From peasant economy to world power - in 30 years

12th September 1997 at 01:00
Contemplating Korea is a complex experience. When you stand on a hilltop, gazing north across the border into the most mysterious and reclusive country on earth, the first thing that strikes you is the unexpected beauty of this forbidden land, its paddy fields and rolling woodlands made newly verdant by the monsoon rains.

Below, just a few hundred yards away, is a railed wooden bridge which, at first sight, could be the setting for a Hollywood romance. This is Le Carr#233 country, the boundary that divides North and South Korea, the last unresolved legacy of more than 40 years of the Cold War.

It was this bridge, the Bridge of No Return, that was used to exchange prisoners at the end of the Korean War. Once the decision was taken to return north or south, there was no going back. For a country still divided, and mentally scarred by civil war, the bridge's symbolism is huge.North or South, communism or capitalism, Russia or the United States? Forty years on, the choice made by many thousands of Koreans, and denied to millions more, has proved to be between success or failure, plenty or famine, pluralism in a fledgling democracy or an authoritarian, now friendless regime.

Any understanding of Korea's place in history must start at the demilitarised zone that separates two of the world's biggest standing armies. The North - whose great inspiration and founding father, Kim Il Sung, died in 1994 - faces economic collapse and international isolation, its people on the edge of starvation after a series of poor harvests. The South, meanwhile, has forged ahead. In 1962 its output per head of population was just $87. By 1995 it had reached more than $10,000 (#163;6,250), a hundredfold increase. Since 1961 it has achieved a staggering 8 per cent annual growth rate. In little over 30 years it has moved from being a peasant economy, one of the world's poorest countries, to being the eleventh largest trading nation.

This transformation from Third World to tiger economy, has been achieved with audacious - some would say ruthless - efficiency. In the early Sixties, the country had nothing. Eighty per cent of its buildings had been destroyed in the civil war. It had few natural resources, little capital (despite US military support to counter the communist threat from the North) and no technology to speak of.

What it did have was a ready supply of hard-working, low-cost labour, determined to make a new life after the ravages of war and decades of occupation and oppression by the Japanese. It also had a strategy: to invest in export-led manufacturing. At first, this was in low-tech industries such as textiles and footwear. With success, the country's ambitions grew. Take two examples. In 1968, the Posco steel company was founded on a man-made floating island off the south-east coast at Pohang. Iron ore, coal and limestone, mainly imported from Australia, are shipped in at one end of the pontoon, while finished steel products are shipped off to all corners of the globe at the other. It's a huge operation and - despite a workforce of 10,000 - highly mechanised. In 1973, the company produced one million tons of steel. This year, with production in full swing at a second plant at Kwangyang, it expects to produce 26. 5 million tons, making it the world's foremost steelmaker.

Better known is the Hyundai car company, founded in 1967. It only began to export cars in 1976, but it is now the world's eleventh largest car manufacturer, with a turnover of $15bn. At its 1,215 acre site at the south-east ern port of Ulsan, 47,000 workers produce 4,500 cars a day. Worldwide, Hyundai turns out 1.35 million cars and trucks a year and has ambitions to move into the top five vehicle producers.

In describing South Korea's successes, it's easy to adopt a train-spotting mentality. Between 1985 and 1995, the value of exports in steel increased from $2.7bn to $7.2bn; in cars, from just over $500m dollars to more than #163;9bn. Add in the growth achieved by sunrise industries and the scale of achievement becomes clear. In the mid-Eighties exports of electronic goods were worth $2. 9bn. A decade later,they had grown to more than $26bn - a tenfold increase.

But the South's success story is about more than just strategy and cheap labour. Any understanding of its remarkable progress - in common with other Pacific Rim countries - must start with Oriental values. The influence of Confucianism, with its emphasis on respect for authority, courtesy and progress through hard work and scholarship, runs deep. Underpinning the country's achievements is an education system built from scratch since the Fifties and now producing - perhaps - the world's most literate and numerate workforce.

Fuelled by the deep ambitions of parents, who spend up to one-third of their income on helping their children through school and college, a good education is seen as crucial to a good career. But the transformation of South Korea has not been seamless. For much of the past 40 years it has been ruled by the military, with a succession of authoritarian presidents. There have been coups, martial law, assassinations and corruption, prompting popular resistance through student demonstrations and strikes. With the election of the centre-right democrat Kim Young Sam in 1992, the country has its first civilian president for 32 years. The next general election is to be held later this year.

With its burgeoning affluence, a democratic constitution and a civilian government, the South has turned its mind to social reforms. There is a growing clamour for more leisure time, freedom from the paternalism of the huge conglomerates that dominate Korean industry, and for a better quality of life.

Anyone who walks the streets of the capital, Seoul, with its skyscrapers, smog-producing traffic jams and lack of green space, cannot fail to sympathise. Yet it is here, with its explosion of shops, restaurants and night clubs - testimony to a growing service industry - that the new generation is making its presence felt.

If Korean society is growing up, demanding more freedom and more choice, so too is Korean industry. Rising wage costs and the search for new markets have led Korean companies to invest in new factories in emerging countries such as Indonesia, the Philipines and Thailand, in addition to the mature markets of America and Europe. One of the most significant developments is the concentration of inward investment to Europe in Britain. Big investment cash injections have been made by companies such as Daewoo, Samsung and Goldstar, producing cars, colour televisions, fax machines, personal computers and other hi-tech products. The biggest investment so far is the #163;1.7bn by LG SemiconElectronics, which is opening up a factory in Newport, south Wales, with 6,000 jobs.

Perhaps the main reason for this inward investment is Britain's strength in advanced scientific knowledge. Korea may have become a world leader in turning new technology into merchandise, but it looks to the West for invention, innovative design and advanced development work. While Britain looks warily at Korea's awsome manufacturing prowess, the Koreans envy our creative skills.

It's no accident that, while British educationists, policy-makers and inspectors beat a path to South Korea's door to try and learn the secrets of its success in basic skills, Seoul is looking to Britain and the US to reform its schools and universities. The Koreans want to produce a more creative, questioning and diverse workforce able to develop ideas of its own.

Where does Korea go from here? In the new world economic order, Korea is pushing for a place at the top table. There could yet be war with a wounded and hungry North Korea, with the ability to fire nuclear missiles at its pampered southern neighbour. It's more likely that the two Koreas will reunite eventually, resuming a 1, 300-year unity which began in the seventh century and ended with the enforced colonisatio n by Japan in 1910.A reunified country of 65 million people - bigger than Britain - will provide further expansionist opportunities for the South's industrial giants and be an important player in the international power game. Meanwhile, Seoul is developing diplomatic and trade links with China, the key to reopening peace talks with the North.

Why should we care? After all, Korea is 6,000 miles away. Korean schools are busily teaching their pupils English, seen as the language of the global market place, the language of information technology. We are already well placed to compete, despite our famous inability to learn foreign languages. The Koreans admire us for our creativity and the diversity of our education system. Yet they are learning fast. Perhaps it's time to learn something from them. And soon.

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