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FOCUS ON...

SOUTH KOREA

South Korea has often been held up as  a  successful  example  of
what can be achieved by the New World Economy. With this issue we
turn our FOCUS... on South Korea to look at some  of  the  issues
raised...


  As South Korea contemplates a future of  integration  into  the
New  World Economy the population is sparing some time to take at
glance over its shoulder at its past. Its lessons do  not  always
make  the South Koreans keen to follow their President, Kim Young
Sam, who is described in the west as a comfortable winner in  the
last  elections. He got 42% of the vote which was actually cast -
somewhat similar to a Mrs Thatcher - and like her  he  has  never
enjoyed  widespread  popular  support  but  rather the support of
sectional interests which, in the Korean context, means from  the
emmerging urban middle classes.

  The rest are not so keen on Kim Young  Sam's  flirtations  with
global  capitalism.  Indeed  one  recent survey found that almost
half of all South Koreans oppose direct foreign investment in the
country,  while  two  thirds  were  against the lowering of trade
barriers.

A  recent  report  by  Political  &  Economic  Risk   Consultancy
suggested that South Korea ...

was  the  most  nationalistic  country  in  Asia  was  the   most
bureaucratic  after  China and Indonesia had an economy dominated
by cartels and state-owned companies discriminated more than  any
other   nation   against   foreign   investment   was   the  most
protectionist nation in Asia had the highest potential for labour
unrest had greater potential for social unrest even than China

  This, as we say, reflects a certain historical awareness of the
people.  Korea  has  never  fully escaped the legacy it inherited
when it went into almost self-imposed exile nearly 400 years  ago
after  repeated invasions by Manchus and the Japanese. This earnt
it the nickname of the Hermit Kingdom and it was one of the  last
countries  to  establish  contact  with the west. All this can of
course be seen still in North Korea where the paranoid regime  of
Pyongyang  has  successfully  perverted  the  traditional  Korean
principle of juche or self-reliance.



  South Korea, meanwhile, has suffered another Japanese  invasion
but  of  a  slightly  different  kind.  Over  90% of South Korean
exports of electronic equipment, for  example,  are  produced  by
affiliates  of  Japanese  countries. Here we should remember that
the most important industries involved in  the  globalisation  of
economic  activity and the new International Division of Labour -
the hallmark of capitalism this end of the  twentieth  century  -
are  often  in  the  electronics  sector, (also we should mention
textiles and clothing in this category, important  industries  in
other  countries  in  the  region).  These  are  industries where
profits are hard to maintain through increases  in  technological
inputs  but  relatively easy to increase by substituting low wage
for high-way labour - heard it before? Is Korea so  special?  Not
at  all.  This  means  that  the  'manufacturing'  undertaken  in
peripheral settings by transnational corporations is  more  often
than not merely assembly, with the manufacture of components that
require higher levels of skill and/or technology  -  particularly
in the area of research and development -being undertaken in core
nations - albeit in settings that are often  outside  traditional
manufacturing  regions - silicon chip valleys and the like. As we
say there nothing new in all  this.  The  story  we  saw  of  the
maquiladoras  in  Mexico (see Freedom  Vol 55 No.3)  is thus seen
to be repeated here. South  Korea's  development  miracle  is  in
large  part  the same old story of a country becoming a glorified
factory of foreign TNCs. But also,  as  we  so  often  find  when
development  is  so  strongly  lopsided  towards  one  industrial
sector, uneven development is the outcome (again  check  out  how
happy  the  peasants  in  Mexico  are at the moment). Because the
basis of economic growth has been in  the  manufacturing  sector,
the  larger  industrial cities and the highly urbanised provinces
have experienced relatively high levels of economic  performance.
Rural  incomes  in South Korea have been supported through price-
support subsidies - not a very endearing notion for those  'free'
market  apologists - but rural incomes and per capita consumption
remain at less than half those of towns and cities. It is in  the
largest  cities  and  their  metropolitan regions, however, where
living standerds are, in many respects, highest. It is here  that
both public and private investment have been most noticeable. The
result is that the cities of Saoul, Incheon, and Anyang  and  the
surrounding  province  of Gyeonggi, in the Northwestern corner of
the country, constitute a  clear  'core'  of  prosperity  with  a
'fragmented  periphery'  that corresponds to the highland regions
of the south and northeast. Highlighting these  factors  somewhat
are  some statistics we can find reported in a new book by Robert
E. Bedeski - an Australian based academic. We give the  following
extract as a taste of some of the statistics:

  Demographic change has also been tranforming Korean society. In
the  period since establishment of the Republic, there has been a
major migration to the cities in the search  for  employment  and
higher   living   standards.  During  1988,  for  example,  rural
populations decreased by 6.4%. The flow to the  cities  has  made
farms  an increasingly male domain, as women and young persons go
to jobs in the urban areas.

  According to the 1985 census... South Korea had a population of
40,448,486  and  was  the  world's  fourth most densely populated
country, with 408 persons per square kilometre. Nearly a  quarter
of  the population resided in the greater Seoul area...  As South
Korea modernises, the population structure  changes,  and  living
standards  have  improved.  Two major results of change have been
the expansion of the urbanised population, and the growth  of  an
urban  middle class.  In 1990, the rural population was 25.6 % of
the total, compared with 72% in 1960. Because of  the  mountanous
terrain,  only 21.7% of the total land area is under cultivation,
and the amount available for farming becomes less every  year  as
more urbanised and industrial sites are created...

   Such movements  towards  the  urban  centres  have  the  usual
predictable consequences:

  With 40% of the nation's population in the greater Seoul  area,
the  housing  crunch  was  becoming  serious. At the end of 1991,
there were 10,580,000 family units in  7,870,000  housing  units,
indicating  that  over  a quarter of Korean families were sharing
their units with another family. Crowding was almost entirely  an
urban phenomenon.



   South Korea has been presented as The Jewel in  the  Crown  of
NICs  (New  Industrial  Countries) and is pointed to as a shining
example of successful development - that it  development  in  the
mirror image of the core industrial countries. So much so that it
hopes next year to become the first Asian member of the OECD.  In
this  light Bedeski's book makes for an interesting read. All the
more so as he is sympathetic, in many ways, to the apologists for
South  Korea.   Certainly  some  of  the economic statistics look
impressive: GDP per capita in the late 60s was  around  $200.  By
1992  this had risen to $7000. But as the author also makes clear
in this academic and objective analysis  the  problem  with  such
averaging  of  figures  is not what they show but what they don't
show.

  For example in the light of  such  statistics  South  Korea  is
often   presented   as   having   relatively   equitable   income
distribution. However, the book calls this sharply into question:

  Nearly one-fifth of the  population  holds  42.2%  of  national
income...  the  governments  1990  budget  was  seen  by  many as
worsening the wealth distribution problem... At the lower end  of
society,  it  is estimated that over three million people live in
poverty. The economic planning board reported that  7.7%  of  the
entire population receive significant public assistance.

 Indeed one can begin to see why South Korea might hope  to  join
the  OECD  next  year  in  this light. Such damming figures would
stand up well in  comparison  with  almost  any  European  member
State: inequitable distribution of wealth; unacceptable levels of
poverty (usually fuelled by high levels of unemployment) and  the
new  beast: stagflation - impossible according to economic theory
but there for all to see. Indeed stagflation turns out to be  the
only  real  miracle capitalism has to offer. Successful economies
in capitalist terms require a radical redefinition of  'success'.

 Financial Times 23 June 94  The Transformation of South Korea by
Robert E. Bedeski. Published by Routledge.






















