Shoes and Economic Miracles

Industrial Mission in 1970s
Interviewing Reverend Cho about the Korean labour movement, 1977

My first experience in foreign aid was in the 1950s, helping my parents send shoes to Korean orphans. The orphanage director wrote that the Korean War had wiped out the shoemaking business. If charitable Americans would donate used shoes, children could bear the winter. Within a year, aromatic mountains of faded sneakers, crumbled slip-ons and boots filled the attic. We sent them all, knowing that some would be sold to buy food.

Nearly 25 years later, South Korea was one of the world’s major exporters of shoes. You could go through piles of the “on sale” stocks in the East Gate Market to find the real bargains. With per capita incomes that had increased more than 150 percent, most Koreans could also buy the goods they made.

Economists have tried to draw lessons from the Korean pattern of development. They are particularly intrigued by the close interaction between improvements in human development and economic growth. South Korea’s near 100 percent literacy rate in the 1990’s compared favorably with highly industrialized nations.  By 1993, Korea’s poorest 20 percent had about one-third the average per capita income compared with the United States, where the poor had less than one-fourth.

Most economists acknowledge that Korea’s success was not due to a “trickle down” from economic growth to social welfare. South Korea’s economy became a prime example of how a resource-poor country can compete in international markets with export-oriented strategies, starting with social, not economic development. On the eve of its economic “take off,” South Korea had already reduced its population growth rate. It also had a large pool of skilled labor—including women and girls– and had a critical mass of expertise in science and technology.

But try as they may, many struggling countries in Sub Saharan Africa and Latin America cannot replicate the Asian economic experience. Maybe this is because they have focused too hard on the numbers and not enough on the process. Political will may be more important than we ever imagined.

At least, in the South Korean situation, political will at all levels was a major determinant of its economic direction.  Korean economists promoted and won policy support for economic growth based on equitable investments in education for the rural poor, including girls. They also successfully argued for public sector spending in upgrading rural life so that women’s time burden would be reduced. Investments were made into rural health services and family planning. The National Economic Planning Board carefully monitored rural-urban income distribution and transfer of private wealth into the public coffers was required.

At the international level, global financial institutions and the United States cooperated to create an international financial and trade structure which favored South Korea’s entry into the global economy—all favoring labor-intensive, export-oriented industries favoring girl’s employment in electronics and garment industries.

But national policy would probably have failed without the political will for equity from the bottom-up.  Democratic movements of the l970s and l980s — among students, factory workers, women, and farmers — made economic justice a development issue. Their gains were won at high political costs, and, at times, with their lives. The factory girls went on strike repeatedly for fairer wages, better work and living conditions in free trade zones. Rural women asserted their economic and political leadership against the tide of authoritarian rule. These democratic rumblings and “disturbances” were the key ingredients in creating a stronger, more peaceful transition to an open economy governed by democratic principles.

We need to take stock of this turbulent political chapter in Korea’s economic history. We should learn more about how economic and social struggles ultimately lay a foundation for sustainable economic growth.