South Korea–the Little Engine that Could–What African Countries Can Infer From it’s Rags-To-Riches Story.

By | 2014-05-20T21:49:10+00:00 May 20th, 2014|1 Comment

“South Korea’s GDP today is $1.12 Trillion dollars. More than two times that of the largest economy in Africa. It is a remarkable achievement for a country that has no significant raw material endowment, has to import virtually all the hydrocarbon resources it needs and has a population of only 51 million.”

South-Korea—the-Little-Engine-that-Could-What-African-CountriesGlobal trade is vital for economic development and social-economic well-being of every country. It is particularly important for African countries because they are well behind others in the process of converting trade into an economic engine for growth. One of my goals for writing “Unleashed: A New Paradigm of African Trade with the World, is that it would be worthy of consideration as a reference manual for decision makers in African countries. A tool, if you will, that expands the options available to decision makers who are deliberating on matters pertaining to trade. One of the ways I have endeavored to further the objective of making the book a relevant reference, is by including extensive analysis of the Asian Tigers’ experience. I have also included an analysis of the rise of China that processes the transformative decisions that Chinese leaders made, that has led to the advent of the greatest mercantile nation of the latter part of the 20th century and the beginning of the 21st century. China has re-written all the rules. Although China is not considered one of the original Tigers, it has, nevertheless, transcended the “Tiger Economies” because its performance is gargantuan in scope and unparalleled in human history.  To put it in perspective, in 1982 the gross domestic product of China (GDP) was $46 billion dollars . It is now more than $8 trillion dollars. It has expanded its economic output by something like one hundred and seventy nine (179) times in 31 years. Just incredible! The analysis uses some statistics but it is not driven by the statistical achievements of the countries. However, it goes without saying that there is much to be drawn from their statistical record. Their statistical achievement is, at the end of the day, the report card of their performance and report cards are measuring sticks. It measures what a given country has done with “seed, soil and sunshine” which are the only true resource endowment that nature has given to every country.

Rather their cameo in “Unleashed: A New Paradigm of Africa Trade with the World,” is based on the decisions, the construct of policy, the determination behind the execution of policy, the tenacious “sticktoitiveness” of policy makers and leaders, the rationality of it all and most important, the self-less, nation-first, spirit that drove them. The late Deng Xiaoping is not, to our knowledge, did not leave an estate worth millions of dollars but his ideas have created the second largest economy in the world and empowered 1.3 billion Chinese. It has transformed a blind, comatose and economically destitute giant of a country into a global economic powerhouse that must be reckoned with. And he did it with a system that the originators of the communist enterprise, the Union of Soviet Socialist Republics (U.S.S.R) could not make work! Deng Xiaoping is universally acknowledged among Western public sector and intellectual community as an Iconic figure for what he has done for China and its people. “It doesn’t matter if the cat is black or white, as long as it catches mice.” This iconoclastic statement by Deng Xiaoping, made in the then-raging debate among China’s leadership about whether to employ capitalist ways in a communist economy, is in my opinion, the ultimate enunciation of pragmatism by a leader. It means in essence, it doesn’t matter if an idea is different; it doesn’t matter if the idea goes against traditions, it doesn’t matter if we (Chinese leaders of the day but one can fill in any country) look bad in the short run because we changed our “Economic Horse” in the middle of the race; as long as the new horse is running better than the old horse! There is much that China offers as a lesson in pragmatism and perseverance to Africa countries. The Opium trade is a vivid reminder to Chinese leaders of what can happen if you fail to manage your society. China travelled through free enterprise system after the fall of Dynastic rule. They went through Communism in all its manifestations—Collectivization and the Cultural Revolution. These two major philosophical and political transformations cost China tens of millions of lives; but with their eye on the prize, they persevered in seeking a better political and economic arrangement that would enable the country to feed its people and overcome poverty.
Seoul

That brings us to my favorite of the Asian Tigers—South Korea. In the immediate aftermath of WWII, the country epitomized “things fall apart.” South Korea was “Humpty-Dumpty” that fell off a wall. Like many African countries, the politicians took over and instead of taking on the task of re-building their country, they set about “eating and chopping,” as pretenders to leadership positions in African countries often do. It was their proverbial time to “eat!” Unconscionably, the new politicians were looking for what to “eat,” in the midst of an evolving catastrophe having befallen the country. It was a level of socio-economic-political tragedy that has few rivals in the annals of national tragedies. It is matched or eclipsed only by the Nagasaki and Hiroshima experience, the devastation of Vietnam, Post-WWII Europe and the Soviet Union and the genocide in Rwanda. South Korea had been split into two political spheres; the communist North attacked and devastated the democratic South. There were shortages of every imaginable goods including housing. The country was in a perpetual state of darkness because electricity supply was in the northern half of the now-divided peninsula. In other words, their electrical generators were now located in enemy territory. The industries in Korea had been owned and managed by the Japanese, whom the Americans evacuated for fear that South Koreans would exact revenge on them for their atrocities during the occupation. This meant South Korea after the Korean War had few industries to make things people needed. In this catastrophic state, South Korean politicians wanted their chance to, as politicians say in African countries, “eat.”

What the foregoing illustrates, is that the demon spirit of greed is not a respecter of persons or nationality. It will infect South Koreans, Russians, Americans, Canadians, French, English, just as much as it will infect Nigerians, Ugandans, Kenyans, Somalis, Ethiopians, Ghanaians, etc. The difference is in the level of the infection. In African countries demonic greed is a viral monstrosity. However, unlike what African countries have experienced, out of the morally bankrupt, greed-infected Syngman Rhee government of South Korea, came a transformative, redemptive fixer-government led by the great patriotic servant of South Korea, the late General Park Chung Hee. When South Korea was on the precipice of anarchy because students staged a massive protest against the then-irredeemably corrupt government, he staged a coup to remove the Rhee administration. He had a simple mission statement: To elevate the people of South Korea from poverty and to strength the country’s military capability so as to be able to repel any attack from North Korea. From this simple mission statement, President Park Chung Hee installed an economic development program with which South Korea launched its rags-to-riches story and the Miracle on the Han River. Syngman Rhee lost a chance to create a great legacy for posterity. The price is that he is hardly a footnote in the history of South Korea while the current President is the daughter of the martyred late Park Chung Hee.

How did South Korea do it and can Africa Countries copy it?
south-korea-SeoulThe saying goes that to be successful you must copy, mirror—use any term that is more comfortable for you as long as it means replicating a process—success. South Korea’s economic development strategy borrowed heavily from Japan, Hong Kong and Taiwan but it was customized for South Korea. The primary ingredients were:
1. Determination. Park Chung Hee brought a level of determination to win the battle against poverty and military insecurity that South Koreans had not had.
2. He created a mastermind alliance of fellow South Korean patriots who were in it for the RIGHT REASONS. They included: Park Tae Joon, Kim Chungy um, O Wonch’ol, Lee Byung Chull, Sung Yeung Kwack and Chung Ju Yung to mention a few. General Park Tae Joon was the founder and mastermind behind one of the greatest steel companies in human history. He pulled off the feat in a country that has no significant raw materials or source of energy for producing steel. Kim Chungy-um was the fixer minister who was responsible for many transformative initiatives in the development of South Korea. Including the Export Promotion Council, solving power generation, currency conversions and the stock exchange. He held many ministerial portfolios including that of Finance Minister and Vice President. Wherever radical transformation was needed, Kim Chungy-um was more often than not the transformative force. He selected O Wonch’ol to create the secondary industries such as machine tools and die-cast plants needed to transition into heavy industries when the program appeared to falter. In that regards, O Wonch’ol was to South Korea’s heavy industry program as General Park Tae Joon was to its steel manufacturing. Without those two, South Korea is a different country today. Lee Byung Chull, then the richest man in South Korea and head of Samsung, successfully counselled Park Chung Hee to turn to Export led Industrialization. He proceeded to back his recommendation by positioning his company at the tip of the spear. Samsung, today, is a $230 billion dollar manufacturer, processor and global export trade juggernaut, single handedly responsible for 20% of South Korea’s GDP. Lee Byung Chull, head of Hyundai bid one (1) Won to construct a bridge over the Han River and delivered the project on time. Indeed a worthy assemblage of honorable men and South Korean patriots all!
3. If people were important, institutions were the gears that drove the process. Park Chung Hee used several key institutions: the Economic Planning Board; Ministry of Finance and the Ministry of Trade and Industry. Subsidiary to this were the Export Promotion Council and the Saemaul Undong Movement that transformed agricultural production and vastly improved the living conditions and earnings of rural dwellers.
4. Intensity. This was the rocket fuel that drove the process. General Park Chung Hee and General Park Tae Joon, his hand-picked President of POSCO and a confidant of the South Korean President, exemplified the attitude of South Korean leaders. They saw the process as one of national survival and approached their tasks with a moral imperative and a grave sense of urgency required for the most urgent crisis. Most important is that they held each other and the entire nation accountable for results. As the chart below shows, they succeeded in instituting the economic and social political foundation that propelled South Korea into the future. GDP which was $2 billion in 1962, increased to $37 billion in 1997 as a result of the successful stewardship of the economy.

South-Korea-gdp

 

 

 

 

 

 

 

 

South Korea: GDP from 1962 to 1977.

South Korea’s GDP in 2014 is $1.12 trillion dollars. More than two times that of the largest economy in Africa. It is a remarkable achievement for a country that has no significant raw material endowment, has to import virtually all the hydrocarbon resources for the country and has a population of 51 million. South Korea is indeed a tale of the “little engine that could!”

About the Author:

The author, John Akhile, is a man of varied entrepreneurial accomplishment in several fields. His range of interest includes fields as diverse from one another as; international trade, real estate and restaurants, demonstrating his keen interest in international affairs and in the cultural underpinnings of society. In many respects he is as a true "Renaissance" man because he has great depth of knowledge and command in many diverse fields. However his central passion has been the African continent and people, having concentrated on the issues hindering development and growth in African countries for more than more three decades. It has led to one self-published book and Unleashed.