Republic of Korea and Jamaica: From economic weakness to strength

Sunday, May 19, 2019

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South Korea and Jamaica established diplomatic ties 57 years ago and have since been great bilateral partners, collaborating on many developmental cooperation projects of mutual benefit.

Coming from similar historical backgrounds of colonial rule, Korea and Jamaica have overcome many obstacles of similar nature, which are associated with oppressive dictatorial rule and slavery. Some of these include significantly high levels of poverty, severe financial indebtedness, economic depression, and social stagnation.

In the case of South Korea, the Korean War (1950-1953) devastated the country and placed it in a state of abject poverty, with the country depending on foreign aid for more than 90 per cent of its budget during the post-war era.

For Jamaica, the negative remnants of slavery stifled the harmony and social cohesion that was necessary for sustained economic growth. Yet, both countries have been able to rise above these circumstances and today are contributing significantly to the global economy and the prosperity of their peoples, even if not yet at desired levels.

Over these years, both countries have undergone major economic changes and experienced growth in their economies. We have seen upgrading of physical infrastructure, improvement in national investment climate, heavy investment in education, strengthening of social institutions and, in the case of South Korea, enviable technological advancements. Indeed, South Korea has done this at greater levels and globally is seen as a developmental model for best practices.

Of course, the opportunity is open for Jamaica to explore workable and comparable economic models from the successful Korean experience. According to the Bank of Korea, South Korea is the 11th-largest economy in the world as of 2018. This is a remarkable accomplishment, coming from being an impoverished state in 1948 to joining the Organization for Economic Cooperation and Development in 1996 and being internationally recognised as a developed state.

Most notably, the Republic of Korea became the seventh country to join the “30-50 Club” — countries with per capita income exceeding $30,000 and populations of more than 50 million. The other six countries which preceded us in joining the 30-50 Club were front-runners in achieving earlier industrialisation by acquiring colonies. Korea's achievement is all the more remarkable because we joined the race as a late starter, having belatedly achieved independence after going through a long period of colonial suppression. What then can Jamaica learn from South Korea?

Given that South Korea was one of the world's poorest countries before the 1960s, depending heavily on foreign aid, many would not expect the renaissance that took place in Korea. However, successive Korean governments took economic decisions that proved fruitful to the country moving from a gross national income per capita of US$85 in 1961 to US$31,349 in 2018, breaking the US$30,000 mark for the first time.

Key factors to South Korea's Economic Transformation

South Korea has experienced one of the largest economic transformations of the past 60 years. Our successful economic growth model, which was based on a strong central government trade [and] industrial and technological policies, has long been emulated by policymakers from many developing countries. Let me share with you some of the main reasons cited for Korea's success by various writers:

1. Export-oriented policies that led South Korea to produce steel, heavy equipment, ships, petrochemicals, and electronics and automobiles — quality products that can be identified in the global market space. Korea's exports as at April 2019 were US$48.86 billion.

2. Heavy investment in education. Educational development contributed significantly to South Korea's economic success. An educated population moved South Korea to become a giant in Asia.

3. An improvement in the business environment. According to the World Bank 2018 Doing Business rankings, South Korea is leading the USA, Japan, and China in key areas of enforcing contracts and ease of doing business rankings, all of which play a significant role in encouraging investment, production, communication and, eventually, economic growth.

4. Policies incentivising investment in innovation. It is well known that innovation and technology are the key factors that have underpinned South Korean export competitiveness and fuelled the country's remarkable economic rise over the past decades.

5. Heavy investment in research and development (R&D). Among OECD countries, South Korea spends 4.6 per cent of its GDP on R&D.

6. The hard work, sacrifices and dedication of the Korean people.

7. Initiating a shared culture of hard work and high achievements.

My country's success was not by chance. We were able to identify the needs of the Korean people and, by extension, the country, and articulate a clear vision for Korea. The realisation of that vision can be attributed to the sacrifice of the people, strong social messaging, and the discipline that exists in the society. Jamaica, too, can experience this significant growth and vision which seek to serve the common good.

Positive Trajectory in Jamaica

On April 11, 2019, the Jamaica Observer published an article stating that the IMF's World Economic Outlook projects Jamaica's GDP will grow by 1.7 per cent for 2019. Like Korea in the past, Jamaica in 2013 launched an ambitious reform programme to stabilise the economy and stimulate growth. For the first time in decades Jamaica's public debt fell below 100 per cent of GDP in 2018/2019. Unemployment is trending down, with an 8.7 per cent rate in October 2018. The Jamaican economy grew year on year 2.0 per cent in the fourth quarter of 2018, and figures to date show a 1.9 per cent growth in the economy. This is encouraging for Jamaica and it is my hope that the Government will continue to build on these gains.

Mutually Beneficial Friendship

My country stands with Jamaica. There are many opportunities for Jamaica to learn from the Korean developmental experience. Korea has wide expertise in many areas that are critical for economic growth. I think the time is right for us to collaborate more, capitalising on our mutually beneficial and friendly relations to achieve prosperity for our peoples.

— Young Gyu Lee is Charge d'Affaires at the embassy of the Republic of Korea in Jamaica


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