracle on the Han River" is a phrase used to describe the period of rapid economic growth in South Korea from the 1961 to 1997 Asian financial crisis. In particular, this phrase refers to the economic growth of Seoul, through which the Han River flows. From the ashes of "The Korean War" Koreans change their work culture & adopted extreme hard labor & prepared to do any Dirty, Difficult and Dangerous (3D) works to make today's shining Korea.

Negative effects of Progress: Korean people “faster and faster" motto, a slogan used by them in promoting industrialization has caused environmental degradation. Whereas, prosperity has caused social and generational gap in the society resulting differences in way of thinking among different generations often leading to distorted relationships & family disintegration. Nextly, the widening political, economic & social gap between South and North Korea is regarded a big obstruction in two countries future unification.

The Japanese occupation in the peninsula had many negative implications and still the Korean remember those days with unforgettable nightmare. Korean War also devastated their countries which energize them to change their work culture. Under Army rule Suppressions of sparking rebellions also led thousands of deaths. These were great upheavals. We can learn a lot from South Korean history. The bottom line is, we should be earnest and hardworking for our collective progress. The government has the pivotal role to play in this path. South Korea had a great leap forward within half a decade of time but with enormous hardships & dedication. We should learn & adopt Korean's development models in our country too. 1

kamal_kh@hotmail.com