Can Latin America learn from Korea’s economic miracle? and what can Korea learn from Latin America


By Federico Basañes

By almost any measure, South Korea is one of the greatest development success stories in recent times. There are many ways to showcase this, including the oft-cited night-time satellite photo comparing North and South Korea, where the North – once its industrial base – is dark compared to a resplendent South.

Of course, South Korea not only outperformed its northern neighbor. In 1980, 15 countries from Latin America and the Caribbean region had per capita GDPs that were superior to South Korea’s. In 2014, according to our estimates, no country from our region surpasses South Korea. Trinidad and Tobago comes closest, with a per capita GDP that is 88 percent of Korea’s.

Korea at night nuevabien

Between 1961 and 1993, its poverty rate went from 48.3 percent to 7.6 percent.

What Korea did right since its brutal civil war left the country in tatters is not a matter of casual debate. Getting the policy mix that enables countries to leap from developing to developed nation is not only hard, it is critical for millions of Latin American and Caribbean citizens to emerge from poverty and compete in the global marketplace.

These lessons are analyzed at the “Knowledge Sharing Forum on Development Experiences: Comparative Experiences of Korea and LAC”, which will take place in Busan, Korea as part of the Inter-American Development Bank’s Annual Meeting. The March 26 event is an exchange where Latin America and the Caribbean region looks to understand the Korean economic and social development model, and vice versa.

A dozen think tanks from Korea and Latin America will produce white papers that look at different economic and social aspects, from sustainable energy to skills for development.

Some of Korea’s successes are well known and documented. The country relentlessly promoted its exports and was able to allocate human capital and resources to its most productive industries in ways that many other countries struggled to do. Its institutions functioned well, a legacy in part attributable to a public sector that – in a tradition going back centuries – was able to recruit the best and brightest to join its civil service.

Less known are what Korea got wrong. According to the white paper to be presented by the Korea Development Institute, the country over-invested in heavy and chemical industries and the private sector operated under the impression that the government would not let companies fail. Among others, these factors contributed to Korea’s economic crisis of the late 90s and to increased levels of inequality.

But the country bounced back, and while it faces important challenges, it is an industrial and knowledge powerhouse, firmly in the camp of developed nations.  Its experiences in education, vocational training, trade promotion, smart cities, use of smart grids and other technologies to increase productivity have provided valuable lessons for Latin America and the Caribbean. In turn, successful policies and programs from Latin America and the Caribbean can shed light on investment options for Korea and other Asian countries.  Some of the areas explored and discussed in the Knowledge Sharing Forum in Busan include

–          Are Korea’s previous trade and investment successes replicable going forward, and if so, how?

–          Given that political leaders have limited political and financial capital at their disposal, what specific reforms are more likely to help countries make the leap from developing to developed nation?

–          What are promising paths to promote growth as well as greater equality?

–          How can vocational educational systems better align with the demands of private businesses and, therefore, with the needs of growing economies?

–          What are the emerging trends in energy efficiency, and what do experiences in countries like Brazil, Nicaragua and Korea show?

–          What role does institutional coordination play in increasing the probability that policies will successfully promote information and communications technologies?

We will be posting video highlights and links to white papers and presentations at our Annual Meeting website and the opening ceremony via livestream.

Basañes is the manager of the IDB’s Knowledge and Learning Department, which is organizing the knowledge forum in Busan

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