Tuesday, December 22, 2009

South Korea, and Aid success story, or not?

South Korea is often cited, generally by aid supporters, as an example of an aid success story. Many, it seems primarily due to their lack of personal knowledge of the subject, are careful not to assert a direct causation between aid received and development made, but nonetheless heavily imply such a link. Most recently Owen Barder, in a very thoughtful article, cited South Korea in just such a manner. He stated that “Some of the most striking examples of growth in the 20th century were in countries such as Korea and Taiwan, which were supported by large amounts of aid.” In response to his article I called such implied assertions “laughable” and “offensive.” Although perhaps a bit harsh, I stand by this criticism. Here is briefly why.

I’ll start with a quote from David Steinberg former USAID official and expert on Korea’s development. Writing in 1982 he said that:

“AID policy now emphasizes the equitable distribution of goods and services, but Korea for almost twenty years paid little attention to the rural sector-the majority of the population at that time. The act stresses the importance of the role of women, but they have essentially been ignored in Korea except as low-cost, light industrial labor receiving wages that are clearly discriminatory. Free labor unions are advocated, but those in Korea are government-controlled; human rights are stressed, but they essentially have been ignored in Korea. Thus, whether nations today could emulate a Korean model with U.S. assistance is questionable.

From reading this quote one might assume that the “Korean model” had been singularly ineffective in promoting development. Knowing that for the twenty years in question Korea had also been ruled by a military dictator, Park Chunghee, might further confirm this assumption. Knowing that prior to the Park dictatorship the Rhee administration was infamous for its corruption and mismanagement of aid money, prompting the US government to threaten suspension of its aid, one might make be even more sure that Korea had been a developmental disaster for 30 years.

And yet you would be deeply mistaken. By 1982 Korea’s economy had grown by an average of nearly 8% per year for roughly 30 years, a feat virtually unmatched in modern human history. Furthermore, contrary to what one might expect from near total dictatorial rule, the fruits of Korea’s economic expansion were more equally distributed across the population than in many Western democracies. Its gini coefficient in the early 80s was in the low 30s and continued to decline throughout most of the 1990s.

And yet Steinberg was/is not alone in his general pessimism about the applicability of this astoundingly successful “Korean model” to other aid-recipient countries. Most Westerners who have studied Korea’s development have been equally pessimistic, especially following Korea’s 1997 market crash and subsequent IMF bailout. Kleptocrats and dictators rarely inspire Western admiration. My personal view is that pessimism for a variety of reasons, none of which is a sympathy for dictators or kleptocrats, is largely misplaced. But that is the topic for another post. The point here is simply to show that even aid supporters who have carefully studied Korea’s development acknowledge that other factors, many of which the international community disapproves of and hence is unwilling to promote internationally, were central to the success of Korea’s development. In summation Steinberg states

Could the Koreans have accomplished all they did without United States assistance? The answer is probably yes…but at a slower rate… The Koreans attained the economic growth they have achieved basically on their own by formulating their own policy framework and implementation systems.”

For more discussion of how Korea accomplished this read Steinberg’s review article from which the above quotes have been pulled (sorry I couldn’t find an ungated copy).

To wrap up it should be readily admitted that this is a huge topic and that this post has at best merely scratched at some of the important issues. If you care to argue about its specific points in more detail, or about ones I have not mentioned, please leave a comment and I will address them.

Bottom Line: Korea benefited from aid. However many of the fundamental causes of its economic expansion were antithetical to most aid prescriptions that were, and still are, promoted by international development agencies. Therefore citing it as an aid success story, even implicitly, is inappropriate and misleading.



  1. Dear Justin,

    I came across your blog while researching Heuksando and Jeungdo. Enjoyed reading your article and I hope to read more.

    I am the Resident Director of the CIEE Study Center in Seoul. CIEE is a US-based study abroad provider for students enrolled in US colleges.

    This weekend I am planning to bring some students (6) to Jeungdo and Heuksando. Would you be interested in talking to the students about the Dadohae Park and your work. There would be a small honorarium. Also, is there any lodging place you can recommend on these islands? Or any particular activities?

    Please contact me at crowdhan@gmail.com.

    Or contact me at 010-8838-8744.

    Your kind understanding would be greatly appreciated,

    Suzanne Crowder Han