Acloser examination of two countries confirms
the conclusion that each of the first four broad
approaches to development—stages of growth,
structural patterns of development, dependence, and
neoclassical—provides important insights about development
processes and policy. South Korea and
Argentina are reasonably well matched for such a
comparison; for example, both are midsize in population
(40 million in Argentina and 49 million in
South Korea in 2008), and both were long classified
as middle-income countries. But South Korea, now
designated by the World Bank as a high-income
country with about $28,000 PPP in 2008, has double
the per capita income of Argentina, with about
$14,000 PPP in 2008, whereas 30 years earlier the reverse
was true. Can the four classic approaches to
development explain this reversal?
South Korea
Stages of Growth South Korea confirms some
linear-stages views, albeit in a limited way. In recent
years, its share of investment in national income
has been among the highest in the world, and
this is a crucial part of the explanation of the nation’s
rapid ascent. To understand just how rapid
this ascent has been, consider that the country did
not even rate a mention in Rostow’s Stages of Economic
Growth in 1960, when the book was published,
and few of the “preconditions for takeoff”
were in place. Investment has been very high since
then, but as a share of GNI, the investment ratio, at
15%, was still below takeoff levels in 1965. Yet it
rose dramatically to 37% of GNI by 1990 and remained
close to 40% in the 2000–2007 period. Still,
South Korea does seem to epitomize Rostow’s notion
of an economy in the midst of a “drive to maturity,”
is well on its way toward mastering the range
of currently available technologies, and appears to
be entering an “age of high mass consumption.”
Rostow claimed that maturity is attained some
60 years after takeoff begins, but he never denied
unique experiences for each country, and it may
well be that the gap between traditional and advanced
technology can actually be crossed more
quickly at later stages of development. The larger
the productivity gap between countries, the quicker
income can grow once takeoff has been achieved.
South Korea certainly meets the “maturity” criterion
of becoming integrated with the world economy
through new types of exports and imports. Although
the fact that India, rather than South Korea,
was picked by Rostow for takeoff shows the limits
of the predictive powers of the stages theory, the
case of South Korea nonetheless offers some confirmation
of their value.
Structural Patterns South Korea also confirms
some patterns-of-development structural-change
models. In particular, South Korea’s rise over the
past generation has been characterized by rapidly
increasing agricultural productivity, shifts of labor
from agriculture to industry, the steady growth of
the capital stock and of education and skills, and
the demographic transition from high to low fertility.
These changes occurred while South Korea’s per
capita income grew by more than 7% annually for
the whole 1965–1990 period. Even in the 1990–2002
period, as a more mature economy and in the face
of the Asian financial crisis of 1997–1998, the economy
grew at a 5.8% rate. In the late 1940s and 1950s,
South Korea carried out a thoroughgoing land reform,
so agriculture was not neglected; but otherwise
its growth through rapid expansion of the
percentage of the labor force in industry has
broadly conformed with the Lewis model of development.
After about 1970, productivity growth in
agriculture also increased rapidly, owing in part to
a successful integrated rural development program.
Dependence Revolution But South Korea poses
a serious challenge to the dependence revolution
models. Here is a poor country that became tied in
with the international economy: It was strongly dependent
in international relations—it was a Japanese
colony until 1945 and thereafter wholly dependent
on maintaining the goodwill of the United
States for defense against invasion by North Korea.
It received a large part of its national budget in the
form of U.S. aid in the 1950s and both exported and
imported a great deal from developed countries, especially
the United States and Japan. The shape of
the nation’s development was thus “conditioned”
in large part by export opportunities to developed
countries, and dependence theory would predict
that retarded development opportunities should result.
Yet South Korea today is an OECD member
and is widely considered a candidate for developed-country
status (its income is comparable to
that of Greece and Portugal). Of course, dependence
theorists could and do claim that South Korea
is an exception because of the magnitude of aid it
received and the self-interests of the advanced
countries in seeing its full successful development
because of its role as a bulwark against communism.
And the Korean government pursued some
particular policies that the dependence school