Many people all around the world believed that the world would end
in December 2012. Perhaps that maybe one of the reasons for people liking songs
and making it go viral on social networking sites. The year 2012 has seen two
such videos go viral from two extremely different countries. I am of course talking about “Why this kolaveri
di?” from India and “Oppa Gangnam style” from the Republic of Korea
(South Korea). While the former gained a viewership of 50 million users across
the globe, the latter gained a viewership of 400 million users. Now this huge
difference might surprise a huge number of Indians but this was expected of the
Koreans. Why? Because the Koreans have created a brand for themselves: The
hardworking East Asian who never stops even after reaching the peak. If it has
been possible for a small country of 50 million people, what went wrong in a
country of 125 million? Let us analyze their past and see what has happened.
1. Export Promotion vs Import Substitution
Like most of the countries, South Korea was devastated post World
War II. Adding on to the misery was the Korean War which extended till 1953.
But unlike most of the developing companies, Korea adopted a policy of Export
promotion against Import substitution. India started to follow Import
substitution in the early 1950s but soon realized that Import substitution
didn’t boost the domestic market as expected. The main idea of introducing the
import substitution was to introduce imported products and replace them with
domestic products in due course of time. But the replacement phase failed to
come into existence at the projected rate. On the other hand, the Export
promotion strategy adopted by Korea bore fruits and it helped develop their
economy. Although the balance of exports was never attained, this strategy
nevertheless helped in recovering the Korean Economy and made a positive impact
in its growth rate. When India adopted the export policy, it was already entering
into the 70s and entered into a trade agreement with USSR virtually confining
itself from the rest of the world.
2. Dictatorship vs Nepotism
From 1961, Korea was ruled by Park Chung Hee, a military General. He
was brought in key economic development agencies like Economic planning Board,
Ministry of Trade and Industry and Ministry of finance. His iron clad rule brought about the huge
transformation of a Korean economy with a Per capita Income of $ 72 to a per
capita income of above $ 20,000 today. On the other hand, India has been ruled
by the Nehru-Gandhi dynasty for almost 2 decades post independence during which
little transformation took place. Park was succeeded by a series of autocratic
leaders who continued Park’s good work. Back in India, The Nehru-Gandhi family
devised a series of complicated policies which failed to promote trade and
commerce. To top it, the Emergency period between 1975 to 77 turned out to be a
nightmare for the Indian citizens.
During this phase, a strong flavor of dictatorship was in the air but it
dampened at the end of 1977. One of the highly criticized policies was the
Permit Raj system which was introduced by Nehru. Though it was introduced to
bring in fair practices in trade, it later turned out to be a reason for corruption.
3. Chaebols vs Crony capitalists
The Chaebols are the name given to the industrial conglomerates of
Korea. These conglomerates are family
owned and include world renowned brands such as Samsun, Hyundai, and LG etc.
The chaebols together single handedly contributed to more than 30% of the
country’s GDP. Back in India, the industries were dominated by the Tatas and
Birlas. These were also family owned conglomerates but the flaw in the plan was
these conglomerates developed close relationships with the ruling politicians
and this relationship reflected on the success of their businesses. They were
more profit oriented and unlike the chaebols, turned out to be crony
capitalists. This statement is evident from the fact that the number of
billionaires who own more than $10 billion are most in India next to Russia.
Thus, it was Advantage Korea.
4. Heavy Industries vs Versatility
Perhaps the one field where India has an advantage might be the
versatility of the industries present in India. India has a wide range of
industries present from heavy industries to light industries, and from large
scale to small and medium scale. Also, the expansion of services industry is a
huge advantage for the Indian economy. The Koreans have been indifferent
towards the service industry, for unknown reasons. While the versatility has
been good for India, It is yet to capitalize the advantage. But the Koreans
have got a liking for the heavy industries such as ship building and
automobiles. The world’s 3 largest ship-building companies are Korean
companies. Also, Koreans are pioneers in oil platform constructions. Though
Korea doesn’t have Oil reserves, it helps build the oil platforms in the
pacific coast and the Indian Ocean. The
Koreans are also experts in the Architecture. The Korean firms are responsible
for decorating the Dubai skies with high rises.
Going by the statistics, the Heavy industries such as Automobile and
Ship-building contribute to 25-30% of the GDP. While India is yet to take
charge in the heavy industry sector, Korea has taken a giant stride forward and
is moving on, widening the gap.
5. Discipline vs Carefree attitude
One of the interesting features which has had a tremendous impact on
Korea’s growth is the disciplined attitude of the people. The Koreans are
filled with pride. They are very proud of their nation and they are bound to do
anything for the sake of the nation. This can be observed by their behavior
during the 1998 Asian financial crisis. When Korea was asked to pay back the
outstanding debt, millions of Koreans lined up outside the government agencies
to deposit their gold so that they can save the face of their country. But the
Indians are contrasting to these characteristics. They are never serious about
deadlines, work targets, lethargic in all kind of work. But the fact is that
Indians are used to this kind of behavior that it is now expected from
everyone. This kind of attitude has to change and unless we change, we are
bound to get lose the competition. As on 2011, Every Indian has a debt of US
$263 on him. How would you react to this?
India got independent on 15th of August 1947. South Korean
government was proclaimed on 15th august 1948. Both these countries were in a
similar state: Poor infrastructure, huge deficit and food shortage. Both these countries have overcome the food
shortage but India is still developing its infrastructure and trying to lower
its deficit. The Golden quadrilateral project, Mumbai – Delhi Industrial
corridor projects look promising but they are yet to materialize. Meanwhile
Korea can boast about hosting international events such as the FIFA world cup
(along with Japan, 2002) and the Olympics, (1988, Seoul, XXIV Olympiad). Seoul
along with Tokyo (1964) and Beijing (2008) are the only Asian cities to have
hosted Summer Olympics till date. India’s nearest hope of bidding to host an
Olympics is for the 2024 Olympics. Will India become an economic superpower by
then? The answer remains with its people and politicians.
References:
1. Vietor, Richard H. K, Thompson, Emily J.,"India on the Move" , HBS Case, Mar 2008
2. Sharma, Ruchir, "Breakout Nations", Penguin India, 2012
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written by Vijay Krishnan A (vijay.pgdm14c@greatlakes.edu.in)
