사회과학연구 2016; 42(3) 1 Journal of Social Science Vol.001 사 회 과 Back to the Future of the South Korean Economy and Society* 1) 학 연 구 2)Minjoo Oh (오민주)** Professor, Department of Sociology and Anthropology, University of Mississippi 3)Hyun Park (박현)*** Professor, Department of Economics, Kyung Hee University ABSTRACT This paper examines the various potential paths of economic growth to understand the development of the economy and the transformation of the society in South Korea. Based on the endogenous growth theory, we describe the engine of economic growth in the South Korean economy over the last fifty years. We also demonstrate how this fast economic growth has molded the country’s socio-politico-cultural life and, in doing so at an semi-anthropological and pseudo-ethnographical approach, help readers to better understand the contemporary life style of average South Koreans. The experience of economic growth in South Korea is unprecedented in human history and provides a role model for the design of strategies for economic growth and development, as well as for associated government policies, for recently developing economies.
We then show that the economy and society in South Korea provides an example of a living laboratory to understand better both developing and advanced economies. The “growing pain” of fast-growing economies and the “geriatric symptom” of advanced economies coexist in contemporary South Korea. Key Words: Economic Growth and Development; Endogenous Growth Theory; Socio-Politico-Cultural Fundamentals; South Korean Economy and Society * We thank Sunghoon Cha, George Economides, Jeffrey Greenwood, Tetsu Haruyama, Jeffrey Jackson, Heayoung Jung, Yeongyo Jung, Han Goo Lee, Apostolis Phillippopulos, and Vanghelis Vassilatos for their helpful comments and suggestions. We also extend our thanks to seminar participants at Athens University of Economics and Business, International Monetary Fund, Kobe University, Macau University, University of Alabama, and University of Pennsylvania.
Park gratefully acknowledge the financial support of SSK (2014S1A3A2044459) in Korea Research Foundation. ** Professor Minjoo Oh, Department of Sociology and Anthropology, University of Mississippi, Room 510 Lamar Hall, 615 Grove Loop, University, MS. 38677; Phone: +1-662-915-3454; email: minjoo@olemiss.edu *** Corresponding Author: Professor Hyun Park, Department of Economics, Kyung Hee University, 001 Hoegi-Dong, Dongdaemoon-Gu, Seoul 130-701, South Korea; Phone: +82-2-961-9375; email: econhyun@khu.kr 2ㆍ사회과학연구 제42권 제3호 Ⅰ. Introduction As when visiting any foreign country for the first time, we as a first-time visitor are most likely to encounter the basic outlook of South Korea.
We may observe how this outlook shapes views on weather, food, streets, traffic, buildings, trees and flowers and then we may go on to explore its everyday lifestyle―its dress code, facial expressions, and public manner―and come to understand these facets by comparing them with the ones of our own country. We then further explore the unique aspects of the country’s customs and culture at the levels of its technology and political institutions. Inevitably, we also try to sense the advance of its unacquainted economic standing beyond the statistics and official level of gross domestic product (GDP), by comparing it with the advance of our own economy. That is to say, we imagine ourselves as a foreigner as if we were visiting South Korea for the first time in our life.
We then set up a working hypothesis to explain a few selected observations in respect to the South Korean economy, which has largely enjoyed the resilience of fast-moving economic growth over the past fifty years. Our modest intention in this study is to offer you, the reader, a “Travelers’ Guide to the Contemporary South Korean Economy and Society.” We intend to take a few directions in “what to look at and how to look at the past and present South Korean economy and society”. In particular, we will travel “back to the future” of the South Korea, and revisit theoretical arguments and practical observations made during the economic growth and development progress that South Korea has experienced and that has led the average South Korean to become about sixty times richer than s/he was after the Korean War. The slightly more ambitious intention in this paper is to design a simple road map for a current developing economy to follow by differentiating between the general and unique nature of aspects of the South Korean economy.
We then show that the South Korean economy provides an excellent example of a living laboratory that may be used to understand both developing or advanced economies, for example, the United States and Japan on the one hand, and India and Republic of Congo on the other hand. Due to the amazing accomplishment of an industrial revolution completed within a fifty-year lifetime, we can witness that the seemingly contradictory characteristics of these two polarized groups of economies coexist together in the contemporary South Korean economy. This paper also intends that by traveling “back to the future” in South Korea we gain a greater understanding of what to expect for the future of developing economies and reconstructing their corresponding societies in the next ten or twenty years. Back to the Future of the South Korean Economy and Societyㆍ3 First, we argue that the fast economic growth of the South Korean economy is unprecedented in the world economy since the first wave of the eighteenth-century industrial revolution.
South Korea also has demonstrated her resilience of economic performance during the two financial crises: 1997~1998 in Asia and 2008~2009 globally. Her economic success has been accompanied with equitable income distribution and accomplished democratization. We then illustrate how the endogenous growth theory helps us to understand the Korean economic miracle and democratization,1) so that we may be able to duplicate her experiences in recently developing economies. For example, this paper differentiates growth elements in short-term and long-term periods: input factors of production, productivity and efficiency, technology, institutions, and government, international interdependence, urbanization, climates, environment, and many others.
Furthermore, the paper explores how preferences in households affect the economic performance of the South Korean economy. We find that an envy and jealousy preference formation plays a significant role for persistent economic growth in South Korea during the past half century. More specifically, envy and jealousy explain the pattern of individual and collective decisions: consumption and saving behaviors, work ethics and motivations, learning and imitation, international competition, and many other elements of the socioeconomic changes of South Korea during the rapid industrialization period. Therefore, we conclude that intertemporal and interpersonal preferences are as critical as nondecreasing returns technology for persistent economic growth.
The South Korean economy exhibits her preferences satisfying the joint condition with persistent economic growth. The scope of the paper is extended fundamentals of economic growth to socio-politico-cultural phenomena in contemporary South Korea. We then argue that noneconomic episodes are closely related with the rapid industrialization, urbanization, economic transformation and achievement, and democratization. It is because we observe the causal relations between economic and socio-politico-cultural changes in a fast-growing economy, say at the nine percent rate of growth, whose per capita income doubles every eight years.
Hence, it is inevitable that the cultural changes in the South Korean society are followed by economic development, and vice versa; otherwise, economic growth cannot be sustainable in the long term. We thus proffer a tentative linkage between economic growth and socio-politico-cultural changes in contemporary South Korea. The method in this paper is not conventional in the economic literature, in the sense that the paper presents theoretical explanation and empirical evidence in a semi-anthropological and 1) See Acemoglu (2009) for the excellent survey on the endogenous growth theory and Acemoglu and Robinson (2012) for the historical aspects of the interconnection between economic and political institutions. 4ㆍ사회과학연구 제42권 제3호 pseudo-ethnographical method.
The first formal approach shows how South Korea has been able to grow persistently over the last five decades, whereas the latter speculates on how South Korean society has changed throughout the process of her rapid economic growth. More specifically, the paper introduces a few socio-politico-cultural episodes that capture the correlation between persistent economic changes in a relatively short period and the events in question. We, nevertheless, have no intention to claim that these episodes occurred solely due to economic changes and success, but identify them to illustrate that “fast” economic growth is critically responsible for a few seemingly puzzling everyday-life phenomena in South Korea. We begin by presenting some episodes that, we believe, signify some defining characteristics of the socio-politico-cultural phenomena of South Koreans’ experience of a fast-growing economy over the past fifty years.
These episodes, we speculate, are equally likely to surprise most foreign visitors to South Korea, be they from either developing or developed countries. As mentioned before, the main objective of the paper is not to conduct a scientific analysis but to suggestively conjecture on the relation between a fast-growing economy and socio-politico-cultural phenomena. What follows is a list of interrogatories based on anthropological and ethnographical observations concerning the everyday lifestyle in South Korea: How is it that South Koreans have come to prefer to live in high-rise apartment complexes in both rural areas and cities? Why are those apartment complexes consistently and repetitively named after large, well-known companies,2) for example: “Hyundai Apartments” built by the automaker Hyundai; “Samsung Apartments” built by the electronics company the Samsung Group; “SK Apartments” built by SK Telecom; “LG Apartments” built by LG Electronics; “Daewoo Apartments” built by the heavy-industrial company the Daewoo Group; or any other conglomerate? How is it that one can often see a white-collar, middle-aged Samsung or Hyundai businessman drunk with a group of coworkers at midnight―acting like a freshman with a group of college friend―walking in the middle of a major street in the Kangnam District of Seoul? Why is it that you may easily encounter groups of teenaged, high-school girls snacking on a cup of instant noodles in front of convenience stores, Tomato, Seven-eleven, GS25, etc., as late as midnight? 2) We hope that, without violating academic integrity, we may reference specific South Korean companies to make these episodes more realistic and down-to-earth for readers. Back to the Future of the South Korean Economy and Societyㆍ5 Why are there so many Starbucks, one at almost every intersection of Chongro streets in Seoul, even though the price of an Americano in Starbucks in South Korea is at least four-times more expensive in terms of real income than one sold in Chicago? How is an average college student in South Korea able to afford to buy expensive designer items: clothes, bags, watches, shoes, etc., produced by MaxMara, Giovanni, Fendi, Gucci, Prada, Luis Vuitton, and many other luxury brands? Why are South Koreans on their cellular phones including instant KakaoTalk messages all the time? Why do South Koreans seemingly fear to be alone and why do they have an almost impulsive desire to be connected with each other at all times? Why do South Koreans engage in regular, seemingly militant demonstrations in the Kwangwhamoon Square in Seoul, e., the 2008 Candle-Light-Demonstrations against beef imports, motivated by fears of mad-cow disease, and the ratification of a free-trade agreement (FTA) with the U.? How does the Demilitarized Zone (DMZ) become one of South Korea’s tourist attractions? How is it that we may be able to find various kinds of travel brochures for trips to the DMZ in the lobbies of major international hotels in Seoul? This paper hypothesizes that the experience of fast economic growth is a critical, if not complete, cause of the above representative phenomena in contemporary South Korea.
The brief precipitate explanations this paper provides are summarized as the following. First, in order of the above episodes, fast industrialization without financial development has forced many conglomerate companies to diversify their manufactured products by becoming involved in the construction of residential apartment blocks. Additionally, South Koreans seeking quality assurance believe they are reducing the risk of poor-quality products by choosing well-known brands, that is, a brand effect. Second, the working habits formed in agriculture remain even though there has been rapid urbanization, so that we may observe the social behavior of agricultural farmers replicated in a manufacturing sector.