Education has been taken very, very seriously since the 1960s.
For instance, (I've heard that) planes do not fly during the day of university entrance exam and that taxi is for free for students during this day.
How did South Korea get so rich?
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The protectionism explanation is weak.
Pretty much every 3rd world country did the same and most of them didn't have any success. See Latin America, for example.This.
The difference between South Korea and slowly-developing countries is that South Korea had LESS protectionism. Libtards love to cite one example of protectionism in South Korea as if that's the only reason they had 10% gdp growth per year for 3 decades. Bulls**t. South Korea had the least protectionism of just about every developing country except Hong Kong, Singapore and Taiwan. All of which happened to be growth miracles.
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The protectionism explanation is weak.
Pretty much every 3rd world country did the same and most of them didn't have any success. See Latin America, for example.Are we really going to resolve this debate with the forum equivalent of a cross-country growth regression? I see your S. Korea and raise you Latin America and Africa!
There is a pretty extensive literature on this. Depending on who you believe, the Koreans engaged in a lot of industrial policy, but they did it right--companies were cut off if they didn't export, etc. The planning ministries weren't allowed to be the source of political patronage. That's a pretty big difference between Latin America and Africa and the Asian Tigers.
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Leftists would probably regard me as a down-the-line neoliberal, but I have to say that you're embarrassing yourselves if you think that South Korea's success is a clear example of the success of free-market capitalism. Yes, it demonstrates that a mostly capitalist system is superior to the hellish, statist repression to the North. But South Korea's economic policy during the boom was remarkably interventionist -- if you want a clear example of successful lassiez-faire in the second half of the 20th century, you should be looking at Hong Kong, certainly not Korea.
Here are some features of Korean policy under Park Chung Hee:
-- Completely repressed financial markets, with the landscape dominated by domestic banks effectively controlled by the government. No serious public equity or bond markets. Massive curbs on foreign capital. Nonconvertible won. Government-directed loans to selected sectors at preferential interest rates accounting for a majority of lending. Big decisions "from the top" to develop in certain sectors -- for instance, the heavy and chemical industry push in the 1970s.
-- Barriers to entry that cemented the stature of a few large chaebol, causing them to bloat into absurdly diversified entities controlling a huge chunk of the economy. Incentives to amp up leverage in anticipation of inevitable government rescues. Protective tariffs imposed as rewards for export performance.I'm not saying that these policies were good, but evidently they weren't bad enough to stop Korea from developing at perhaps the fastest rate in world history (up until that time). The problem with cases like this is that there are so many possible contributing factors that it's hard to really say what worked. There's plenty of material for heterodox economists like Ha-Joon Chang to claim that Korea vindicates their view of development, yet also many ways in which Korea's success can be understood in the context of mainstream economics. I tend to come down on the latter side, though some aspects of the Korean experience raise uncomfortable questions.
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By the way, some of my (uninformed) thoughts:
-- First, Korea's emphasis on exports (as opposed to import substitution industrialization common elsewhere at the time) was a masterstroke on several levels. It was better from a political economy perspective: if you're an industrialist selling to a captive domestic market, you don't give a s**t about efficiency in your sector, as long as barriers to entry maintain your profit margins. In fact, you have every incentive to avoid development and artificially cripple your sector: your position is safer under stagnation than change. Success as an exporter, on the other hand, is much more correlated with actual value creation.
Even ignoring political economy, export orientation is better from a simple efficiency perspective -- even if your industrial policy involves some wasteful subsidies and handouts, as an exporter at least you kinda-sorta play to your comparative advantage, while import substitution pointlessly forces you to engage in all kinds of production at which you're hopelessly inept. This is especially true in the presence of scale and learning externalities (often invoked by heterodox economists as justification for protectionism) -- you're much more likely to reach efficient scale if you can concentrate in a few export sectors rather than attempting to perform across the board, particularly if you're a small country.
It's quite possible that this one aspect of Korean policy -- the obsessive focus on export promotion -- allowed it to grow even in the presence of a lot of other suboptimal policies.
-- Korea's labor policy isn't such a common topic (perhaps because it plays to a very different ideological constituency), but I wonder if it also played a big role. Basically, the Korean regime was very right-wing on labor (as you might expect from a military dictatorship driven by hatred of Communism). There weren't restrictive labor laws or strong unions. This is in stark contrast to a lot of less successful nations (*cough* India) where labor laws continue to prevent a serious organized manufacturing sector from forming.
-- Given the success of so many other East Asian countries, Korea's success is to some extent overdetermined. It's popular to cite various features common to these nations -- like a strong emphasis on education, as exemplified by high educational attainment relative to income -- as the "key" behind their success, but we just don't have enough independent data points to be able to know much. Education is, no doubt, important, but there are a lot of other distinctive features as well.
For instance, Korea had, prior to being a colony of Japan, an extremely longstanding and cohesive state and civil apparatus (a dynasty lasting 500 years). Although this state had been primitive and isolationist, its history of sheer strength and continuity compared very favorably circa 1960 to other poor countries, many of which were primarily tribal and had minimal history of organized government prior to colonialism.
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$500 GDP/capita in the 60s. Now, they're on the technological frontier with Samsung, Hyundai, and LG -- gradually ripping market share from our most cherished technological innovators.
WTF happened?South Korean gets rich because its citizens all use 'Paul Wilmott Introduces Quantitative Finance' by Paul Wilmott as an everyday bedtime reading.
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Leftists would probably regard me as a down-the-line neoliberal, but I have to say that you're embarrassing yourselves if you think that South Korea's success is a clear example of the success of free-market capitalism. Yes, it demonstrates that a mostly capitalist system is superior to the hellish, statist repression to the North. But South Korea's economic policy during the boom was remarkably interventionist -- if you want a clear example of successful lassiez-faire in the second half of the 20th century, you should be looking at Hong Kong, certainly not Korea.
Here are some features of Korean policy under Park Chung Hee:
-- Completely repressed financial markets, with the landscape dominated by domestic banks effectively controlled by the government. No serious public equity or bond markets. Massive curbs on foreign capital. Nonconvertible won. Government-directed loans to selected sectors at preferential interest rates accounting for a majority of lending. Big decisions "from the top" to develop in certain sectors -- for instance, the heavy and chemical industry push in the 1970s.
-- Barriers to entry that cemented the stature of a few large chaebol, causing them to bloat into absurdly diversified entities controlling a huge chunk of the economy. Incentives to amp up leverage in anticipation of inevitable government rescues. Protective tariffs imposed as rewards for export performance.
I'm not saying that these policies were good, but evidently they weren't bad enough to stop Korea from developing at perhaps the fastest rate in world history (up until that time). The problem with cases like this is that there are so many possible contributing factors that it's hard to really say what worked. There's plenty of material for heterodox economists like Ha-Joon Chang to claim that Korea vindicates their view of development, yet also many ways in which Korea's success can be understood in the context of mainstream economics. I tend to come down on the latter side, though some aspects of the Korean experience raise uncomfortable questions.I think the point is that South Korea had an interventionist government, but so did all the others poor countries. And that when it comes to trade, Korea was less closed than most.
So, it is hard to say that protection caused growth, like some people try to say.It is like if every football team wore pink bandanas. Then someone took the 5 best teams, looked that those 5 teams use pink bandanas and said that pink bandanas cause success.
This is not what I expect economists to do. This is what I expect people that write business books to do.