The economic development of South Korea since 1960 is one of the biggest success stories in the history of development. In just a few decades, South Korea transformed itself from an agricultural society to an industrialized nation exporting high-technology products such as cars, TVs, mobile phones or computers. Furthermore, after more than two decades of authoritarian rule South Korea changed relatively peacefully to a democratic society in 1987.
On the other hand, many developing countries in Africa, Latin America or South Asia still face economic stagnation and enormous development problems: Poverty, inequality, bad health, a low life expectancy, illiteracy, ethnic and religious conflicts and discrimination of women are a daily occurrence. Observing these large differences in the development level of South Korea and today's developing countries, this article explores, what numerous underperforming countries can learn from the South Korean development model.
This article argues that it will be very difficult, if not impossible, for today's developing countries to imitate the South Korean development model by simply adopting similar policies and formal institutions because, apart from conventional explications, informal institutions shaped by Confucianism ("Asian values") and specific historical circumstances played a key role in the economic development of South Korea. Nevertheless, there are still some lessons to be learnt from South Korea.
Keywords: South Korea, economic development, developing countries, formal institutions, informal institutions, Asian values, Confucianism, institutional transplantation
The economic and societal development of South Korea since the 1960s is without doubt a success story. In just a few decades, South Korea transformed itself from an underdeveloped country to an industrialized nation exporting high-technology products like cars, TVs, mobile phones and computers. South Korea's chaebols (conglomerates) like Samsung, Hyundai or LG are well known throughout the world. Moreover, after more than two decades of dictatorship South Korea transformed relatively peacefully to a democratic country in 1987. The population of South Korea is one of the best educated in the world and income in South Korea is distributed very equally compared to the rest of the world. While South Korea has reached a development level equivalent to that of Spain or Italy, its communist neighbor North Korea is one of the world's poorest countries. The divergent long-term development path of South and North Korea compared to the USA is shown in the graph below (Note 1).
The Asian crisis in 1997, or "IMF crisis" as Koreans call it, caused a slowdown of economic development in East Asia, but compared to other countries hit by the crisis, South Korea recovered relatively well and continued to grow economically after the crises but at a reduced rate. In any case, the Asian crisis should not blur the positive evaluation of the long-term development performance of South Korea and the other "Asian Dragons" Taiwan, Singapore and Hong Kong as Léon (1998, p. 5) rightly stresses.
"For many Western observers the Asian crisis not only means the interruption of an impressive process of growth, but the end of a model of development. In my opinion, an ounce of caution is not out of place. Inasmuch as economic development is a long-term process, the development performance of East Asia should be analyzed in a historical perspective, that is to say, at least from 1950 to present."
While South Korea and several other East Asian countries influenced by Confucian culture closed or are closing the development gap to the world's most developed countries (Note 2), many countries in Africa, Latin America or South Asia still face economic stagnation and enormous development problems. Poverty, inequality, bad health, a low life expectancy, illiteracy, ethnic and religious conflicts and discrimination of women are a daily occurrence in many developing countries. …