by Bakri Musa

Chapter 4: Modern Model States

The Asian Miracle – South Korea

In the 1950’s, the Filipino government was sending community development officers to the Republic of Korea (ROK) to help the Koreans recover from the devastations of war. Today, the two Asian nations could not be more different in the quality of life of their people.

The Economist noted that in 1964 Zambia had a per capita GDP twice that of South Korea, but by 1999 the Korean figures had rocketed to over 27 times that of Zambia’s. South Korea is now among the top twelve trading nations. Its upward trajectory was briefly interrupted by the Asian economic crisis of 1997, but it is now back on track.

No one would have predicted back in the 1950’s that this Asian nation would be a model of success that it is today. Indeed the first half of the last century had not been kind to South Korea. Yet it succeeded, and did so by flouting every conceivable rule of modern developmental economics. It unabashedly adopted central planning, complete with Soviet-style Five Year Plans and with the state assuming a dominant role in business and the economy generally. The state directed major investment decisions and allocated scant resources, including credit. It was not shy in strategically intervening in the economy when it deemed necessary. South Korea’s strategy had been labeled “guided capitalism.” Read the rest of this entry »