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The Facts

Korea, South
Development (Aid)

new internationalist
issue 183 - May 1988

Development choices - The FACTS

'Development' is an elastic term whose meaning expands or contracts according to your point of view. For a Brazilian businessman it may mean free wheeling private investment, for a Zambian peasant it may mean a reliable village water supply.

However there is general agreement that all 'development' should improve living standards. The way governments do this varies widely: the economic blueprints followed spring from a mixture of ideology, geography and colonial history.

None of the following are pure economic models; the borders tend to blur between them. The categories describe different economic tendencies and the countries which best illustrate them in practice.


Photo by SUNIT GUPTA / NETWORK Theory: In traditional economic terms self-reliance means balancing export earnings against import expenses plus debt repayments, so foreign aid is unnecessary. Self-reliance doesn't mean severing all links with the global economy. But it does mean less dependence on both foreign investment and on foreign markets. An important part of this economic model is that a nation will try to meet as many of its production needs as possible.

Practice: India is extraordinarily self-reliant by Third World standards. It is the world's eighth largest industrial power. Most consumer products are locally made, including home appliances and cars. It is also self-sufficient in food. Advertising by Western and Japanese multinationals is conspicuously absent. But this apparent success has benefitted relatively few Indians - mostly urban elites and large farmers in the north. The 600 million Indians in rural villages see little of the country's industrial wealth. New industries have also favoured capital-intensive technology which has done little to alleviate mass unemployment in the cities. Essentially the 'modern sector' has been overlaid on the old way of life and the two are largely separate. Once serves a privileged domestic minority while the rest remain desperately poor. Stagnation in the rural economy and mass poverty in the cities has contributed to a growing sense of frustration and resentment between different regions, religions, castes and classes.


Photo by RICHARD AND SALLY GREENHILL Theory: The local economy of South Korea is geared to international exports. Cheap, reliable manufactured goods find markets in developed countries by undercutting Western-based manufacturers. New technology combined with cheap labour produces foreign exchange earnings which are used to improve government services including basic health care and education. If the export strategy is successful, growth is strong and there is enough surplus to allow for gradual wage increases and basic social welfare programs.

Practice: South Korea is one of Asia's 'economic miracles': the export strategy has been remarkably successful. The country is a major exporter of automobiles, ships, electronic equipment and textiles. But success has had a price. Multinational companies control an estimated 30% of South Korean exports; there is stills strong dependence on foreign capital. Also, to maintain growth, export prices are kept low which means greater pressure on labour as competition increases from other Third World countries. South Korea is a highly regimented society. Wages are low and a 12-hour day, six-day work week common. The media, the education system and the labour movement are tightly controlled. There have been recent moves toward democracy but the army is still the main force in the country and South Korea's business elite are reluctant to give in to threats which may effect export prices.


Photo by NORMAN POTTER Theory: Also known as Third World socialism, the goal is to inject popular decision-making into basic development issues. This requires a finely-tuned political system which allows information to flow up from the bottom to the top. The intention is to avoid a rigid centrally-planned bureaucracy which is isolated from the people it is intended to serve. In theory grassroots participation will allow the government to forge a national consensus built on a shared understanding of realistic economic goals - a trade off between growth and redistribution.

Practice: Zimbabwe went through a rough transition period after winning black majority rule in 1980. Internal political squabbles were compounded by South African harassment in the south and several years of drought which badly damaged the maize and tobacco crops. Dramatic changes were expected after the long liberation struggle. And discontent quickly bubbled up when Robert Mugabe's ZANU government delayed redistributing white-owned farmland to peasants. ZANU's highly-organized political structure is the conduit for grassroots participation. But attempts to criticize are frowned on by party brass and there is still a widespread assumption the party is not to be publicly criticized. In his urgency to create a one-party state Mr Mugabe has allowed security forces to use excessive brutality and sweeping powers of arrest and detention under the Emergency Powers Act. As a result there is deep distrust of Harare amongst non-ZANU blacks.


Photo by RICK REINHARD Theory: Unfettered growth will eventually iron out huge inequalities between rich and poor. Economic benefits will 'trickle down' from the elites thus improving everyone's living standard in the long run.

Practice: Brazil is a classic case study of the failure of 'trickle down' development. It has the Third World's largest economy and a population nearing 150 million. It is the top exporter of coffee, soybeans and sugar and the second largest cattle and cocoa producer. Yet prosperity has remained in the hands of a few: the top 20% control nearly 70% of the wealth and two thirds of all Brazilians go hungry. Governments have tried to divert the poor by opening new lands in the interior - at the expense of both the environment and indigenous peoples. Brazil is also one of the most indebted Third World nations ($1 13 billion). Debt repayments, IMF imposed cutbacks and urgent demands for real democracy may bring restrictions on political and civil liberties.


Photo: IFDP Theory: Growth hinges on the stable, long-term export of a few primary resources initially developed by ex-colonial powers. Foreign exchange is used to encourage manufacturing - industrial jobs then open for peasants fleeing the countryside as agriculture is mechanized. The end result is a diversified, less dependent economy.

Practice: Zambia's reliance on copper exports began during the British era and continued after independence. Public servants and city dwellers prospered while agriculture was ignored. In 1955, 20% of the country's food was imported; today nearly half is purchased abroad. When copper exports slumped in the mid-1970s Lusaka took on huge loans: debt repayments now absorb nearly 60% of export earnings. The mines will be exhausted in 20 years. Traditional support for Kenneth Kaunda's 30 year-old rule is waning. Screws have been tightened on domestic dissent, strikes banned and the government says 'internal enemies' will be fought ruthlessly by the security forces.


Photo: JAMIE STILLINGS Theory: State planning and public ownership replace private ownership and the unplanned chaos of the marketplace. Instead of market demand shaping production, a centrally-planned economy first sets priorities, then plans production to meet those needs. The economic principles are Marxist - i.e. the state invests the surplus in productive industries for the long-term benefits of the people.

Practice: Cuba has a Third World 'monocrop' economy: sugar accounts for 85% of total exports and 60% of total farmland. And Havana has done little to get off the treadmill. A US trade embargo forced the island to strengthen ties with the USSR - Moscow imports most Cuban sugar and provides millions in economic and military aid. Economic progress has been limited but the country has made tremendous social gains: especially in education, health care and equality for women. Recently Cubans have begun to question central planning. There is concern that rigid economics are creating a rigid political system which is jeopardizing the basic democratic impulses of socialism.

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