Real lessons for Myanmar from the South Korean economic model

01 September 2016
Real lessons for Myanmar from the South Korean economic model
The South Korea economic success story - View of Seoul. Photo: EPA

In the following response to our story, “South Korean development model ‘not the answer’ for Myanmar: Indian economist,” Kyungmee Kim, a South Korean researcher and PhD student specializing in covering Myanmar echoes the concerns voiced by Indian economist Prof. Jayati Ghosh that the country has to take care in its choice of economic model.
The original story can be found here:‘not-answer’-myanmar-indian-economist
When I first visited Myanmar in 2014 and travelled the country, I was quite surprised to find many local people watching South Korean soap operas. The shows seemed to be hugely popular and were being watched people on the busy streets in Yangon, as well as in the remote villages in the countryside.
When I spoke with people and introduced myself as a South Korean researcher, many ordinary people, colleagues and friends in Myanmar showed an interest in my country’s popular culture, and some knew the story of my country’s quick economic development, sometimes referred to as an ‘economic miracle’.
In a way it is a miracle. Two generations ago the country was in ruins after the Korean War, an international conflict that, technically, continues to this day. Perhaps my middle-class family is a showcase of the rapid change that followed. My grandparents are illiterate and only started using a flushing toilet a few years ago. My parents, still traditionalists in many ways, managed to gain a better education and after years in small inner city apartments, they now live in a comfortable modern house. And now, my generation has the highest college graduation rate, and many are even educated and settled abroad. To be sure the story of my country’s economic development is a fascinating case.
There is no panacea to achieve development
When considering Myanmar’s economic future and various paths to development, it would be prudent to study the South Korean success story and whether it would be suitable for the country. I would like to argue that it is not, and the analysis of Prof. Jayati Ghosh and Prof. Chandrasekhar’s (Mizzima article: “South Korean development model ‘not the answer’ for Myanmar: Indian economist”) appears to be accurate and insightful.
In fact they are not the first to warn against the South Korean economic model. In his 2012 report Prof. Dwight H. Perkins of Harvard University also refuted the possibility of “imitating South Korea” in Myanmar’s industrial policy. Applying lessons learned from one country to another always has caveats due to the structural and historical differences. Development is not a single path, and there is no panacea.
The South Korean Government has been actively promoting the ‘Korean model’ of development overseas. In Myanmar the South Korean government has offered a range of development assistance including helping to establish a government think tank to advise the national development planning. Despite the effort of the South Korean government, it is not clear if the Government of Myanmar is yet fully convinced.
Uncertainty in the new economic policy
Since the NLD took the reign of Government in March 2016, little has been revealed on the economic policy.And the role of the state in the economy and further economic reform is still left unclear.
The newly elected government has inherited numerous problems from a half-century military rule. Despite the challenges, the country is in a unique moment of history to choose its own path for development, the opportunity that South Koreans had not enjoyed until its democratization in 1986.
Myanmar has its multiple layers of complexities from diversity in ethnicity and religion compared to South Korea. The country has a vast territory with lucrative natural resources and is located in a geopolitically strategic location. A long tradition of sophisticated literary culture and the bright young people’s thirst for opportunities offers hope of a promising future.
Is Myanmar really following the ‘South Korean development model’?
In addition to the strong focus on industrialization and export, the South Korean development model until 1980s can be characterized into the following: 1) state-driven industrial policies and planning; 2) strong state intervention to the domestic market; and 3) limited influence of Foreign Direct Investment (FDI).
Based on the economic reforms by the previous government, Myanmar seems to be heading in a different direction. For example, attracting FDI has been the main strategy for the Government of Myanmar to develop and revitalize its economy. Yet the role of state in national economic planning has remained central after the reforms.
These policies enforced by the South Korean government have left legacies of both positive and negative. One of the strategies was the restrictions on imported goods. During the military junta period, the South Korean government employed ‘economic nationalism’ to promote the consumption of domestic products. As a matter of fact, it was difficult to find imported goods in any regular retail stores in South Korea until the late 1990s, and succeedingjuntas restricted its citizens from traveling abroad until 1989. Under these circumstances South Korean companies enjoyed a guaranteed revenue from what was asemi-competitive domestic market.
Another conspicuous example of strong state intervention is the government subsidies to larger companies, which caused a structural imbalance in the business ecosystem. The South Korean government provided loans and benefits to companies to promote exports in certain industries. The patronage of the government was crucial to the business, and the decades-long relationship between the government and business allowed negligence of tax spending and corruption of large business. As a result a handful of business conglomerates, also known as Chaebols,have dominated the South Korean economy.
Some may argue that public investment is necessary for implementing the export-driven industrialization strategy for the ‘latecomers’. However unchecked financial support without transparency has a risk of breeding corruption and discouraging real entrepreneurship.
Unsolved and deepened social problems
In general South Korean people’s life has significantly improved thanks to the economic development. Education, health care, pensions, and a liberal culture have become widely available in the society, and many South Koreans have been relishing the outcomes of development and acquired wealth. However the laggard social policy has left many social problems unsolved despite the economic success. Chang Kyung-Sup in his article in 2009 refers to the ‘compressed modernity’ as the result of rapid economic and social changes, which leaves a number of predicaments in society.[1]
It is also a clear example that social progress is not assured by economic growth. The limited social welfare programmes have dire consequences of a diminishing middle-class and leaving the low-income population trapped in poverty, and the wealth gap has profoundly widened between the rich and the poor since the 1997-8 Asian Financial Crisis. According to the recent statistics, nearly 50 percent of the elderly live in poverty due to an insufficient welfare programme and pension funds.
Gender equality and labour rights have not made significant progress despite the economic growth. The most educated generation of women are still forced to exit the labour market after marriage and childbirth.[2]South Korea is one of the least unionized OECD member countries, and its business has often neglected basic rights and welfare for employees.[3]Now many South Koreans have bitter feelings about the legacies of economic development and express the frustration about the persisting social problems.

[1] Kyung-Sup, Chang. “Compressed Modernity and Its Discontents: South Korean Society in Transtion.” Economy and Society 28, no. 1 (1999): 30–55. doi:10.1080/03085149900000023.

[2] See more about moderate success of the legal reform in 2006: Cho, J., & Kwon, T. (2010). Affirmative action and corporate compliance in South Korea. Feminist economics, 16(2), 111-139.

[3] OECD Stat.

The people of Myanmar have entrusted the NLD government with an important task to decide the right path for the development of the country. The country is in a unique moment in history, and it is a high time to discuss what path of development the country should take. Cherry-picking relevant policies from other countries is much needed, but the South Korean model or any other development models need to be understood in their historical context and with their limitations.
Kyungmee Kim is a PhD Candidate at Uppsala University in Sweden. Her PhD research topic is on the contentious hydropower development in Myanmar and its role in civil war. She also teaches research methods in Peace and Conflict Studiesand environmental security at Uppsala University.