South Korea: lessons about its quick economic growth
Written by Juan Manuel Toro.
Nowadays when we think about South Korea immediately appear in our minds a lot of different
kind of technological products that we use every and are manufactured there, Each one of us have
at least one of this things :a tv, a cellphone, fridge, washing machine or a car that are fabricated in
South Korea or belongs to a South Korean Company. Nevertheless, it wasn´t in that way 50 years
before. The change has been bigger than anyone expected, South Koreas used to be one of the
poorest countries in the world in 50 decade, but now according to Goldman Sachs Group South
Korea will pass the 35.000 USD gpd per capita in less than one year (of course that prediction was
before the SARS-COV-2 Pandemic virus); we can see the behavior of growth in the next graph.
Figure 1GPD PER CAPITA SOUTH KOREA; FROM MACROECONOMICS TRENDS.
¿But how one of the poorest countries turn in one of the biggest economies in almost 60 years?
Well, Korean developed have the base on manufactured industry of the country, but what is the
way or model that Koreans use to change the dynamics of agricultural country to a manufactured
and services country. The answer is not just in the economical decisions, the political decisions and
regimen was fundamental in the growth. ¿How? In a interview with Paulo Gregoire, political
analyst and director of Piketon, we found that the success of Korean economy was depending of
the decisions of political system; first protectionist, but the only way to done it is closing the
political and economic system, then open again the economic system and finely, when the
industry is sustainable re open the political system. Why Paulo believes that closing the political
system was fundamental in Korea due to the dynamics of political and culture tradition of the
country; what it means: weakness institutionally, corruption, hunger, violence and cultural conflict
was the principal problems of stagnation in Korea, and the politicians and habitants were hardly
honest or highly educated, so the reforms that was necessary for the progress must been decided
under a dictatorial system.
However, is not about oppression. The successful is in the development factors that Korea
prevailed, education and national industry; that is routed to get better life conditions of all the
habitants, in the deepest part is about the culture, the technical end cultural knowledge (Consume
behavior). In the MIT investigation named Manufacturing Revolutions Nathaniel Lane compares
Ghana and south Koreas in their GPD movement. Despite that Korea and Ghana was similar in
1957 a long the time Ghana growth slowly along this last 60 years.
The focus was in transform in a exportation country, the strengthening of the chemical industry
and cars manufactured was the base at the beginning, then the services like offered by Samsung
was fill the tertiary, quaternary and quintenary sector. To make a strong manufactured system
first was necessary to make strong the financial system, the credits to internal industry with low
interest rate helps the growth of real GPD (Real Productions factors). In this way the regimen helps
the strong industries to transform in world biggest industries, and the small or not productive
industries has a lot of external competitions, to minimize the cost of life and cost of supplies. At
the end the enterprises have enough capital to make big inversions; and that let the government
make social inversions too.
In consequence, the inequality is low, the creativity industry is bigger, the style of life and the
purchase power is better; this is the example of a successful case of growth in all the sector but we
could see that Korea has a particular condition. The next graph proves it; Historical Index Of
Human Development.
