Korea, shared at the opening ceremony of the Ready for Next event on the afternoon of December 8, 2022

It is both my honor and pleasure to be here in Vietnam, a land of long history, great diversity, and overflowing energy. I am especially happy to be here to celebrate belatedly my longtime friend Dr. Park Young Jun’s conferral of an honorary degree from the University of Economics Ho Chi Minh City (UEH). I am doubly honored to be in Vietnam on the 30th anniversary of Korea’s diplomatic relations with Vietnam. In many regards, I am truly delighted to be in Vietnam and thank you for having me here today. 

 

Today, I would like to invite everyone to think about Vietnam’s future. We know Vietnam is a fast-growing economy. But how do we keep Vietnam’s energy alive? How shall we keep it sustainable? As the former Prime Minister, an economist by training, and a passionate educator, I would like to tackle that question with you today by drawing from the experiences of Korea, a nation that kept its energy alive to become one of the largest economies in the world from one of the poorest nations in the world.

Dr. Chung Un Chan shared the theme "Towards sustainable economic growth in Vietnam: Lessons from Korean experience"

Korea has undergone a series of unfortunate events in the first half of the 20th century. In 1910, Korea was colonized by Japan, which marked the beginning of one of the darkest periods Korea has ever experienced. Korea fiercely resisted and fought Japan’s colonial rule and regained her independence in 1945 at the end of World War II. Nonetheless, the Cold War immediately set in, and Korea was divided into North and South Koreas. In the southern half of the peninsula, the Republic of Korea was founded in 1948 under the auspices of the United Nations.  

 

The joy of a new beginning for the Republic of Korea did not last long. Only two years later, in 1950, the Korean War broke out. During three years of devastating warfare, over 4 million people were killed or wounded. The infrastructure of the economy was severely destroyed. Seoul was almost completely burnt to ashes, and orphans and refugees roamed the cities and the countryside searching for their lost loved ones. Malnutrition and disease were everywhere. I still have memories of the difficult times both during and after the war.

 

Towards the end of the 1950’s, Korea’s per capita GDP ranked 101st out of 125 nations. In 1962, Korea’s per capita GDP was less than 100 US Dollars. Over 40% of the nation’s population suffered from absolute poverty and it seemed as though there was no way out.  But now korea is one of the 7 countries in the world, which has a population larger than 50 million and at the same time per capita GDP higher than 30 thousand USDollars. The other 6 countries are the U.S., Japan, Germany, the U.K., France and Italy. Korea is the first and only nation to transition from a foreign aid recipient nation to a donor nation in world history. Some people refer to this achievement as the Korean Miracle.

 

Natural question to ask would be, “How did Korea do it?” Numerous scholars have asked the same question and analyzed Korea’s economic development in search of an answer. There cannot be one right answer to this question, but there is one factor that lies underneath all other factors: education. 

 

Korea is not endowed with rich natural resources. She has limited supplies of coal, iron, tungsten, limestone, and kaolin, while other resources are scarce or nonexistent. Arable land accounts for just 20 percent of total land; climate, soil, rainfall, and temperature are all unfavorable for agricultural production. 

 

A focus on education and investment in human capital was critical. With no significant natural resources or accumulated capital, South Korea had to rely on a highly educated workforce to drive economic growth, and the Korean people possess great passion for education. 

 

In fact, passion for education has a long heritage in Korea. Perhaps a famous anecdote will help you to understand the Korean people’s attitude toward education. It involves a 16th-century scholar, Seokbong Han, who is recognized as one of the foremost calligraphers in Korean history. I will refer to him as Han. Han’s mother, despite her desire to keep her son by her side, sent him to a Buddhist temple in the mountain so that he could focus on studies, away from distractions. Some years later, still immature and unmotivated, Han returned home one day and told his mother that he no longer wished to pursue calligraphy. Although she was delighted to see her son again, she was determined to see him finish his education. His mother, who was supporting Han by selling rice cake in the marketplace, proposed a contest. They would turn the candlelight off, and if Han could write calligraphy better than she could slice the rice cake in complete darkness, then he could do whatever he wanted. When they turned the candlelight back on, Han’s calligraphy was humiliating at best while each piece of the rice cake sliced by his mother boasted perfect form and size. Realizing that his studies and practice did not come close to completion, Han was humbled and returned to the temple, determined never to return home until he could be the best calligrapher in Joseon. Can you imagine yourself in place of Han? First, your mom sends you off to a remote temple in the mountains. When you return, she scolds you for being immature and sends you back until you make enough progress in your studies. This is how much Koreans value education. The tradition still pushes Korean people to study more and to work harder. 

 

I myself had numerous helpers and mentors who allowed me to fulfill my academic pursuits. I was born in the countryside, and, during my elementary school years, my family could not afford my lunches. My mother worked at a hospital washing clothes to support my siblings and me during the tough postwar years. She kept reminding me of her confidence that a bright future awaited me so that poverty would not discourage me. I worked as an in-house tutor since high school all the way through college to earn tuition, but I never neglected my own academics. Besides my mother, I had others who imbued me with confidence throughout my youth. They all had a passion for education. Without the conviction of my supporters and professors, my academic path from the countryside to Seoul to the United States, and myself today would not have been possible.

 

Indeed, a nation’s education and economic development go hand in hand. A symbiotic relationship between a country and its educational institutions as they are responsible for producing the nation’s intellectual capital, thereby, instilling the proper methodology for good governance, economic stability, and social welfare. Korea was able to make meaningful strides because Korea’s education effectively disseminated advanced science and technology. In the early phases of economic development, the knowledge that Korea possessed was much less than that of developed countries. The Korean schools provided knowledge from overseas, and the government led more students to schools. Then the graduates used the knowledge that they learned to develop Korea at an unprecedented rate. As a result, Korea grew rapidly despite lacking in capital and resources. 

 

So far, I have discussed one of the fundamental factors that contributed to Korea’s rapid economic growth: education. However, let’s refer to the question that I started with: how do we keep the energy alive? How do we keep it sustainable? We do not want our progress to be a momentary glory: we want it to last. 

 

In this regard, we must remember that our approach to education and the economy must adapt as the nations develop. To be more specific, it may be enough to encourage students to study up on what other advanced nations are doing—to follow the leading nations. But as the nation catches up with the frontrunners, the return on simply transferring and sharing knowledge from developed nations diminishes. For example, as efficient as Korean universities were in sharing knowledge, it has become more evident that our universities lacked the ability to create new knowledge. Unfortunately, the “following-who-is-in-the-front” method could not instill creativity, critical thinking, and ingenuity to create new ideas and technology. This issue becomes increasingly relevant since the road to economic prosperity depends on overcoming ongoing technological challenges by way of initiative, innovation, and flexibility. 

 

In other words, as the economy develops, a nation must be prepared to shift its educational goals from that of transferring knowledge to creating it. When conducting R&D, the letter R must stand for true research, not refinement on what others did. Winston Churchill once said, “to improve is to change; to be perfect is to change often.” As a nation’s economy develops, it must be prepared to adapt and shift its focus to creating and contributing knowledge to the rest of the world. Such effort will expose younger generations to new challenges early on so that they are equipped with self-assurance and flexibility, which will help them carry the day effectively in today’s rapidly changing geopolitics. 

 

Lastly, I would like to direct your attention to fair competition as a prerequisite to a sustainable economy. Korea’s economic development in the formative years employed a theory of unbalanced growth. That is, the Korean government allocated resources to industries that exhibited the highest potentials instead of distributing resources throughout all industries. The strategy was successful in growing the economy but at the cost of economic equality. In other words, corporations that benefited from the government’s policies became global conglomerates today, but their economic influences are overshadowing small and medium enterprises, also known as SME’s. The Gini coefficient in Korea is rising fast, and wealth is being polarized where the rich get richer and the poor get poorer. And the economic growth rate is not as high as it once used to be. 

 

A list of solutions would include a well-educated population, many engineers, designers, and other professionals, enormous deposits of knowledge, adequate capital, strong public education, efficient economic institutions, and a legal system congenial to the promotion of entrepreneurship, etc. But I would like to emphasize that the solution can be summed up as two words: Shared Growth. It may be unconventional to discuss topics like Shared Growth in developing nations. But I propose Vietnam to keep Shared Growth in mind because first, the vicious cycle of “rich gets richer and poor gets poorer” is extremely difficult to break after the country’s economy grows and second, Shared Growth will help Vietnam find a more sustainable model for economic growth.

 

To briefly explain, Shared Growth is a philosophy that promotes economically growing together. Various scholars in different fields may refer to it with a slightly different name. For example, OECD uses the term inclusive economy, which shares similar ideas with Shared Growth. What is more important than what we call it is what “growing together” truly means. By growing together, Shared Growth aims to promote fairer distribution without curbing vigorous economic growth.

 

People sometimes misconstrue Shared Growth as another distribution mechanism that takes away from the rich and gives it away to the poor. I do not blame them because traditionally growth and distribution were in an “or” relationship; you could either pursue growth or distribution in economics. If you wanted to push for economic growth, distribution had to take a back seat. Likewise, distributing wealth meant that you were giving up growth. Shared Growth says otherwise; economic growth and distribution of wealth are not at opposite ends of the spectrum. Growth and distribution can be achieved at the same time by growing the economic pie bigger and distributing the fruit of the growth fairly amongst contributors. 

 

I will explain the concept with a hypothetical scenario. Let’s say that Korea’s economic output on GDP in 2021 is 100 and that 50% of the output went to the major conglomerates while the other 50% went to SME’s. Now let’s imagine that the Korean economy grew by 20% in 2022, bringing Korea’s GDP up to 120. But this time, let’s make distribution fairer; conglomerates take away 45% while SME’s get 55%. Both parties benefited from the growth because the wealth of the conglomerates went up from 50 to 54 while the wealth of the SME’s went up from 50 to 66. In other words, the real problem of the Korean economy is that while the SME’s contribute more than 50% of the work, they get much less than what they deserve. When we make the distribution process fairer and pay the SME’s for what they really deserve, we can achieve growth and distribution at the same time. In short, Shared Growth is about securing justice in the process of distributing growth fruit. Instead of pursuing economic growth for the sake of growth, Shared Growth will help Vietnam grow in a healthier and sustainable way. 

 

The concept of Shared Growth can be extended to building cooperative relations with other nations as well. In today’s world of high connectivity, a nation cannot “do it alone.” Even back in the 1950’s, Korea worked with great friends who cared. In response to the UN Security Council Resolution 84, 16 countries came to South Korea’s aid during the Korean War. Young men and women from these far-flung lands came and shed their precious blood to defend a country they had not even known and a people they had never met. The proud flags representing these 16 countries fly daily at the War Memorial of Korea to commemorate those courageous soldiers. After the war, our allies and the UN lent a valuable hand in rebuilding our war-torn nation. Currently, South Korean agencies and corporations implement diverse humanitarian projects in all corners of the globe to reciprocate the generosity and goodwill that we as a nation received from our dear friends around the world. Likewise, Vietnam must work together with its friends to make a breakthrough. And Shared Growth philosophy will help her build cooperative relations with other nations. 

 

Today, I talked about Korea’s rapid economic growth and factors accounting for it. And I added a few remarks about what Vietnam might do differently in order to grow in a healthier and more sustainable way. Each country is different. Vietnam’s population and land are much larger than those of Korea. But I do believe that emphasis on education and high spirits to excel are universal factors that will help any nation go far. I have no doubt that Vietnam’s strategic plans with Shared Growth in mind will help her build her own economic growth model and that other nations in the future will be asking, “How did Vietnam do it?” 

 

In recent years, South Korea led initiatives to enhance the international development aid model.  In addition to assisting struggling countries with funds and materials, or the hardware, Korea has also emphasized the provision of the software for economic development such as strengthening public education, creating efficient economic development and infrastructure plans, and building social welfare networks. I sincerely hope that Vietnam will continue to work together with Korea and that the two nations will share their growth. 

 

It was truly an honor and privilege for me to speak in front of honored guests today and with that I would like to conclude my speech.  

Thank you.