Paradox of Korea's development
.jpg?w=728)
By Ranjit Kumar Dhawan
Korea’s successful economic transformation from an agricultural based economy to an industrial giant is popularly known as the “Miracle on the Han River.” The country which had a per-capita income of less than $100 in the 1950s became a member of the Organization of Economic Co-operation and Development (OECD) in 1996. Hence, the Korean economic development became a role model for several developing countries.
As a result, Korea initiated the “Knowledge Sharing Program” to disseminate its knowledge and experience of economic development with other developing nations of the world. Korea has also transformed itself from an aid recipient to a donor country and it has been involved in the promotion of economic activities in several parts of the world.
However, there is other side of the Korean economic development which Koreans would not like to share with the rest of the world. Korea presently has one of the highest suicide rates and lowest birth rates in the world. The rising unemployment problem and dissatisfaction of the people regarding the living conditions in Korea negates the success story of its economic miracle.
According to Korea’s own estimate its entire population would become extinct by 2750 due to the declining birth rate. Being an aging society, the situation of the older generation in Korea remains pathetic as several of them are left alone without much social security. A large number of younger people are also forced to remain single because of rising economic problems.
Korea’s rapid economic development is mainly due to the low cost production based on cheap labor in the export oriented development strategy. But the economic changes brought about by the forces of globalization and technological changes such as use of robots in manufacturing have created problems for the Korean export dependent economy.
A number of jobs have vanished in Korea due to the mechanization of production techniques and outsourcing to cheaper wage locations outside the country. Korea’s competitive edge is being challenged by new technology. In recent years Korea has also been witnessing decline in the export of goods.
The “developmental state” in Korea created the business giants, chaebol, for faster economic transformation of the country. But these chaebol now control a large part of the Korean economy. According to a report, in 2011 the total sales of the top ten chaebol groups was equal to about eighty percent of the entire Korean gross domestic production. There has been a massive concentration of wealth in the country.
The Sewol ferry incident in 2014 highlighted the corrupt business practices that exist in Korea. But it also showed the state of education in the country and the condition of young students who were left to die in the cold water of the sea. On the other hand, the shrinking middle class in Korea only depicts the declining economic condition of the people.
In the milieu of rising economic and social problems, terms like “Hell Joseon” is being used to describe the present situation in Korea where young people are increasingly finding it difficult to survive. Despite all these issues Korea’s expenditure on welfare remains one of the lowest among the OECD countries.
Under these circumstances Korea needs to remodel its economic development strategy so as to mitigate the problems of the masses. While developing countries can learn from Korea’s economic success, Korea also needs to learn from the developed Scandinavian countries to build a strong welfare state and promote technological innovation in the country.
Ranjit Kumar Dhawan has done PhD from Jawaharlal Nehru University, New Delhi, India. His e-mail address is rkdhawan13@hotmail.com.