This report was published in Time.com at Nov.15,2010 and was written by Michael Schuman. This is a summary.
Thirty years ago, Korea was poorer than Malaysia and Mexico. Since then, its GDP per capita has surged by a factor of 10 to $17,000, more than double the levels in those countries. GDP growth was 0.2% in 2009, and is estimated to be 6% this year. Yet when I left Korea in 2000, it was an open question whether its success could continue.
Over the past decade, however, Korea has reinvented itself- it is a Asia miracle again. Korea has become a innovator, an economy that does not just make stuff, but designs and develops products, infuses them with the latest technology. Samsung and LG, not the Japanese eletronics giants, are dominating the hot new LCD TV business. In 4G phone technology, Samsumg is poised to become a leading force, while Hyundai Motor, a joke a decade ago, is a top-five automaker.
Part of Korea`s success is simple commitment. Koreans spend some 3.5% of their GDP on R&D, compared with 1.5% in China and less than 1% in Malaysia and India. Innovation, however, is not something that can be conjured up in government offices or corporate boardrooms. You can tell people to work harder or build a more modern factory, but you can not order them to think better or be more creative. That change has to take place inside people heads. In Korea, it has. Koreans are breaking down the barriers that held the nation back, a process fostered by political freedom and a passionate embrace of the forces of globalization.
Globalization has always been the engine behind Korea`s economic miracle. Beginning in the 1960s, a destitute Korea capitalized on its cheap labor to competitively export toys, shoes and other low-tech goods to comsume in the west. That jump-started income growth, as costs rose, Korea shifted into ships, microchips and other advanced products.
The country was largely ruled by dictators for 26 years, until massive street protests forced free elections in 1987, and even after that, the government still intervened heavily in the economy. But, Korea has become a much more democratic society over the past decade, and the market-oriented economic reform made necessary by the 1997 financial crisis. Now the government is smaller and intervenes less. The economy of a country is very reflectiveof the politics of the country
Above all, Korea offers a counterpoint to those political leaders, like China, who believe¨state capitalism¨ is superior to free enterprises, or that they can create an innovative economy without civil liberties. Of course, that does not mean the Korea system is perfect. The outdated education system is so rigid that parents flee the country in droves to put their kids into high schools in the U.S. and elsewhere.
However, Korea I know is a country that confronts its challenges.
