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Wednesday, 30 November 2011
South Korea: a model of development? | Mark Tran
South Korea, the host of this week's fourth high-level forum on aid effectiveness, believes other countries could learn from its development experience
It may not be the prettiest seaside resort, with its drab tower blocks looming over the beach, but South Korea's second-largest city does not lack civic ambition.
Located at the southernmost tip of the Korean peninsula, Busan not only boasts a mammoth department store, the world's biggest – overtaking Macy's in New York two years ago – it also plans on having the world's third-tallest building in 2013, after Burj Khalifa in Dubai and Taipei 101 in Taipei, Taiwan.
On Tuesday, Busan hosts the fourth high-level forum on aid effectiveness, when more than 2,000 delegates, with star turns from Hillary Clinton and Tony Blair, descend on the vast Bexco conference centre, where workers were still putting the finishing touches to its layout at the weekend. Busan and South Korea rightly take great pride in hosting this conference, and the South Korean government believes others can learn from its development experience. Echoes here of Turkey, host of this year's least-developed countries conference in Istanbul, when it banged on about the importance of the private sector in its own development.
After the Korean war, South Korea was one of the world's poorest countries with only $64 per capita income. Economically, in the 1960s it lagged behind the Democratic Republic of the Congo (DRC) – currently holding elections marred by violence . Since then the country's fortunes have diverged spectacularly. South Korea now belongs to the rich man's club, the OECD development assistance committee (DAC). The DRC has gone backwards since independence and, out of 187 countries, ranked bottom in the 2011 Human Development Index.
South Korea, however, benefited from big injections of foreign aid, first from the US, then Japan. A briefing paper from KoFID, a South Korean network of civil society organisations, and ReDI, a South Korean thinktank, points out that the US offered about $60bn in grants and loans to South Korea between 1946 and 1978. In the same period, the total amount of aid provided by the US to the entire African continent was $68.9bn. Korea – considered by the US an important ally during the cold war – indisputedly used the aid well. Seoul was not afraid to stand up to the US when they differed on development strategy as well.
In a foretaste of the current debate on "ownership", South Korea was not prepared to play second fiddle to the US and insisted on pursuing its own course. Aid was linked to South Korea's planning and budget process, one of the principles set out in the Paris declaration on aid effectiveness in 2005 and expected to be reaffirmed in Busan.
South Korea, under strongman Park Chung-Hee, focused on building up large economic champions, or chaebols (business conglomerates), against American advice to focus on small- and medium-sized companies.
That policy laid the foundation for successful South Korean brands in the world market, such as Samsung and LG, although it came at a price in terms of political corruption in the close ties between business and political elites. KoFID and ReDI argue that the focus on conglomerates led to the chaebols exploiting their monopoly status, fostering increasing economic inequality.
Park took a pragmatic approach to corruption. Instead of cracking down on corrupt businessmen as urged by the US, he expropriated their bank shares and assigned them to invest in import-substitution industries, such as fertilisers, a point made in Catalysing Development, a book on aid edited by Homi Kharas, Koji Makino and Woojin Jung.
Whatever its faults, the South Korean regime did not squander the aid it received, unlike Mobutu in the DRC's previous incarnation, Zaire. As the International Monetary Fund (IMF) and the World Bank looked the other way, Mobutu looted the country, building himself palatial follies in his mother's home village in the remote bush in Gbadolite, complete with an airport that could accommodate Concorde for shopping trips the Mobutu clan would make to Paris or New York.
While the DRC stands out as a model of development to be shunned, South Korea, as well as Vietnam provide pointers on how development should be done.
Once again, Vietnam underlines the importance of ownership. The government, rather than donors, set out the poverty reduction agenda and at times has rejected the advice of international institutions. Vietnam allowed its programme with the IMF to lapse over disagreements with the pace of financial sector reform and audits of the central bank.
Ownership cuts both ways, however. Vietnam, like a number of developing countries that have overseen considerable progress, has a strong authoritarian streak, recently jailing a French-Vietnamese blogger. Rwanda, Ethiopia and Cambodia also spring to mind in this context. A primary concern of civil society groups in Busan is the increasing use of legislation to crack down on NGO activity.
Cambodia is discussing an NGO law that civil society groups fear could further stifle dissent in a society with minimal political opposition, although there are signs the regime is backtracking under international pressure. Meanwhile, some Ethiopians say civil society has been virtually strangled since the introduction of an NGO law in Ethiopia in 2009. Campaigners are hoping to hear a strong message of support from Clinton for civil society when she speaks on Wednesday.
As for South Korea, KoFID and ReDI say the government has not given enough importance to the role of civil society in the country's successful path to development.
"Decades of suffering and sacrifice were endured by most of the population: the small business people, labourers and farmers," KoFID and ReDI argue. "It was their push for a democratic civil society in Korea that lay behind the stable development of the country."
It is an assertion open to debate, but Tunisia, Egypt and the Arab spring show the dangers of not spreading the benefits of economic growth evenly.