The South Korean mir­a­cle

Financial Mirror (Cyprus) - - FRONT PAGE -

Most peo­ple know Korea be­cause of the threat for world sta­bil­ity that is posed by Kim-Jong un, the young leader of Py­ongyang, North Korea. In­deed, it is a se­ri­ous threat, es­pe­cially for the peo­ple liv­ing in South Korea. The prob­lems be­tween the North and South Korea are not new, and have ex­isted since the early 1950s and the divi­sion of the penin­sula af­ter the 1950-1953 Korean war. In the af­ter­math of the war, the coun­try was in ru­ins and the peo­ple of South Korea en­dured ex­treme poverty. How­ever, in less than four decades, the coun­try was re­mark­ably trans­formed into one of the world’s lead­ing economies and its cap­i­tal, Seoul, a thriv­ing me­trop­o­lis and a ma­jor eco­nomic hub in North­east Asia. This was mainly an ex­port-driven eco­nomic growth, led by its multi­na­tional con­glom­er­ates (known as “chae­bols”) such as Sam­sung, LG and Hyundai. Korean com­pa­nies are now among the global lead­ers in smart phones, TVs, com­put­ers, cars, etc., but also in­volved in con­struc­tion of oil tankers, con­tainer ships, sky­scrapers, high­ways and shop­ping malls around the world. South Korea is the only coun­try in the world that has tran­si­tioned from a ma­jor re­cip­i­ent of for­eign aid (mainly from the U.S.) to a ma­jor donor (par­tic­u­larly to North Korea).

The term that is used for the coun­try’s re­cov­ery is “Mir­a­cle on the Han River”, re­fer­ring to the growth of Seoul through which the Han river flows. Right now, Seoul is one of the most mod­ern, tech­no­log­i­cally-ad­vanced cities in the world, of­fer­ing a dy­namic and ex­cit­ing life­style to its peo­ple. It’s also the city that hosted the 1988 Sum­mer Olympics while the coun­try has been the co-host of the 2002 FIFA World Cup. I had the priv­i­lege and plea­sure to live, work, and ex­pe­ri­ence this re­mark­able city for four years (2007-2010) work­ing as an As­sis­tant Pro­fes­sor of Fi­nance at SKK Grad­u­ate School of Busi­ness. Be­fore mov­ing to Seoul, I did not have high ex­pec­ta­tions but it ended up be­ing an amaz­ing ex­pe­ri­ence with lots of valu­able lessons.

To high­light the key points of why South Korea has trans­formed into an eco­nomic pow­er­house in rel­a­tively short pe­riod of time, we have to see what are the main driv­ers that led to this re­mark­able re­cov­ery.

– The Con­fu­cian thought has been in­stru­men­tal in de­vel­op­ing and shap­ing the Korean so­ci­ety. Con­fu­cian­ism af­fects the re­la­tions be­tween old and young, eth­i­cal be­hav­iour, morals, and even forms the ba­sis for the Korean le­gal sys­tem. Eth­i­cal be­hav­iour (or morals) in all aspects of so­ci­ety are in­stru­men­tal for the ad­vance­ment of a coun­try. Ethics/in­tegrity is in­stilled in Korean so­ci­ety from a very early age, and that shapes their char­ac­ter.

– The Korean lead­ers had a vi­sion to trans­form the coun­try to an in­dus­trial and hi-tech pow­er­house. They in­vested a lot in the chae­bol sys­tem, by help­ing them grow and drive for­ward the na­tion’s econ­omy. They suc­ceeded, but that in­volved care­ful plan­ning, or­gan­i­sa­tion, and above all, pa­tience! Un­for­tu­nately, in many coun­tries around the

Cul­ture

Vi­sion

world, lead­ers are more con­cerned about the re­sults of the next elec­tion which dis­tracts them from work­ing on a longterm goal.

Col­lec­tive­ness

– Kore­ans have al­ways come to­gether at times of cri­sis, to help the na­tion (in the af­ter­math of the Korean war or dur­ing the East Asian fi­nan­cial cri­sis of 199798). I read sto­ries that dur­ing the 1998 cri­sis, about 3.5 mil­lion peo­ple have come to­gether and do­nated gold (around 227 tons) to raise the coun­try’s re­serves to re­pay the IMF debt. This was more of a sym­bolic ef­fort, but it high­lights the col­lec­tive­ness of the peo­ple at times of cri­sis.

– The Kore­ans have in­vested a lot in education, from the early stages up to univer­sity level. They have cre­ated ex­cep­tional ed­u­ca­tional cen­tres that are now world-renowned. Th­ese cen­tres/schools pro­vide the hu­man cap­i­tal for the chae­bols that trans­formed the coun­try into a hi-tech and in­dus­trial pow­er­house.

– The Kore­ans work long hours, again start­ing from a very young age all the way into their pro­fes­sional ca­reer. There is in­tense com­pe­ti­tion to get into the top univer­si­ties of the coun­try, and in­tense com­pe­ti­tion to suc­ceed in their ca­reer. Al­though work­ing long hours can have draw­backs as they are left with very lit­tle free or fam­ily time, it is ma­jor rea­son for the suc­cess of the coun­try.

For western so­ci­eties it’s worth study­ing care­fully the South Korean mir­a­cle. It can pro­vide valu­able lessons. Per­son­ally, I learned a lot.

In­vest­ment in Education

Work

Ethic

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