I've been reading through the "A History of Korea" by Michael Seth, hoping to get some insight into how Korea went from a colonized underdog into a global economic power in such a short time. The modern history of both Koreas is truly fascinating as are their early parallels.
One thing I've been surprised to learn is how much of a role various Christian groups in Korea played in anti-governmnet activities going all the way back to the Japanese Colonial period. There's some interesting and unique history there with respect to Korea's history with Christianity -- including being one of the only countries with a history of self-conversion, before missionaries ever showed up there.
More recently, the parallels between the economic development of the North and the South are quite striking. While the North made some very big economic development strides early on, the long term focus on almost pure heavy industry and military development caused the country to stagnate and economically regress -- despite an almost constant stream of aid and support from first the Soviet Bloc and then China. The infrastructure has begun to crumble because the state never bothered developing the entire economic ecosystem needed to keep it running.
The South on the other hand, under the military dictator, Park Chung-hee, took a more step-wise foundation building approach that's yielded tremendous long-term success for the country. Seizing power from an incompetently run, but democratic, government. Park put in place a complex series of programs designed to build up an export-oriented economy through gradual development of industry from light-industry to heavy.
It was tremendously corrupt, and built on lots of favor trading. But he used the power of the military and the government to keep the economy focused on pure growth, and pragmatically eliminated "non-essential" economic activities. Starting with things like sugar refineries and textile manufacturing, the country started working up to construction (a significant number of U.S. projects during the Vietnam war were built by Korean companies), then shipbuilding, cars, petrochemicals, etc. Each designed to both provide economic opportunities for export, as well as provide domestic capabilities for the next steps.
No political activity was allowed and the country was basically run like a giant, efficient, no-nonsense, military apparatus for decades. It took until the 80s before it was really time to switch off from this into the more liberal and democratic country we see today.
He financed all this with a very pragmatic finance scheme, hitting up Japans booming economy during the 60s and 70s, despite a great deal of animosity between the two countries. And then more importantly sold back the finished goods to Japan and the U.S. markets.
It was under Park that South Korea started doing major construction projects in the middle-East. The technical ability of South Korean construction companies can't be underestimated -- the Burj Khalifa was built by Samsung.
Despite significant student demonstrations and unrest during the Park administration (and the similar Chun Doo-hwan one that closely followed), most people were simply too busy working and scratching out a living to take to the streets, or form anti-government organizations.
There's other parallels as well, extremely low participation in the work force by women, a history of foreign meddling, etc.
I guess what I'm saying is that idle hands may just be the source of a lot of this misery. In richer Arab countries, most of the work is done by foreigners on the cheap and locals live off of the proceeds, they're bored and have nothing else to do. In poorer ones, people need jobs, are desperate and again, have nothing else to do.
There's been some half-hearted attempts to provide other activities. KAUST, for example, is a Science and Tech graduate-level university that's had billions invested into it. But one of the interesting points my book brings up is that setting up advanced schooling, or advanced industry, doesn't make sense unless a Park style staged economic program is put in place first to build all of the necessary social, educational and economic foundations to support these advanced industries. You can't really leapfrog these things, but you can make progress unbelievably fast.
The real problem is that, at least for the oil rich parts of the Arab world, there isn't much incentive to really do these things. If any place might have a go, someplace oil-poor, like Egypt, might be a logical place to kick off something like a "Tiger of the Nile" program. I know I'm not the first person to think of this either.
Note also, that having a resource-oriented economy tends to vastly overstate GDP. A dollar of exported crude oil counts as a dollar of "national income" but it's not income any more than selling off your furniture is income. You're just converting assets into cash. This phenomenon makes countries that derive their income from selling resources think they're richer than they really are.
But I think this is an oversimplification. Not all of the Arab world is resource cursed. Egypt, as an example, only gets 7% of its GDP from Oil and Gas. Agriculture accounts for almost 20%. (of course you could possibly argue that tourism is the resource that Egypt is cursed with)
One of the interesting things I've also read about the development of South Korea is that U.S. advisors pushed South Korea to develop its agribusiness, but this was rejected by the Park administration in favor of the export-driven focus because of the poor and highly variable economic performance of agriculture.
Basically you can feed people if you grow rice, but you can feed them twice as much if you sell cars.
I think more important is the early and strong rejection in South Korea of Communist and Socialist economic ideas in favor of growth oriented chrony-capitalist ones. Notable is that Korean conglomerates who went along with the government plan and met their economic targets were given tremendous leeway, while ones that didn't hit their targets or were against the government goals, were simply ripped apart and bankrupted.
The problem with the export driven economy is we can't all be net exporters. At some point your export driven economy will be undermined by neighbors with cheaper labor.
I think there's something else going on there though...
South Korea (per capita GDP $24k) is hardly the only success story in that part of the world. Japan ($38k), Hong Kong ($38k), Singapore ($55k), and Taiwan ($20k) have basically pulled off the same trick. All these places have in common that they are either Chinese (mostly Chinese, in Singapore's case) or very closely related culturally to China (Korea and Japan are more closely related to China than, for example, Laos or Myanmar). They are all small, without huge agricultural potential or much other resources, but with good access to the sea.
A more recent, and possibly more relevant example is Malaysia ($11k). Malaysia is an interesting case. It is majority Muslim, but it has a significant non-Muslim Chinese minority that controls most of the economy. It is a large petroleum exporter, but it has successfully expanded to manufacturing and services, arguably escaping the "resource curse".
You might be tempted to conclude that Malaysia pulled this off because of their Chinese population (and I know some Malays have said exactly this), but there are counterexamples to this - Thailand ($6k), Indonesia ($4k), Vietnam ($2k) and Cambodia ($1k) all have significant ethnic Chinese populations. On the other hand, ethnic Chinese control business in all those countries far out of proportion to their share of the population.
What useful lessons Arabs can draw from this I have no idea. Well, I have some idea: just look at North Korea ($0.6k) and Vietnam ($2k). The lesson isn't just simply "communism is bad" though, because they are well behind Russia ($15k) and even Cuba ($6k).
Sure, the Asian tigers. There's some ideas that float around that various Confucian "values" contributed to this surge, hard work, education etc. But all those places were Confucian long before they became successful. The other thing they all have in common is deep support from a more powerful country.
- South Korea had some colonial development under Japan, and the U.S. support post WW2 and the Korean War made up to 1/5th of the country's GDP during some periods, nearly all of the Government budget and 100% of the military budget for quite some time. Favorable investment and borrowing and an open U.S. export market were instrumental to the modern success it is today.
- Japan was well on its way to being a major economic power before WWII, and significant support from the U.S. helped it rebuild after the war. Again, Favorable borrowing, investment and an open U.S. export market were helpful.
- Taiwan was a model Japanese colony before WW2 and received significant support from the U.S. after the establishment of the ROC. Significant U.S. support of the ROC military, aid and favorable borrowing and open markets.
- Singapore and Hong Kong have similar histories of British support, but towards trade and finance centers rather than export driven economies.
- Maylasia is a fascinating, formerly under British rule, has had stellar growth since independence in 1957, and has just started moving towards a similar growth model that Taiwan, Japan and South Korea have enjoyed. It also has the Chinese "Bamboo Network" to tap into (which explains the dominance of the Chinese minority in the economy). It's also offering Islamic alternatives to Western finance for Muslim countries.
I think people blame religion far too quickly in these issues because it frequently arises as a symptom of some larger issue rather than a strict cause. I think what the Arabs need is a Park Chung-hee, distasteful in the short run, but providing for a solid economic foundation while keeping idle hands busy in the interim. Instead it's just sectarian brutal dictator after brutal dictator. Malevolence instead of Benevolence.
Maybe there is something in the East/South-East Asian cultural makeup that gives a better chance for a Benevolent(-ish) dictator to take charge for a while? I don't know, and again, I think that's over simplifying things for a bit and unfair to the Arab people.
idle hands are s source of misery about anywhere in the world you look, whether they lead to violence or the obesity epidemic, people with little to do will rarely do well. Some take up self destructive habits and others are just waiting to be led by some charismatic character, of which very few are benign
Comments
I've been reading through the "A History of Korea" by Michael Seth, hoping to get some insight into how Korea went from a colonized underdog into a global economic power in such a short time. The modern history of both Koreas is truly fascinating as are their early parallels.
One thing I've been surprised to learn is how much of a role various Christian groups in Korea played in anti-governmnet activities going all the way back to the Japanese Colonial period. There's some interesting and unique history there with respect to Korea's history with Christianity -- including being one of the only countries with a history of self-conversion, before missionaries ever showed up there.
More recently, the parallels between the economic development of the North and the South are quite striking. While the North made some very big economic development strides early on, the long term focus on almost pure heavy industry and military development caused the country to stagnate and economically regress -- despite an almost constant stream of aid and support from first the Soviet Bloc and then China. The infrastructure has begun to crumble because the state never bothered developing the entire economic ecosystem needed to keep it running.
The South on the other hand, under the military dictator, Park Chung-hee, took a more step-wise foundation building approach that's yielded tremendous long-term success for the country. Seizing power from an incompetently run, but democratic, government. Park put in place a complex series of programs designed to build up an export-oriented economy through gradual development of industry from light-industry to heavy.
It was tremendously corrupt, and built on lots of favor trading. But he used the power of the military and the government to keep the economy focused on pure growth, and pragmatically eliminated "non-essential" economic activities. Starting with things like sugar refineries and textile manufacturing, the country started working up to construction (a significant number of U.S. projects during the Vietnam war were built by Korean companies), then shipbuilding, cars, petrochemicals, etc. Each designed to both provide economic opportunities for export, as well as provide domestic capabilities for the next steps.
No political activity was allowed and the country was basically run like a giant, efficient, no-nonsense, military apparatus for decades. It took until the 80s before it was really time to switch off from this into the more liberal and democratic country we see today.
He financed all this with a very pragmatic finance scheme, hitting up Japans booming economy during the 60s and 70s, despite a great deal of animosity between the two countries. And then more importantly sold back the finished goods to Japan and the U.S. markets.
It was under Park that South Korea started doing major construction projects in the middle-East. The technical ability of South Korean construction companies can't be underestimated -- the Burj Khalifa was built by Samsung.
Despite significant student demonstrations and unrest during the Park administration (and the similar Chun Doo-hwan one that closely followed), most people were simply too busy working and scratching out a living to take to the streets, or form anti-government organizations.
There's other parallels as well, extremely low participation in the work force by women, a history of foreign meddling, etc.
I guess what I'm saying is that idle hands may just be the source of a lot of this misery. In richer Arab countries, most of the work is done by foreigners on the cheap and locals live off of the proceeds, they're bored and have nothing else to do. In poorer ones, people need jobs, are desperate and again, have nothing else to do.
There's been some half-hearted attempts to provide other activities. KAUST, for example, is a Science and Tech graduate-level university that's had billions invested into it. But one of the interesting points my book brings up is that setting up advanced schooling, or advanced industry, doesn't make sense unless a Park style staged economic program is put in place first to build all of the necessary social, educational and economic foundations to support these advanced industries. You can't really leapfrog these things, but you can make progress unbelievably fast.
The real problem is that, at least for the oil rich parts of the Arab world, there isn't much incentive to really do these things. If any place might have a go, someplace oil-poor, like Egypt, might be a logical place to kick off something like a "Tiger of the Nile" program. I know I'm not the first person to think of this either.
http://www.academia.edu/5319334/A_Comparison_of_the_Politica...
http://www.e-ir.info/2013/12/23/south-korea-egypt-and-waller...
http://www.imd.org/research/challenges/TC057-13-two-dictator...
This phenomenon has a name, the resource curse: http://en.wikipedia.org/wiki/Resource_curse.
Note also, that having a resource-oriented economy tends to vastly overstate GDP. A dollar of exported crude oil counts as a dollar of "national income" but it's not income any more than selling off your furniture is income. You're just converting assets into cash. This phenomenon makes countries that derive their income from selling resources think they're richer than they really are.
But I think this is an oversimplification. Not all of the Arab world is resource cursed. Egypt, as an example, only gets 7% of its GDP from Oil and Gas. Agriculture accounts for almost 20%. (of course you could possibly argue that tourism is the resource that Egypt is cursed with)
One of the interesting things I've also read about the development of South Korea is that U.S. advisors pushed South Korea to develop its agribusiness, but this was rejected by the Park administration in favor of the export-driven focus because of the poor and highly variable economic performance of agriculture.
Basically you can feed people if you grow rice, but you can feed them twice as much if you sell cars.
I think more important is the early and strong rejection in South Korea of Communist and Socialist economic ideas in favor of growth oriented chrony-capitalist ones. Notable is that Korean conglomerates who went along with the government plan and met their economic targets were given tremendous leeway, while ones that didn't hit their targets or were against the government goals, were simply ripped apart and bankrupted.
The problem with the export driven economy is we can't all be net exporters. At some point your export driven economy will be undermined by neighbors with cheaper labor.
I think there's something else going on there though...
South Korea (per capita GDP $24k) is hardly the only success story in that part of the world. Japan ($38k), Hong Kong ($38k), Singapore ($55k), and Taiwan ($20k) have basically pulled off the same trick. All these places have in common that they are either Chinese (mostly Chinese, in Singapore's case) or very closely related culturally to China (Korea and Japan are more closely related to China than, for example, Laos or Myanmar). They are all small, without huge agricultural potential or much other resources, but with good access to the sea.
A more recent, and possibly more relevant example is Malaysia ($11k). Malaysia is an interesting case. It is majority Muslim, but it has a significant non-Muslim Chinese minority that controls most of the economy. It is a large petroleum exporter, but it has successfully expanded to manufacturing and services, arguably escaping the "resource curse".
You might be tempted to conclude that Malaysia pulled this off because of their Chinese population (and I know some Malays have said exactly this), but there are counterexamples to this - Thailand ($6k), Indonesia ($4k), Vietnam ($2k) and Cambodia ($1k) all have significant ethnic Chinese populations. On the other hand, ethnic Chinese control business in all those countries far out of proportion to their share of the population.
What useful lessons Arabs can draw from this I have no idea. Well, I have some idea: just look at North Korea ($0.6k) and Vietnam ($2k). The lesson isn't just simply "communism is bad" though, because they are well behind Russia ($15k) and even Cuba ($6k).
Sure, the Asian tigers. There's some ideas that float around that various Confucian "values" contributed to this surge, hard work, education etc. But all those places were Confucian long before they became successful. The other thing they all have in common is deep support from a more powerful country.
- South Korea had some colonial development under Japan, and the U.S. support post WW2 and the Korean War made up to 1/5th of the country's GDP during some periods, nearly all of the Government budget and 100% of the military budget for quite some time. Favorable investment and borrowing and an open U.S. export market were instrumental to the modern success it is today.
- Japan was well on its way to being a major economic power before WWII, and significant support from the U.S. helped it rebuild after the war. Again, Favorable borrowing, investment and an open U.S. export market were helpful.
- Taiwan was a model Japanese colony before WW2 and received significant support from the U.S. after the establishment of the ROC. Significant U.S. support of the ROC military, aid and favorable borrowing and open markets.
- Singapore and Hong Kong have similar histories of British support, but towards trade and finance centers rather than export driven economies.
- Maylasia is a fascinating, formerly under British rule, has had stellar growth since independence in 1957, and has just started moving towards a similar growth model that Taiwan, Japan and South Korea have enjoyed. It also has the Chinese "Bamboo Network" to tap into (which explains the dominance of the Chinese minority in the economy). It's also offering Islamic alternatives to Western finance for Muslim countries.
I think people blame religion far too quickly in these issues because it frequently arises as a symptom of some larger issue rather than a strict cause. I think what the Arabs need is a Park Chung-hee, distasteful in the short run, but providing for a solid economic foundation while keeping idle hands busy in the interim. Instead it's just sectarian brutal dictator after brutal dictator. Malevolence instead of Benevolence.
Maybe there is something in the East/South-East Asian cultural makeup that gives a better chance for a Benevolent(-ish) dictator to take charge for a while? I don't know, and again, I think that's over simplifying things for a bit and unfair to the Arab people.
idle hands are s source of misery about anywhere in the world you look, whether they lead to violence or the obesity epidemic, people with little to do will rarely do well. Some take up self destructive habits and others are just waiting to be led by some charismatic character, of which very few are benign