SOME LESSONS FROM KOREAN EXPERIENCES

I. Introduction
It has been a puzzle to many economists for long time why Korean economy has grown faster than most of other devel oping countries. The experience of Korean economic growth has now become a classic example of a successful story of dev elopment and industrialization.

It is very often said that the rapid economic growth and industrialization of Korea since the early 1960s is primarily attributable to its people, not only diligent but also well-educated. When Korean economy initiated its modernization and development in the early 1960s, it had almost nothing but human resources as meaningful factors of economic growth and development. Arable land accounted for less than a quarter of the total area. The country had one of the highest population density in the world. It had significantly limited natural resource. In addition, due to its historical reasons, Korea had all of the disadvantages of underdevelopment: a lack of accumulated capital and technology and a scarcity of appropriate institutions and enterprises. The only asset that Korea could rely on for its economic growth and development was its abundant human resources with a relatively high level of education, motivation, trainability, and ability to work together.

In an influential presidential speech of the American Economic Association in 1960, Theodore W. Schultz said that the investment in education is every bit as important as investment in physical capital (Schultz, 1961, p. 17). Following Schultz many other economist have elaborated the idea of investment in human capital, applying it to all the human resource development activities. Recently, some studies sponsored by the World Bank support further to the idea that human resource development has an important element on economic growth (See, for example, Psacharapoulos and Woodhall, 1985 among others).

People play a dual role in the development process: they are ultimate beneficiaries of development, but they also provide very important input into the process of development. Thus the relationship between human capital and economic growth is mutually reinforcing. Economic growth helps to develop human resources in education, health, and nutrition. But investment in human resources also helps to accelerate economic growth, by increasing labor productivity, encouraging greater investment in physical capital, and reducing dependency burden of the population. These contributions of human resource development to economic growth are especially evident in the case of education.

The view of humans as an economic resource has two dimensions: quantitative and qualitative. In economic theory, however, the quantitative aspect is too much emphasized, while the qualitative aspect is ignored too often. Many economic models assume that labor is homogenous and thus can be measured by counting bodies, or hours of work. It is no doubt that such models, even if very useful in most cases, are too simple to explain the complex process of economic development. The qualitative aspects of the human contribution to economic development are as important as the quantitative aspects.

Economists often talk about "developing human resources" or "investing in human capital." The analogy to natural resources and physical capital may be appropriate in many ways. However, it can be misleading if it is simply taken to imply that the nature of "human resources" and their contribution to production are understood exactly same as that of physical capital. The role of human resources is far more complex and even mysterious than physical capital. To what extent, and in what ways, human resources can be created through an investment-like process are questions to be addressed (Gillis, et al., 1992).

Many studies on the Korean economic development have found that the human resources have been the most important factor in the process of economic development. Especially, education and learning has been viewed as the most important prerequisite for Korea's sustained economic growth and development. This can be attributed to a number of factors, but most fundamental has been the historically deep-rooted value placed on education by the Korean people.

This paper attempts to retrieve some lessons from the Korean experience in human resource and economic development since the early 1960s, especially focusing on the role of education and learning. Following this introductory Section, some important lessons from the Korean experiences in human resource development in relation to economic policy are recapitulated: 1) historical value in learning, 2) the role of private sector, and 3) quality of Korean education.



II. Historical Value in Learning
Why has social demand for education been so strong in Korea? It seems to be due to the Confucianism, deeply rooted in Korean history: important role of the scholar, the privileged social status of teachers, strong values on learning, etc.

Even though the modernization of the Korean economy started early in the 1960s, the foundations of the basic educational system has been in place even before the early years of this century. The historically deep-rooted, traditional and indigenous educational institutions, Seodang, played a crucial role in the development of basic education in the early years of this century.

Historically, there are several evidences in the Korean language that education and learning were highly regarded (see, for example, Choo, 1985). A number of common Korean words and sayings indicating the strong inclination of its people can be found. The Korean classics are also full of references on learning and educational institutions.

This strong undercurrent in learning was reinforced as the nation was colonized. Learning and education became an important part of the independence movement. Educational development became synonymous with survival in the early years of this century in Korea. The zeal for learning and education often went beyond sentiment and was backed up by action.

In the early part of the century, during the period of colonization by Japan, the strong desire for learning increased. Blaming Korea's underdevelopment, especially in education, as the reason for the annexation, many leaders of the independence movement saw education as the only hope for national survival and independence.

The demand for education has expanded dramatically since the liberation from Japan in 1945. Attributing their poverty and low socio-economic status primarily to lack of education, Korean parents devoted all possible means at their disposal to educate their children. Considered a virtue under the Confucianism, education was seen as an important source of upward mobility as well as of new job options. Even after the attainment of a relatively advanced level of higher education by international standards in recent years, the expectation of their children's education has continued to grow towards higher education.

Although the colonial government had first introduced public schools in primary education, basic education in Korea had long prevailed for a number of centuries through the widely spread indigenous Seodang. High social value has long been historically placed on education by its people in Korea.

Seodang was an indigenous institution unique in Korea and persistently remained to function its roles in basic education, even after the colonial government began to introduce its own primary education. Consequently, even before the colonial government had provided adequately educational opportunities, a minimum level of basic education, if not more, was sufficiently and effectively met by Seodang.

Furthermore, this indigenous institution had spread widely because of popular participation and bottom-up approach in its establishment and operation. This educational institution was not only geographically accessible but also economically affordable by the majority of population when poverty and low income prevailed in the country.

Indeed, Korea's recent economic development since the early 1960s is primarily attributable to its human factor. In view of the several evidences, its initial effort in human resource development is found to be historically deep rooted. A due recognition of contributions in basic education by traditional and indigenous Seodang may shed some light in explaining the human dimension of Korea's rapid economic growth and development since the early 1960s.

Education increases labor productivity and thus offers better pay. But it is also a step towards the attainment of the certificates leading to higher-level social position, especially in Korea. Wage differentials by educational attainment obviously affect worker's motivation to obtain educational certificates. The compensation system in Korean organizations, public as well as private, is largely dependent on one's educational attainment, especially on the basis of formal education. Once hired, subsequent increases in the individual's salary depend largely on seniority, leaving little room for productivity or incentive mechanisms to operate.

Despite heavy social demand for higher education, the Ministry of Education has long enforced a strict enrollment quota system. This in turn has resulted in the elitism of college education, where a college diploma rather than a graduate's productive capability is honored and rewarded. It is why people are so keen to enter college. Moreover, it is a fact of life in the Korean labor market, particularly for white-collar occupations, that one who graduates from first-ranking universities will not only be employed by the first-ranking business conglomerates but also never need be unemployed in his or her lifetime. College graduates from other than first-ranking universities cannot be more than second-class citizens. Many important government positions, up to ministerial level, are virtually monopolized by graduates from the most prestigious universities such as the Seoul National, Yonsei, Korea, etc. Businessmen would even openly acknowledge their preference for first-ranking university graduates because they can get things done very quickly through their informal connections with alumni friends in important positions.

Indeed, the driving force behind the recent Korean drama of human resource development has been historically entranced in the strong values of its people on learning and education, which can be traced back for centuries.



III. The Role of Private Sector
It is widely conceived that the human resource is certainly of crucial importance in explaining the rapid economic development of Korean economy since the early 1960s. Especially, the high level of education of Korean workers has often been cited as one of the most crucial characteristics attributed to economic development

In the process of human resource development in Korea, the public sector has played a rather limited and supplementary role. Instead, the role of private sector has been more significant and dominant. It was not until the Fourth Five-Year Plan (1977-81) that social development was included in the formal plan. The first three Five-Year Plans from 1962 to 1976 placed their priorities in export-led growth and industrialization. Because of the various constraints in the earlier years of Korea's economic development, such as the shortage of infrastructure services, heavy defense burdens, and the lack of domestic savings and foreign exchange reserves among others, the Korean government was unable to allocate much of its scarce resources to human resource development. It has been the private initiatives and commitment to human resource development, especially in education and family planning, which has been responsible for much of its progress.

The private sector has not only played the leading role in meeting growing demands in all areas of human resource development but it also has borne a major share of the country's financial burdens. The dominant role of the private sector may be seen most vividly in education. Due to the demographic structure of the country's population and increased enrollment rates, the size of the student population has increased drastically over the years. Although the number of public institutions and the number of students enrolled at such institutions increased rapidly over the years, the majority of students has been largely accommodated by private institutions. Among the students attending kindergartens, high schools, and colleges and universities, more than 60 percent of them were enrolled at private institutions that receive little financial support from the government. Had there not been the mushrooming of private educational institutions in Korea, its level of educational development would have likely been far below the level that we see today (Choo, 1993).

The rapid expansion of school enrollment growth has not been accompanied by the fiscal strains usually experienced in other developing countries. It was because the pattern of educational finance in Korea was unique; unusually large share of the financial burden of the government has shifted to private households. Private households have paid approximately one-third of the total direct educational expenditures by the late 1970s and more than half of them by the 1990s. Despite the rises in public expenditure for education, financial burdens on Korean parents for education have been persistently high. Even though primary education is compulsory and theoretically free, its private cost-sharing has ranged from about 40 to 50 percent of the total cost of education.

The share of household expenditures on education has increased steadily over the years. According to the estimates by the Korea Education Development Institute, 32.7 percent of the total direct costs for all levels of education were financed by the private sources in 1977. But, in 1990, this share reached 52.0 percent. Even for the compulsory primary education, supposed to be free at least theoretically, parents financed more than half of the all direct costs in 1990. This surely indicates the success of the Korean government in shifting the burden of human resource investment to the private sector.

Strong social demand for education in most developing countries gives, in general, tremendous pressure on government to expand enrollment capacity, first at the primary level and then at progressively higher levels. But Korean families have had to carry most of the financial load, by paying fees even in public schools and relying heavily on private schooling when the government was not able to expand the capacity of the public schools. It is the willingness of large numbers of Korean families to pay substantial sums, especially large relative to their modest incomes, that is perhaps the most impressive feature in Korea.

In other areas of human development such as health, nutrition, and family planning, the private sector has also played the major role. Since the Fourth Five-Year Plan period, the rural health care delivery system has been strengthened. However, effective health care services delivered by that system have been rather limited and far from adequate. Instead, growing numbers of pharmacies, clinics, hospitals, and medical centers privately operated and managed met most of the needs of primary and high-level health care, while the growth of transportation facilities helped the rural population to access health care facilities more easily. Financing of health care services through a health insurance scheme has also been facilitated by the contributions of employees and employers, with little government financing, except for a minority of the rural population and the urban self-employed and unemployed.

The success in family planning in Korea was mostly due to private initiatives and endeavors. The adopted family planning policies were accepted and practiced by almost all the members of the Mothers' Club and many participants of the New Village Movement at the grass-root level throughout the country. Of course, family planning and MCH services provided by the health centers and sub-centers contributed in part to the success of the plan by increasing the accessibility of such services to the targeted rural population. However, the most credit to such success in family planning is attr ibutable to the relatively well-educated and self-conscious members of the Korean population that had voluntarily practiced family planning.

The outlays of public resources in health, nutrition, and family planning have also been rather modest. The share of the Ministry of Health and Social Affairs budget as a percentage of GNP was less than a quarter of one percent until 1975 and increased to about one half percent since then. This ratio has increased further to 0.68 percent in 1990. The emphasis on social development in the Fourth Five-Year Plan (1977-81), and in the formal plans thereafter was never supported with appropriate funding of public resources, except for recent increases in health insurance subsidies. The health insurance scheme introduced in 1977 was originally designed to be neutral to public financing with a marginal government subsidy. Since 1988 the government began to provide a more meaningful level of subsidy covering half the cost of the health insurance premium for the self-employed and the unemployed including farmers.

It is evident that rapid economic growth and development in Korea since the 1960s has largely been attributable to its people since the country had no other significant factors of economic development. However, its human resource development and investment have been initiated and carried out by the people themselves. The role of government and policy interventions in social and human resource development have been very limited and supplementary, if not marginal. Most of the government budget and public investment was channeled into promoting directly or indirectly export-led economic growth and the heavy and chemical industries, which provided income-generating employment opportunities to its people. The Korean people have invested a significant portion of their income on themselves, especially on the succeeding generation.



IV. Quality of Education
There is no doubt that rapid economic growth in Korea owes a great deal to the increase in the general level of education. Strong social demand for education in Korea is historically deep- rooted, with no parallel in the world except perhaps Japan. The average level of schooling of the working-age population rose significantly over the years.

It is true that the availability of large numbers of literate and modestly educated workers contributed to facilitate the organization of the economy in the early 1960s. It seems to be that the role assigned to education in the socialization of the population, both as students and adults, contributed a lot to the basic attitudes of Korean people towards modernization and development of the society. Although the government promoted education as contributing to economic development, major trends have not been towards skill acquisition. Education in Korea has not expanded as a response to technological improvements in the economy requiring higher levels of skills among workers. Rather, the expansion of education obeyed social demand for increased educational opportunity because educational attainment is a key determinant of occupation and social mobility.

The result of large quantitative expansion in school enrollment is large class sizes, so the quality of Korean education has often been called into question. Class sizes in all levels of schools in Korea have been very large. On the average, teachers face about twice as many students as educational specialists claim to be desirable. Classes are large not only in primary schools but also in all levels of schools. The classroom condition of primary schools, particularly those in large cities, have been characterized by over-crowdedness and double-shift use of school buildings until recently. Such deplorable classroom conditions were compounded by growing numbers of school-age children and a rapid urbanization. The average class size of elementary schools did not drop down to 50 until 1980, while those of middle schools and high schools have been kept around 60 for long time.

Automatic promotion is common in Korea at all levels of the system. Students were taught what to memorize rather than how to think. Emphasis on note memorization, learning of facts rather than principles, and encyclopedic curricula are seen as counter-productive and often cited as typical backwardness of education in Korea by many educational specialists.

What is taught in the classroom has largely served the purpose of political socialization, not technical preparation for industrialization. Even the major part of the vocational high schools were vocational in name only as they lacked both equipment and the instructors qualified to demonstrate practical work skills. In fact, these schools have been a refuge for students unable to pass examinations for the academic schools. Furthermore, the elitism of Korea's educational system has been emphasized in a cultural interpretation of Korean development.

Education, the possession of certificate in the case of Korea, replaced scholarship as the characteristic of a respectable person and occupation as source of prestige. Because in Korea respect was based less on material wealth of an individual than on his standing (as demonstrated by successful performance on examination), it was possible for the expansion of a new source of respect (the university degree) to occur without serious distortions to a reasonably equitable distribu tion of national income.

One of the fundamental problems of Korean education is that education is basically viewed as an instrument to obtain future success through better social position. This perception of education is historically deeply rooted in Korean society based on Confucian tradition. For centuries, the civil service examination system has been practiced. This long tradition of an examination system has encouraged the perception of learning as a powerful instrument for higher position in the social hierarchy, if not as the guarantee of economic livelihood. The same is true under the current education system. Since the Liberation in 19454, education has become the single most powerful tool for social and economic mobility.

With this pervasive view of education, formal education is reduced to a mere vehicle to prepare for the entrance examina tion. Schools focus on teaching the subject matter of the entrance examination, at the expense of education for knowledge and skill acquisition. Indeed, the college entrance examination system is one of the most crucial problems facing Korean education, threatening the productive role of school education. While students, parents, teachers, and policy makers insist desperately that the current college entrance examination system needs reform, no promising and workable alternative has yet been proposed.

The entrance examination system itself generates some abnormality in classroom instruction and school curriculum management. All school activities, including classroom teaching, tend to be focused on preparing for the examination. Further industrial society requires productive individuals who can reason and think critically, be creative, lead and serve society, and socialize. But school education mainly focuses on memorizing simple factual information. Indeed, serious doubts have been raised regarding the usefulness of Korean general school education in preparing the students for the future society. And it is very often recommended that the formal education system should be reformed properly.



V. Emerging Issues
Development planners and policy makers must work with imperfect information and knowledge of socioeconomic development and are constrained by slowly changing social values and norms, the differences in gestation periods for acquiring policy-inputs such as manpower, social overheads, and service facilities, and the differences in the time required for demographic transition and industrialization aside from the often imposed political constraints. As a consequence, it is extremely difficult in practice to synchronize and harmonize all the developments in human resource-related socioeconomic sectors and to avoid major developmentally-induced problems. The Korean experience has been no exception, despite remarkable achievements recorded in human resource development. An illustration of a few of the major problems encountered, counter measures adopted and the unresolved remaining issues in this section will address the complexities in human resource development.

The high social value placed on learning and education and rapid increases in student enrollment in high schools colleges induced at least these three interrelated developmental issues in Korea: the possibility of over-education, labor shortages of skilled workers, and the inability to meet changing manpower requirements.

As is widely known, the severe competition to enter respectable colleges and universities in Korea has always been a focal point of social crisis. The problem was particularly accentuated throughout the 1970s and early 1980s, when the number of high school graduates increased rapidly and the government did not sufficiently adjust the college student quotas because of frequent student demonstration against it in a society where more than 80 percent of the parents expected their children regardless of sex to have a college education. Then, the size of college entrants increased very rapidly to 201 thousand in 1980, by 2.5 fold as compared to 1975, and to 314 thousand in 1985. As a consequence, Korea has become a country with the third highest college enrollment rate in the world today, following Canada and the United States, which may be considered as a case of over- education in view of the level of the Korea's development.

Over a period of 10 years from 1980 to 1990, the numbers of students enrolled in high schools and in colleges and universi ties increased by 587 thousand and 636 thousand, respectively, which drastically reduced the availability of the labor force by retaining larger numbers of economically active population in the educational system. While there are severe shortages in semi- skilled and skilled manpower, about one half of all college graduates are still seeking employment. Yet, high-tech industries and automated manufacturing firms are in need of qualified engineers and scientists to meet their manpower requirements. Because of the growing 3-D syndrome, a tendency to avoid difficult, dirty, and dangerous manual work, small and medium industries often request the government authority to ease the regulations to higher migrant workers from abroad. Obviously, there is a problem of mismatches between the manpower supplied by the educational system and that demanded by society, as well as a question on the quality of education in Korea, which needs to be addressed in the future.

Another issue of that needs to be resolved and has not attracted enough social concerns of now is the sex imbalance in the young population. The dramatic success of family planning and the development of the sonogram, with little change in the social preference for males within a generation has drastically distorted the sex ratio among post-family planning births. In 1970, the sex ratio among the young population at age 10 and below was 1,000 to 933 favoring boys. But this ratio was further deteriorated against boys to 1,000 to 917 in 1980. Within no more than two decades, it may be increasingly difficult for young Korean men to find female partners for marriage, unless brides- to-be are imported from abroad. Immediate efforts to restore the sex balance and to outgrow the notion of male preference are urgently needed to avoid a potential social crisis.

In conclusion, it is evident that rapid economic growth and industrial transformation in Korea since the early 1960s has largely been attributable to a healthy supply of human capital as the country had no other significant factors of economic development. It is also clear that its human resource development and investment have been initiated and carried out by the people themselves. The role of government and policy interventions in social and human resource development have been at most supplementary, if not marginal. Most of the government budget and public investment was channeled into promoting directly or indirectly export-led economic growth and the heavy and chemical industries, which in turn provided income-generating employment opportunities to its people. With growing means available, the Korean people have invested a significant portion of their income on themselves, especially on the succeeding generation. The driving force behind the recent Korean drama of human resource development has been historically entranced in the strong values of its people on learning and education, which can be traced back for centuries.



References
Choo, Hakchung (1985), "Reinterpreting Historical Development of Basic Education in Korea: Sui Generis and a Basic Needs Approach?" Seoul: Korea Development Institute.

Choo, Hakchung (1993), "Investing in People as a Source of Growth: the Korean Experience," Unpublished Manuscript.

Choo, Hakchung and Kimoon Cheong (1995), "Human Resource Development and Economic Policy: The Experiences of Korea ," Unpublished manuscript.

Gillis, Malcolm, Dwight H. Perkins, Michael Roemer, and Donald R. Snodgras (1992), Economics of Development, 3rd ed., Norton.

Psacharoupolos, George and Maureen Woodhall (1985), Education for Development: An Analysis of Investment Choices, New York: Oxford University Press.

Schultz, Theodore W. (1961), "Investment in Human Capital," American Economic Review, 51, January.



* Hakchung Choo
Director, Center for Economic Education, Korea Development Institute, P. O. Box 1947, Young-dong, seoul, Korea.

** Kimoon Cheong
Professor of Economics, Department od Economics, Kangwon National University, Chunchon 200-701, Korea. Phone: 0361-50-6126. Hitel: kimoonc. E-Mail: kimoon@cc.kangwon.ac.kr.