Introduction
It is not often that an international event and economic development outcome generate as much attention and admiration as the transformation of South Korea from a war-ravaged, international aid-dependent economy to an advanced industrialized economy and a donor of aid in one generation has done. Dusting itself off Japanese colonialism, the regional effects of World War II, fallouts of civil war resulting in its splinter into two countries, and the United States’ military occupation of the country,1 South Korea has become a template for national transition from economic poverty to wealth, an enviable prototype for how a State can reinvent itself from near irrelevance to international respectability. History bears the record of South Korea’s successful hosting of the 1988 Summer Olympic Games in Seoul, the 2002 Soccer World Cup, the 2010 G-20 Seoul Economic Summit, the 2011 High Level Forum on Aid Effectiveness in Busan, and the 2018 Winter Olympic Games in PyeongChang. Beyond its international sports hosting prowess, South Korea is also the 13th largest economy in the world, and in 2018, it became the ninth country in the world to have accomplished the economic feat of hitting a trade volume of $1 trillion!
These economic achievements of South Korea are remarkable for several reasons, two of which are its GDP per capita and its international trade numbers. On GDP, South Korea has a prominent lead in comparison with the economic growth of some African countries that it once shared similar economic realities with. For instance, in 1950, Gross Domestic Product (GDP) per capita for Ghana was $1,193 while South Korea’s was $876, that of Cote d’Ivoire was $859, and Nigeria’s was $547. By 2010, GDP per capita for Ghana was $1,287, that of Cote d’Ivoire was $1,056, Nigeria’s was $1,224, while nominal GDP per capita for South Korea was at $20,757.2 On the second indicator of international trade, South Korea’s accomplishment in its rate of trade growth also shines brightly when set against those of eight advanced economies that have also achieved over $1 trillion in international trade:
it took the other eight countries an average of 26.4 years to go from $100 billion to $1 trillion in trade and 8.4 years to reach $1 trillion from $500 billion. For South Korea, it only took 23 years for the first jump and six years for the next.3
These indicators compel a need to understand how South Korea was able to overcome domestic and international constraints of poor economy and Cold War politics to sustainably achieve economic success through industrialization while other least developed countries (LDCs), especially those in sub-Saharan Africa, failed and are of interest to us in this book. To what extent is South Korea’s rapid development a function of luck of geography or of getting the markets and/or institutions right? What is the mixture of domestic and international factors that enhanced South Korea’s capacity for rapid development and to what extent are these applicable lessons for countries in sub-Saharan Africa? We explore these questions generally in this book and more conceptually in this chapter. The rest of the chapter examines (1) the nature of State capacity that makes economic development possible within the context of domestic and international factors and how State effectiveness as a major variable was essential for the external factor of Official Development Assistance (ODA) to enhance and enable the economic development in South Korea and (2) conceptually, how and why domestic and international politics enabled the economic development in South Korea but remains the core challenge for effective economic development in several African States.
State capacity and effectiveness for economic development
Like South Korea, most of the LDCs, especially those in the sub-Saharan Africa region, were former colonies of current industrialized countries. However, like everything else in life, commonality rarely, if ever, translates to similar experiences or outcomes. In fact, it is the possibility of disparity in outcomes arising from similarity of positions that fascinates scholars and continually teases their need for comparative analysis. Different positions, perceptions, and interests of analysts often shape their focus and the kinds of evidence and conclusions they are likely to validate or refute in their analysis. Several instances of these are pertinent in the case of this book. For example, South Korean officials and scholars often repeat the mantra in policy and scholarly events about their economic development that, though South Korea was colonized by Japan, suffered greatly as a result of World War II and the Korean War, and how South Korea, which was at one time the poorest country in the world, managed to rise from poverty to wealth in one generation. Although South Korea has been widely recognized as a model for a developmental State, it is unlikely that its domestic politics characterized by authoritarianism, which deliberately used State power to suppress domestic dissent while creating and generating wealth to solve public problems, gets mentioned.
Indeed, it is rarely acknowledged publicly by Korean leaders and scholars that, in some respect, it was South Korea’s deliberate political strategy – the New Village Movement – with its “lift-yourself-up by your community-bootstraps” ideology that enabled the government to shift the rural and poor people’ attention away from the activities of government officials and community leaders while the major local corporations, or chaebols, were empowered with privileges that gave them the necessary competitive edge to thrive. In addition, their narrative of poverty does not often acknowledge the fact that, based on a desire to increase its living spaces, Japanese colonialism built infrastructure and capacity that became the foundation for South Korea’s industrialization, high level of education, and modern bureaucratic structures.4 This reality differs significantly from western colonialism that mostly exploited African countries without infrastructural or skills development. Furthermore, the narrative, especially by western scholars and policy makers, often leaves out the fact that South Korea’s reconstruction effort after the Korean War and consequent economic growth was enhanced partly by Japanese reparation payments to South Korea, which was utilized for the construction of a global steel mill that the World Bank had advised the Koreans against.5 Also, it is important to note that the Japanese failed to destroy the traditional basis of Korean culture.6 This is unlike the experience of many countries in Africa where States were largely patched together for European conveniences at the Berlin Conference in 1884–5, without regard to historical ethno-national and religious differences, contemplation of the implications of such disregard, or coherence in their colonial substitutes. In contrast, Korea had built a highly centralized, advanced nation-State system for centuries before the Japanese colonized the country in 1910.7
For Europeans, especially France, Britain, and Belgium, their colonial approach across Africa rested on a strategy that looted and left behind legacies of destroyed traditional institutions, arrested development characterized by dependent educational and bureaucratic structures, and fragmented societies trapped in State territories that were hurriedly decolonized, largely, as a result of World Wars I and II. These postcolonial State structures and institutions across Africa remain challenged in capacity and effectiveness, the framework needed for human and social organization for advancement, and the lack of which has been the consuming focus of its industrialized former colonialists and America’s narrative lens. Many neoclassical economists and western policy analysts tout South Korea’s rapid development as largely due to what many other LDCs, especially African States, have failed to do – that is, adopt capitalist economic policies devoid of political interference in economic decisions. What Western neoclassical economists who dominate international aid agencies rarely acknowledge is the fact that South Korea, like Taiwan, Hong Kong, Singapore, Malaysia, Indonesia, and Thailand, achieved their remarkable economic transformation not because of the magic of free market decisions but due to two reasons. First, direct government involvement in planning, financing, and implementing of economic development policies and projects. Second, as a result of public partnership with the private sector and the government’s active role of direct involvement of its top leadership in oversight responsibilities of this sector with targeted economic policies. The Asian Tigers did not achieve economic growth and transformation without political engagement in their economic decisions.8
Thus, the 20th century rapid industrial development in South Korea and in much of the newly industrialized countries or Asian Tigers became the driver of the scholarship undergirded by neoclassical economic theory and support for its claim of market as the solution for poverty and economic growth. In that context, the neoclassical perspective paid little, if any, attention to the impact foreign assistance had on the economic development of the Asian Tigers, especially in the case of South Korea. Whenever external aid factored into the neoclassical analysis of development, it was largely evaluated on the basis of the extent to which the aid recipients industrialized or developed based on efficient market policies measured by variables such as GNP, price stability, current account balance, external reserves, domestic savings, and balanced budgets. While these macroeconomic variables formed the basis for policy prescriptions for the LDCs to emulate the market economy policies of the newly industrialized countries (NICs), a critical issue underpinning the policy advice that eludes many neoclassical economic scholars was and remains politics and its impact on State development policies and outcomes.
For some, especially from the World Bank and the International Monetary Fund, the narrative that includes politics assumes that getting the institutions right means getting the politics right. Therefore, the new mantra from the aid agencies, principally led by the World Bank, is good governance without clarifying the ideological import of what constitutes good governance and the extent such assumed criteria could have helped in South Korea’s rapid economic advancement.9 However, some works take politics into account, for example, Foreign Aid: Diplomacy, Development, Domestic Politics by Carol Lancaster. The focus of Lancaster’s book is on the internal politics of donor countries, with emphasis on the influence of domestic lobbyists on executive and legislative decisions to fund foreign aid without attention to how those political interactions at the domestic level tend to weaken the impact of aid on recipient States. Focusing on sub-Saharan Africa, African Economies and the Politics of Permanent Crisis, 1979–1999 by Nicolas Van de Walle explains the dynamic interactions between domestic and international actors, the effect of these on political authority, and the consequences for economic growth through reforms in sub-Saharan Africa.
While more recent scholarships and discussions on ODA have focused on aid effectiveness, very little effort is devoted to aid donor transparency as a precondition for understanding the extent to which ODA impacts economic development in recipient States. This is important because dysfunctional States, which are – “by definition unstable, unpredictable and unable to play their part in the provision of regional and global public goods, indeed they generate negative public goods and spillovers”10 – are not capable of using ODA effectively for development and do not have the capability to engage aid donors in ways that enable recipients to focus attention on economic development. In other words, if a recipient State lacks the capacity for effective governance, to what extent do donor countries expect their aid to help such a country become economically developed and less dependent on donors in the long term, as the case of South Korea demonstrates? In this regard, there is insufficient attention to the poli...
