🤔 What India Can Learn From South Korea's Rise?

South Korea is now on everyone's radar thanks to K-Pop, K-Dramas and their skincare. But it wasn't always so popular or wealthy. Here's how it rose from the ashes like a Phoenix.

Thanks to BTS, K Dramas, and Squid Game, South Korea has taken the centre stage the world over. But it's hardly the first time that it has done so. 

The island nation is known for transforming itself from one of the world's poorest countries to a developed, high-income economy in just a few generations. This exponential economic growth, called ‘The Miracle on the Han River' has made South Korea an integral part of the G-20. 

The tale of South Korea's growth is as riveting as the dreamy K-Dramas that you can't stop bingeing. So let's dive right in! 

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South Korea didn’t get off to a good start.  While on the one hand it was enslaved by Japan, on the other, it had to tackle the continuous jabs of the hostile elder brother North Korea. With the hopes of turning around its destiny, South Korea waged wars against these political rivals.  Those lasted over a decade and left the South Korean economy in a completely tattered state.

Then how did this country with seemingly no wealth, natural resources, and no allies rise from the ashes? 

Even if you are robbed of all your resources; even if nature has been brutal to you; there is one thing that no one can take away: your spirit and determination. 

To supplement the dearth of natural resources, human capital was made to be South Korea's biggest resource. 

It banked on the hard work and dedication of its people to build its unique proposition. Surprisingly, Japan, its enslaver, played a big role in this revival.

By 1965, the labour-intensive export-oriented units were no longer profitable for Japan. Also, its prime market, the United States, would not allow Japanese goods within its borders. To save its economy, Japan turned to South Korea. 

It promoted the South Korean industry to take up the role of exporters. But how did this help Japan?

They could now sell capital equipment to South Korea. 

Soon the US market was flooded with South Korean goods. And both South Korea and Japan flourished with this development.

But Japan cannot take all the credits. The South Korean government also had a huge role to play.

How Traditional Small Businesses Became Global Giants

The government heavily funded the family-owned conglomerates (called Chaebols) of South Korea. The chaebols in turn created millions of jobs and South Korea grew itself out of poverty. The largest and most prominent chaebols are Samsung, Hyundai, and LG, which have transformed into extremely profitable businesses. Today these chaebols account for more than 2/3rds (67.8%) of South Korea’s GDP. 

The Next Step In Transforming Korea

A labour-intensive economy was a great first step for the company. But to become resilient to global developments, South Korea needed to do something more. You see, labour is not unique. Any country could take away South Korea’s supremacy. 

And so the establishment of Chaebols was accompanied by a heavy emphasis on the literacy of its populace. In the 1990s, South Korea started investing in technology and Research and Development. 

Not long after, China became the manufacturing destination of the world. South Korea’s far-sightedness paid off. 

It is still the sixth-largest exporter in the world, the largest exporter of ships, the third-largest exporter of cars, and a technological hub that can compete with prominent international hubs like Silicon Valley and Tokyo. As of 2021, South Korea holds the top spot in the Bloomberg Innovation Index.

Impending Crisis In South Korea?

While South Korea has demonstrated incredible economic growth over the years, in recent times some dangerous trends have been highlighted.

South Korea is often referred to as the Land of modern dynasties, and rightly so. The dominance of the chaebols is quite apparent in the economy. More than 2/3rds of the GDP is directly dependent on these chaebols. LG, Hyundai, and Samsung are monopolistic and many argue that the benefits of this expansive GDP growth of South Korea were reaped by only a selected few.  

These companies are mini-governments of sorts and the power they hold is no joke. Ulsan is known as the Hyundai City of South Korea. Everyone who works there is directly or indirectly an employee of Hyundai. The apartments, the hospitals, and even the schools there are all owned by Hyundai.

What Can India Learn from South Korea? 

In 1961, the per capita income of India and South Korea was comparable. In 2019, there was a huge difference as they stood at $2,104.1 and $31,762, respectively.

While South Korea speed-tracked its growth, India's economy remained shut till 1991. There was a lot of catching up to do. 

Right now India has two big advantages. Young demography in a large population and rich natural resources.

With Make in India, India has been trying to do what South Korea has done in the past: putting its large population at work. 

But times have changed. When South Korea became a manufacturing major, automation wasn't that big a thing. It had time to amass wealth and then think about innovation. 

But India has to speed-track innovation now. It starts by improving the quality of education and extends to ease of doing business. Only then the dream of the 'Sone ki Chidiya' ruling the world will come alive. 

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