Comparing Pakistan with Korea

Dr. Niaz Murtaza

A most unhelpful occurrence in Pakistan’s history was the visit in the 1950s by South Korean officials to study our economic policies. Western experts then ranked Pakistan higher than Korea. Soon after the visit, Korea started developing astronomically while Pakistan gradually floundered.  Thus, the visit created the illusion that Korea outpaced us by copying our recipes which we failed to utilize ourselves, and its memory still causes an immense sense of unfulfilled national destiny. Popular myth maintains that we could easily have been like Korea if only we had better leadership and/or better ethics, especially unity, honesty and hard work.  Actually, our slower progress is rooted in a broad array of structural factors which include politics and ethics but also anthropology, history, geography, chemistry and economics.  Understanding this complexity will help in reducing our frustration levels and analyzing our future development potential.

Let’s start with anthropology and history. Pakistan has been consumed by ethnic tensions since independence, unlike Korea. However, ethnic diversity and shorter national history rather than weaker ethics are the cause. Korea has been a homogeneous separate country for more than 500 years with the Korean ethnic group constituting 90% of its population. Pakistan has been in existence for just 60+ years and is highly ethnically heterogeneous. Long-standing, homogeneous societies handle inequality better as inequality produces jealousy but also hope among have-nots as they see similar people benefiting. Wealth also spreads widely more quickly through cultural mechanisms such as marriages, gifts, personal loans etc. Consequently, while both experienced inequality post-independence, inequality caused minor problems in Korea but constant ethnic turmoil and even dismemberment in Pakistan. Moreover, our colonial history was also different. Japan undertook major industrialization and land reforms in Korea, while the British de-industrialized India and strengthened feudalism. Imagine how smooth Pakistan’s progress would have been if at independence there were no landlords or ethnic tensions (two of our biggest problems) but higher industrialization? That is how Korea started out in 1945!

Geography and chemistry further expanded Korea’s advantages after independence. Compared with our off-on American relationship, it enjoyed consistently stronger chemistry with America as the threat of communism was more serious in East Asia. Both faced a hostile neighbor after independence due to partitioning. However, we had to beef up defenses mostly from our own pocket, leaving little for development investment, while the USA reduced Korea’s defense burden by maintaining troops there. Korea also got much more economic aid, technology and access to American markets. Moreover, once Japanese companies started hunting for cheaper production sites from 1960s onwards, South Korea made sense given physical proximity and colonial linkages–advantages Pakistan could not match even if it had better national ethics, leadership and policies.

The last difference relates to economic policies. Korea adopted a consistent strategy of working closely with the private sector to wean it towards progressively more advanced industries. Pakistan’s economic policy changed several times–from market-led to state-led to IMF-led strategy. Until 1971, we followed a market-led strategy. The state did work closely with the private sector in facilitating industrialization. However, we remained stuck with light industry without the technology from America and Japan that Korea got.  Bhutto adopted a state-led strategy with a focus on heavy industry and ethnic equality given earlier failures along these dimensions. Roles reversed as now it was Pakistan copying Korea’s policies. As in Korea earlier, banks were nationalized to harness savings for industrialization and a state steel mill set up along with down-stream automobile industry. In Korea, nationalization was limited and industrialization drew on a capable bureaucracy. In Pakistan, nationalization was over-done and the private sector and bureaucracy weakened in pursuit of the second goal (ethnic equality) precisely when they were needed to meet the first objective. While this reflects faulty policy, it also reflects the additional policy considerations faced by an ethnically heterogeneous country recently dismembered due to ethnic tensions. Moreover, Korea set up advanced industries with superior American and Japanese technology while Pakistan only got Soviet technology for its steel mill. Finally, since the 1980s, we have followed an IMF-led strategy which undermines national development and which Korea never followed.

Korea’s astronomical development within one generation then was the result of more favorable developments stretching back to the pre-colonial period. Thus, a wide array of factors must converge, over decades and even centuries, before a country (at least large ones without oil) can develop. Security, good governance, human capital, finances and technology are all imperatives. At least some of the following must also be present as they facilitate the imperatives: favorable location, chemistry with great powers, large diaspora, natural resources, high savings rate, homogeneity and national history.

It is differences along all these factors (some controllable, many beyond our control) that explain the differences between Pakistan and Korea and to varying degrees with other East Asian countries. Thus, Pakistan had little chance of emulating Korea back then even with better ethics and leadership. Both did have some impact but themselves were results of more structural factors, many beyond our control. Thus, better leadership in Korea was partially due to Japanese colonial land reforms and industrialization, which weakened landlords and allowed urban interests to assume power soon after independence.

Fortunately, these factors are starting to line up for Pakistan. The center of the global economy is moving to our neighborhood in China and India; Pakistan is among the most important developing countries for America; urbanization is increasing, leading to likely ascendance of urban groups and gradual improvement of governance. Other factors will become more likely as governance improves: eliminating militants and mafia and improving relations with India to increase security; developing skilled labor force through higher education budget; expanding tax base and reducing corruption, waste and defense costs to generate resources for development; adopting state-led industrialization approach and avoiding IMF dictation; reducing ethnic tensions through decentralized democracy and avoiding illusionary top-down short-cuts. Thus, Pakistan’s long-term future will likely be better than the past.

Dr. Niaz Murtaza, Research Associate, University of California, Berkeley, Article appeared in Dawn recently.

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