South Korea’s transformation

Every society has some myths to discuss. Pakistan’s reportedly lent economic planning model of 1950/60s from South Korea is a story sans substance. Empirical and exploratory researches categorise it as wishful thinking. A South Korean delegation’s visit was not all an exercise in mimicry. This piece endeavours to analyse all aspects associated with this self-congratulatory achievement. Numerous textbooks, newspaper articles and fiery speeches of politicians suggest one unanimous achievement, exporting of the development model to South Korea and basking in its reflected glory. Factually, this never happened as asserted by some professionals in Pakistan.

Pakistan launched its long-term development plans prior to South Korea in 1955-1960 and then 1960-1965. It is also a fact that a delegation of South Korea visited Pakistan supposedly prior to 1960. Today, no archive is available with Pakistan’s Ministry of Planning and Reforms to indicate what had happened. However, guess work is galore. Dr Mahboob-ul Haq, ex iconic figure of Pakistan’s economic history, is said to have handed over a full-fledged development template to South Korea. Dr Haq, in his books on development planning (1963; 1983), has never mentioned any such incidence. He has rather massively assailed Pakistan’s first two development plans with scorching criticism. To him, both plans failed in achieving targets in per capita income, investment, domestic savings, agriculture and mining sectors.

Toussaint (2014) has recorded several factors of the Korean transformation. Among the prominent ones are; the state’s high degree of involvement, US’s substantial support in the form of grants, radical land reforms, conversion of import substitution to exports substitution, state control of the banking sector and the enforcement of authoritarian planning. The Economic Planning Board, headed by the deputy prime minister, was assigned substantial financial, legal, fiscal and administrative powers.

The South Korean government implemented four successive five-year development plans beginning in 1962; the economy grew at an unprecedented 8.9% average annual rate during this period. The government, on a trial and error basis, rolled out its first plan on February 15, 1962, with the following themes: (i) to expand agriculture productivity and increase rural household income, (ii) to secure energy sources, (iii) to improve balance of payments via export promotion, and (iv) to increase employment. The Economic Planning Board (EPB) formulated the plans. Quite contrary to Pakistan’s wishy-washy Planning Commission, EPB gained immense superiority over other ministries, not only in the formulation of plans, but also in enacting specific legislation, increasing the budget and winning foreign capital, mobilising and operating domestic capital and even managing inflation of the country.

Historically, the Korean economy grew step by step and according to a planned curve. The country prospered by enhancing the productivity of of the agriculture sector by simultaneously working on small industries. It continued to develop transportation, communication and energy infrastructure and the financial system to encourage the modernisation of domestic savings. Later, the Korean economy entered into a phase of diversification. A wide range of industries was established such as automobile, shipbuilding, semiconductor, chemical, machinery and electronics industries. If Korea had faithfully followed the advice of international organisations and developed countries, it would not exist as we know it today. Most probably, it would have be at the tail end of Asia’s poor countries economically.

Mr Javed Masood (2010) debunks the popular myth of Pakistan’s model to be emulated by South Korea and dates back 1981. The newly posted consul general of South Korea to Pakistan pleased audience in Lahore during a reception by the chamber of commerce by stating that Koreans owe their success to Pakistan and referred to the Korean delegation that visited in early 1960s to study Pakistan’s planning process. Mr Masood says Mr Jay Hee Oh did it only to establish full diplomatic relations on the lines of North Korea’s with Pakistan. Mr Jay mellowed General Zia’s government, achieved his target in 1984 and was appointed vice minister of foreign affairs on his return from Pakistan. Factually, Korea had 70% literacy rate in 1960s with educated labour force. Tugral Yamin (2015) quotes Mr Megna Desai who narrates his conservation with Dr Mahboob Ul Haq. Dr Haq had shared with Mr Desai that the Koreans, despite the famous visit, declined to follow Pakistan’s model owing to its leaning towards self-reliance. Korea was seeking policies on export led economic development that they did. By that both Pakistan and India were focusing on import substitution industrialisation. The Embassy of South Korea in Islamabad has denied any relevance of Pakistan’s model with South Korea’s and terms it “largely a myth”. Dr Ha-Joon and Dr Akbar S Zaidi have also testified the same argument. Even the Planning Commission of Pakistan has no record to substantiate any connectivity between the two models, ministry’s website does not highlight this argument among its achievements. Pakistan’s chief economist Dr Nadeem Javaid sees the matter this way: “I think the Korean experience shows us that a development strategy is a complex set of well-knitted policies rather than a simple matter of an outward-looking or an inward-looking trade regime. The Korean case reveals that the fastest way to build an advanced industrial base in a developing country is to earn foreign exchange through diversified exports to import advanced technologies and the machines that embody them. Contrary to this, Pakistan’s policy makers perused import-substitution through rent-creation model with the objective to achieve self-sufficiency – eventually, which proved fatal”. Mr Sakib Sherani endorses same exposition in his (Growth vs development, 2017) article.

Less than sixty years ago, Korea was a wasteland. Now it is not only the world’s 11th largest economy, but also a vibrant democracy and an emerging culture power. Korea’s change of path from poverty to philanthropy is strewn with dazzling stories of economic transformation and effervescence. Certainly South Korea has reaped the fruits of its own models, not of ours! Have we reaped the planned fruits of our own short-medium term plans and of perspective planning?

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