Why don’t LDCs borrow Japan, Korea, and Taiwan’s examples? Muyanja Ssenyonga

Sometimes it is talking the obvious that invites tumultuous ovation from those in attendance, wins us accolades from the powers-that be , great sense of accomplishment of a job well done. This time it is not about acclaims that motivates this scribbling, nor honor, however befitting those who would cherish conferring it would make of the discourse. Just musing about the sense of it all, you can call it reading between the lines, is as ample an accolade as the writer would wish for. It is about attempts to achieve economic development of currently developing nations. Developing nation means different things to different people. To a politician, even if the details of development are as clear as Greek is to many, it is a buzzword to sing to the voters if you are to have even the slightest chance of success, and an avenue to rub shoulders with developed country counterparts as you extend the begging hand at any opportunity.  For developed countries, it is a term that reminds you of billions of dollars of sunk money without any significant change in the lot of more than three-quarters of the world population, disease, poverty, wastage, even ungratefulness. Rulers, not leaders, have come up and fallen depending on how of their performance fares on this one parameter. To many an academic underdevelopment sets off bells of atrophy, incapacity, subservience, helplessness in the ear. It implies that condescension from developed counterparts while you are on a stroll in the course of an international conference or seminar.  Belonging to developing country status means higher state of alert at entrance terminals as you are considered to be more likely to commit felonies than foster communion. For multinational agencies, it represents a dazzle and puzzle at the same time: the persistence despite strenuous efforts to tackle the phenomenon sends researchers back to drawing tables as their horned theories fail to deliver tangible dents into massive poverty. It is also an opportunity for both bureaucrats in developing and  developing nations alike, to win favors by overstating the degree of ‘underdevelopmentness’ and  gain influence by overstating the much your ‘developmentness’  can deliver.  I take issue with the vital factors fostering   economic development, and why Japan, S. Korea, and Taiwan have much to offer to LDCs today.  Who forgets the simple, and by all accounts ,  simplistic antidotes to overcoming paucity of finances to fund the development process that  emphasized initially domestic saving, voluntary and otherwise through taxation and inflation tax, then foreign investment , direct and portfolio ?  High domestic savings per se however can not provide the requisite propulsion to high and sustained growth and development. As a factor among many there is no debate on that, it is of vital importance, but the small contribution to economic growth that quantitative increases in capital stock, which high saving rates supposedly bring about undermines the argument that it all about saving high from current income that enables a country to throw off the shackles of underdevelopment to achieve the cherished status of a developed nation. Socialist and former countries of the former Soviet Union would have been the first world if the argument holds much water due to the high government savings the economies were able to achieve. Foreign direct investment is often seen as a panacea, forgetting the attendant inappropriate technology, attitudes, and MNC economic dominance, it fosters and breeds.  Renowned economists have long found evidence of a far better predictor of economic growth: the knowledge level taking forms of scientific and technological researchers, level of education and training, research laboratories. The knowledge level manifests itself in inventions and innovations which increase the capacity of conventional factors of production such as capital and labor to produce multiples of the quantities employed in production. So economic development is faster in economies that invest huge resources in  knowledge capacities which  translate into new production processes, new and improved  constructs, concepts, and product prototypes, new and improved products, faster lead times ,higher consumer acceptance,  higher competitiveness. The aforementioned enhances the production capabilities of the economy for existing products,   increases the capacity to bring about new and better quality products at faster rates, raises the overall capacity of the economy to  identify product  niches where the highest long term economic rent is, which enables economic planners to design strategies to achieve world dominance in those areas. High knowledge capacity   confers dexterity, flexibility, innovativeness and inventiveness. It removes one of the most formidable hurdles of development: institutional and attitudinal anachronism. It lets loose the tight taboos that hold back adventurism and risk taking, reduces the ease with which obfuscation as a political tool  is used by political masqueraders because knowledge sharpens criticism, enhances powers of recollection of promises made, and emboldens the populace to take to task those who take their votes for granted ! The most potent force in the annuals of economic development to date has been put to good use by Japan, South Korea, and Taiwan. Not endowed with abundant natural resources, which were considered the principal ingredient of the industrialization process at least before such misconceptions were obviated by the apparent success the three economic achieved despite lacking in such resources; Japan, Republic of Korea, and Taiwan, have to both the developed and developing world that economic development is not achieved by a single well known truck, which had been charted by the ‘old’ developed nations countries. ‘Scarcity’ as is abundance of resources can motivate economic development, only this time the components of the development equation must be altered to reflect the apparently different parameters that are emphasized in the endeavor to achieve development. Quantitative accumulation of factors of production takes the back seat, while qualitative accumulation of first human capital, which is then judiciously used to acquire physical and social capital   wherever this may be located.  Since resources have to be moved long distances from locations abroad, ship construction and maritime activity become the prime mover of all economic activity, minimization of resource wastage become national priority, miniaturization  technology becomes an obsession. By and large, thus the economy relies on the knowledge of its working population rather than resources underneath the land of their ancestors, and it must be acquired at all costs because it is not a matter of choice, but survival.

It is not only surprising how the three economies have achieved their economic development in ways that broke ranks with what was for along time considered conventional wisdom, but have established themselves as dominant forces in the world economy on their own terms. Many attribute such success to the close connection the three economies had and still have, with the largest capitalist nation in the World, the United States. This holds water as far as providing the three economies with opportunities to enhance their knowledge levels, which of course in 1945, 1949, and 1955, for Japan, Taiwan, and S.Korea had been reduced to minimal levels because of the second world war devastation, having left everything behind after the success of the Mao Tse Tung Revolution on the Chinese mainland, Korean war dilapidation respectively. Additionally, the three countries had access to the large US market for the budding industrializing economies. Immense financial support from US at least to convince the population that free markets was a better choice than communism also contributed to reducing the duration of suffering, facilitated the transfer of technology which saved immense costs , and time. However, many economies have since tried to follow the same example, using the opportunity of being close allies to US to no avail. The commitment of the population, translated into good development policies by visionary leaders is as important, if not more so.  Beating the odds provided the motivation to move on. What however, eludes many development economists is the ability of the three economies to retain the control over the national economy in the hands of their respective population. We don’t see many MNCs from the developed world controlling the Japanese, South Korean or Taiwanese economy. This is despite the immense contribution US made towards the development of these economies. It is a good lesson for economic planners in LDCs worth learning, for it is easier said than done!