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

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

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

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. aksinghifs@gmail.com

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