4 30-10 final edit -mozambique’s economic miracle –korea
1. How to escape poverty!
Presenters: Part 1 –TimWilson; Part 2 –Sasha Shakov;
Part 3 –Vivienne Oyunchimeg; Part 4 –Dasha Karyukhina
Korea 1961
2. PROLOGUE:
Ha-Joon Chang
Born: October 7, 1963
Seoul National University
University of Cambridge
Is a leading,
Heterodox Economist
specializing in
Development Economics
Currently a Reader in the
Political Economy of
Development at the
BOOK COVER:pages vii-xxv
3. BookTitle:
The Bad Samaritans,
A Prologue Excerpt:
Prof. Ha-JoonChang
http://geology.com/world/south-korea-map.gif http://www.vassar.edu/headlines/2008/images/ha-joon-chang.jpg
http://wwp.greenwichmeantime.com/images/time/africa/mozambique.jpgMozambique, Africa
A short comparative analysis of the economic and
developmental advancement of Korea, whose state in 1961
was similar to the condition of Mozambique today.
South Korea
4. When I was born in 1963, Korea was one of
the poorest countries in the world! “Today I
am a citizen of the wealthier, if not
wealthiest, countries in the world. During my
lifetime, per capita income in Korea has
grown something like 14 times, in purchasing
power terms. It took the UK over two
centuries (between the late 18th century and
today) and the US around one and half
centuries (the 1860’s to the present day) to
achieve the same result.” –Ha-Joon Chang
5. AUTHOR’S CHILDHOOD:
During the 1960’s the author’s
family lived in a new two
bedroom house without flush
toilets. But they owned one of
the fewTVs and Refrigerators in
their neighborhood (Chang, x-xi).
AUTHOR’S PARENTS
CHILDHOOD:
Mother’s Story: “…her heartbreak
when her little brother, starving
during the Korean War at the age
of five, said that he would feel
better if he could only hold a rice
bowl in his hands, even if it was
empty (Chang, xi).”
Father’s Story: “At the age of ten,
he had to watch helplessly as his
seven-year-old younger brother
died of dysentery, a killer disease
then that is all but unknown in
Korea today (Chang, xi).”
http://lcweb2.loc.gov/frd/cs/korea_south/kr02_02e.jpg
6. LITERACY RATES
1945
1961
2010
0%
20%
40%
60%
80%
100%
Literacy
Rates
1945
1961
2010
PER CAPITA INCOME
1961
2004
2006
$0
$5,000
$10,000
$15,000
$20,000
Korea - Per Capita Income
1961
2004
2006
Within 16 years the Literacy Rate
was increased 49% (1945-1961)
22% (1945) – 71% (1961) – 99% (2010)
From 1961 to 2004 the Per Capita
Income increased over 172 times
$87 (1961) - $14,162 (2004) - $20,000 (2006)
7. ABOUTTHE KOREAN WORKER ABOUTTHE KOREAN JAEBEOL
“…the government
can persuade,
threaten, or induce,
but in the last analysis
it is the people who
achieve.”
–W. Arthur Lewis, Daily
Newspaper Joong Ang
Republic of Korea
재벌: “…if Samsung
were not in Korea, the
Korean economy
would have been at
the same stage as that
of the Philippines.”
–Ikeda Motohiro,
Seoul Nihonkeizai
Newspaper, Seoul
8. Ha-Joon Chang’s Story
Mozambique’s Economic Miracle is a
story retelling Korea’s Economic
Miracle.
9. Maputo, Mozambique-
basedTres Estrelas, the
largest African business
group, unveiled a
breakthrough technology
for mass production of
hydrogen fuel cells.
The new fuel cell factory will
start production in the
autumn of 2063.
10. 1. Hydrogen fuel is set to replace alcohol as the
main source of power for automobiles
2. This is bound to pose a serious challenge to
the leading alcohol producers.
3. Offering consumers much better value for
their money in the form of Hydrogen Fuel
Cells,Tres Estrelas takes on the Big Boys
11. 1. TheTres Estrelas Company
started with the exporting
of cashew nuts in 1968
2. Then diversifying into
textiles and sugar refining
3. Followed by a bolder move
into electronics; first as a
subcontractor for Samsung
and later as an
independent producer.
12. 1. In 1995 the per capital
income was $80 and the
country had the poorest
economy in the world.
2. Deep political divisions,
rampant corruption and
a 33% literacy rate.
3. In 2000, eight years
after the civil war the
average citizen earned
$210 a year.
13. The rise of theTres Estrelas company in
Mozambique symbolizes the fast company
growth that happened with modern Samsung
in Korea.
14. The Korean economic development programs
started from the time of president Park with the
launching of the ambitious Heavy and Chemical
Industrialization program in 1973. New firms
were set up in electronics and other advanced
industries. During this period, the country’s per
capita income grew by more than 5 times; also
exports grew even faster increasing more than 9
times in US dollars between 1972-1979.
15. The country’s obsession with economic
development was fully reflected in their
education, where they learned about their
patriotic duty and were taught to ignore
foreign advertisements and offerings of
imported products.This was to preserve
foreign currency for purchasing products
which would directly help the Korean
economy.They darkly commented on those
who preferred foreign products.
16. Spending foreign exchange
on anything not essential for
Korean industrial
development was prohibited
or strongly discouraged
through import bans, high
tariffs and excise taxes. Also
foreign travel was banned
unless you had explicit
government permission to do
business or study abroad.
http://www.koreaittimes.com/images/imagecache/large/Early%252070's%2520TV%2520manufactured%2520by%2520Gold%2520Star.jpg&imgrefurl
17. A considerable quantity of illegal and semi-legal
foreign goods was in circulation.There was some
smuggling, especially from Japan, but most of the
goods involved were things brought in illegally or
semi-legally from the numerous American army
bases in the country. Increasingly affluent middle
class families could afford to buy M&M’s andTang
juice powders from shops or itinerant peddlers. Less
affluent people might go to a restaurant to be
served boodae chige or kimchi chige.
18. Korea’s economic miracle wasn’t without its dark
sides.
In the textile and garment industries, which were
the main exports industries, workers often worked
12hours or more in very hazardous and unhealthy
conditions for low pay.
Conditions were better in the newly emerging heavy
industries: cars manufacturing, steel, chemicals,
machinery, and so on-but, overall, Korean workers
with their average 53-54 hour working week, put in
longer hours than just about anyone else in the
world at the time.
20. Also, urban slums emerged. Families of 5 or 6 would
be squashed into a tiny room and hundreds of
people would share one toilet and a single
standpipe for running water. Many of these slums
would ultimately be cleared forcefully by the police
and the residents dumped in far-flung
neighborhoods, with even worse sanitation and
poorer road access, to make way for new apartment
blocks for the ever-growing middle class
21. Few people
outside of
Korea were
aware that
the beautiful
public parks surrounding the impressive
Seoul Football Stadium they saw during
2002World Cup was built literally on top of
the old rubbish dump on an island http://en.wikipedia.org/wiki/File:Se
oul_World_Cup_Stadium.jpg
22. In October 1979,president Park was unexpectedly
assassinated by the chief of his own Intelligence
Service, amid mounting popular discontent with
his dictatorship and the economic turmoil
following the Second Oil Shock.A brief ‘Spring of
Seoul’ followed, with hopes of democracy welling
up. But it was brutally ended by the next military
government of General Chun Doo Hwan, which
seized power after the 2 weeks armed popular
uprising that was crushed in the Kwangju
Massacre of May 1980.
23. By 1982, Koreans had become competent enough
to copy advanced products and rich enough to want
the finer things in life (music, fashion, books).
Also at this time, the country was one of the ‘pirate
capital’ of the world, churning out fake Nike shoes
and LV bags….
Today Korea is one of the most inventive nations in
the world -it ranks among the top 5 nations in terms
of the number of patents granted annually by the
US Patent office.
24. In the late 1980’s,Korea had become a solid upper
middle income country.
In 1996,the country even joined the OECD
(Organization for Economic Cooperation and
Development) the club of rich countries-and
declared itself to have ‘arrived', although that
euphoria was badly deflated by the financial crisis
that engulfed Korea one year later in 1997
Korea’s economic growth and the resulting social
transformation over the last four and a half
decades have been truly spectacular.
25. For most economists, the answer is a very
simple one. Korea has succeed because it
has followed the dictates of free market.
The view is known as Neo-liberal Economics.
Neo-liberal Economics:
is an updated version of the
liberal economics of the 18th
century economistAdam Smith.
26. Belief that unlimited competition in the free
market is the best way to organize an economy
Judging of government intervention as harmful,
because it reduces competition
Supporting of certain forms of monopoly (such as
patents or the central bank’s monopoly over the
issue of bank notes) and political democracy.
The core Neo-liberal agenda of
deregulation, privatization and opening up
of international trade and investment has
remained the same since the 1980’s
27. Use their aid budgets and
access to their home markets
as carrots to induce the
developing countries to adopt
neo-liberal policies
Creation of an environment in
the developing country
concerned that is friendly to
foreign goods and investment
in general
28. The IMF (International Monetary Fund)
and theWorld Bank play their part by
attaching to the loans the condition that the
recipient countries adopt neo-liberal policies.
TheWTO (WorldTrade Organization)
contributes by making trading rules that
favor free trade in areas where rich countries
are stronger but not where they are weak.
29. Nurturing certain new industries, selected by the
government
The government owned all the banks, so it could
direct credit and loans
Some big projects were undertaken directly by
state-owned enterprises
Pragmatic , rather than ideological, attitude to
the issue of state ownership
Absolute governmental control over scarce
foreign exchange and foreign investment
Encouraging of “reverse engineering” and over
looking ”pirating” of patented products
30. Today's rich countries while gaining market
strength used protectionism and subsidies, while
discriminating against foreign investors.
They have state-owned enterprises
They provide macroeconomic management
In the past the Netherlands and Switzerland
refused to protect and enforce patents.
Practically all of today’s developed countries,
including the UK and the USA have become rich
on bases of policy recipes that go against the
orthodoxy of Neo- liberal Economics
31. 1. According to Friedrich List,
they “kicking away the ladder”.They
preach free market and free trade to
the poor countries in order to take
larger shares of the latter’s markets
and to pre-empt the emergence of
possible competitors.
2. As a result of re-writing their own histories
Bad Samaritans are recommending free trade, free-
market policies to the poor countries in the honest
belief that their own countries used to have the same
routes.
32. Free trade reduces freedom of choice for poor countries
Keeping foreign companies out may be good for them
(Developing Countries/Economies) in the long run
Some of the world’s best firms are owned and run by the
state
“Borrowing” ideas from more productive foreigners is
essential for economic development
Low inflation and government prudence may be harmful
for economic development
Corruption exists because there is too much, not too little
market
Free market and democracy are not natural partners
Countries are poor not because their people are lazy; their
people are lazy because they are poor
33. Presenters: Part 1 –TimWilson; Part 2 –Sasha Shakov;
Part 3 –Vivienne Oyunchimeg; Part 4 –Dasha Karyukhina
Korea 1961