(President Park Chung-hee)
An Economic Development Board is an economic agency tasked in producing statistical information and economic datas to the wider public and is given the mandate to diversify industries of nation-states and shape economic policy-making, much like what Brunei’s DEPD (Department of Economic Planning and Development) and BEDB (Brunei Economic Development Board) are currently doing.
One of the best case studies of a successful Economic Development Board is that of South Korea’s Economic Planning Board.
It is an economic agency founded by President Park Chung-hee in 1961 to shape and spearhead the national industries forward in the name of economic development. Its principal mandate is to design five-year economic development plans as well as in managing the government’s budget and securing foreign loans. This Economic Planning Board was instrumental in taking South Korea from the brink of poverty into the pathways of prosperity.
The by-product of that agency since its inception in the late 1960s, among many others, include the likes of Samsung, KIA, Hyundai, Daewon, and many other South Korean MNEs – known in the business world commonly as the Chaebols – with interests that stretches from industrial petroleum, car production, smart phones, ship building, and consumer retail complexes.
Weave their influence and corporate power together, they have bought about the creation of mass jobs for the society serving as principle instruments of economic growth and development, as well as acting as technological transfer agencies needed in industrialising the country forward.
To give a picture of their importance consider that twenty years ago, South Korea was able to produce cups from machines they imported off from US or England. Now they are not only able to mass produce those cups, using their own technological know-hows, they were able to produce the machines that produce those cups too.
One can only dream of a war-torn country to be able to rise up so fast that its companies even threaten global MNEs in the economic field. Yet, South Korea triumphed against all odds and made this possible. A case to point is the Samsung conglomerate which constantly is at battle with US’s Apple within the smart phone industry.
Little do people know, Samsung (through its subsidiary Samsung Heavy Industries) also manufactures LNG Carries for international Oil and Gas companies. According to a report, most ultra-large ships are built at its dock, and it also have the world’s highest production efficiency with yearly dock turnover rate of 10 and the launch of 30 ships per year.
Talking about diversification, Samsung is a brilliant example of a nationally-grown corporation that could only be possible through an effective economic agency serious enough to usher the nation in the right direction.
Many intellectuals and idealists gradually look up at the South Korean model as a miracle at the beginning of the 1960s. I think Lee Kuan Yew was right when he said, “If Singapore is not successful, no one will care about us.” The same case here for South Korea. No one cares about South Korea until it is successful.
The role of the Korean Economic Planning Board on making the whole projects were was not all that easy. They had to make tough, unpopular decisions which almost always goes agains the grain of what “society wants”. Had they gone alone, they would have failed miserably.
However, a visiting professor delivered a remarkable insight few weeks ago that taught me something in my LED class. He said that there has to be an effective risk-sharing mechanism which exists between different actors wanting to shape nation-states forward. The economists, being naturally inclined to efficiency would almost always favour it over equity. Meanwhile the politician would do the exact opposite.
This can be encapsulated beautifully in economic terms as the “efficiency vs equity” debate.
During those trying times however, the politicians have to face the hard reality and have to agree with the economists. Luckily, South Korea has Park Chung-hee, the revolutionary hero who saw the need to make hard decisions in turning the country around. And he did at the backing of his people and under the advise of the right people.
Under the department and under the licensed political support given by the South Korean leader, the board was given almost complete autonomy from the political risks associated in bringing about nothing short of a complete overhaul of the entire South Korean socio-economic landscape through its successive waves of five-year economic developmental plans.
Almost always these economic plans were remodelled after “Western models of development”. Not that they would copy wholeheartedly or blindly what the Western powers did, but they did so intelligently. They realise that those models are simply means required to sustain and rebuild the national system.
Three things that the South Korean Economic Planning Board focused on were the strengthening of property rights institutions and the rule of law, as well as the implementation of land reform policy (to break the monopoly power of the landed aristocrats and to redistribute them back to the people).
At the heart of these reform policies were economic liberalisation based on the model of export-oriented and outwad-looking principles needed to enjoin South Korea to the global economy. They knew that the Western models of development could not “simply wipe out their culture or polity”, as some neoconservatives usually and cynically dream off.
No. Instead they see Western models of development as a way which will serve to strengthen themselves, as did the Japanese upon learning their technological methods in the name of development which saw Japan ultimately becoming the first Asian country to crush a Western power (Russia) in the 19th Century, effectively elevating their national confidence and completely surprising world observers.
All the policies were wholly through a top-down process which looked at creating and exploiting opportunities needed to take South Korea from the precipice of mass poverty into the age of prosperity. One has to be reminded that South Korea just recovered from war with its Northern counterparts and economic data shows how the country was as poor as Uganda.
Below you can see the top-down structure of the Economic Planning Board which exist in the following image below:
(Structure of the Korean Economic Planning Board)
In the midsts of this economic upheaval, the Korean Economic Planning Board founded by Park Chung-hee bought about much-needed reform that required those working in the boards to provide him the “Blue Books”, statistical and economic reports published daily to provide monitoring, coordination, and report of what is happening in the ground. Surprisingly, these “Blue Books” systems exist to this day and is used by South Korea’s finance minister to check the day-to-day updates of the Korean economy.
It was not all that easy to lead the organisation forward. The President had to absorb all the political risks involved in the political fallout associated with the changes bought about by the Board, but those who followed him – the economists, policy-makers – carried out their duties dutifully, as would those Turkish soldiers did theirs under the leadership of the great Atarurk in delivering Turkey from foreign domination in the Turkish War of Independence.
The result of President Park Chung-hee’s initiative in building up the Economic Planning Board and putting in place economic liberalisation policy fundamentals, namely property rights, land reform, and rule of law. South Korea underwent unprecedented growth making it one most developed and dynamic economies on earth in less than fifty years of development.
In 2004, South Korea joined the trillion-dollar club of world economies, and South Korea currently ranks 13th in the world by nominal GDP and 13th by purchasing power parity (PPP) In the picture below we can see that in the 1960s, GDP per capita was comparable with levels in the poorer countries of Africa and Asia.
Since the inception, the Korean Economic Planning Board has morphed into a better, stronger organisation empowered with wider mandates to manage the seven following points in the South Korean economy:
1. Planning and coordination of the mid- to long-term socio-economic development goals and setting economic policy direction on an annual basis
2. Distributing resources effectively and assessing the effectiveness of budget execution
3. Planning/reforming Korea’s tax policy and system
4. Planning and management of policies for treasury, government properties, government accounting and the national debt
5. Coordination of policies for foreign currency transactions and international finance
6. Enhancement of international cooperation and promotion of inter-Korean economic exchanges and cooperation
7. Management and monitoring of public institutions’ operation
As Alan Ryan notes in his book, On Politics, as a man grows old he gets weaker. But as an institution grows, it gets stronger. Surely President Park Chung-hee was the man of his times; whose conviction led to the furnishing of this remarkable institution, the Korean Economic Planning Board, one which the Koreans needed at those troubled times and in the current, in navigating the intricacies of the new world order.
—-Implications of this study for Brunei Darussalam—-
What are the implications of this study for Brunei Darussalam. Well, in order to bring about changes, its leaders have to understand the role of its economic agencies. In a way that they do not simply exist to provide statistical information and is tasked at diversifying the economy.
They exist as an agency to bring about economic liberalisation to the very core of the Brunei’s economic model. Doing so would be hard, but with the right political support and licensed autonomy to carry our hard decisions, the board can serve to intensify economic development like never before.
To my fellow friends and compatriots, please learn about property rights, land reform, and rule of law. The nation has these economic liberalisation policy fundamentals in place, but there are still a lot of things to do. We, the young people, have to grow them and to strengthen them in the name of precipitating the nation’s economic growth.
Such policies must never be seen as simply keywords. It has to be studied, to be learned, and to be researched. If you were in charge of one of the economic departments in the national university, I advise you to concentrate at putting full force of my energy in planting and seeding the minds of the young in the right economic ideas required to make Brunei into a prosperous nation.
Such ideas however represent only one of the many facets needed to take the nation forward. It also require strong political will needed to carry out these changes. Such hard decisions to be make, but they are bound to happen. Let us not kid ourselves any longer. The moment of truth looms ahead. Let us take every opportunity we have in ushering Brunei into the next step of development.
So let us not give up. Let us carry forth the banner to intensify economic reform.