Jun 09 2009

Economic development itself can not make a real development

by at 3:53 pm under Uncategorized

Through several sessions of the course, it became clearer to me that development matter should be considered not only in an economic perspective, but also in a social structural perspective; a society’s history, culture and institutions. In the same sense, western countries’ economic success model cannot be directly transplanted to a developing country which has different structure unless there are concurrent strategies for institutional change at the same time. This viewpoint also explains why western economic success or Asian four dragon’s path has not been reiterated in many developing countries.

Some might argue that economic development can be still achieved without institutional changes such as growth of civic society and political maturity, providing the example of Dubai, one of seven Arab Emirates states. The city-state Dubai emerged as the center of luxurious tourism, world class financial service, and significant real-estate market of middle-east Asia during the late 1990s and early 2000s. Although most part of the country is covered with sand, the state’s highly centralized government had changed the desert into a vibrant business place. The country has the world’s first 7 star hotel and the world highest tower (this building is under construction). Investors have brought huge amount of money to the tax-free country and the money stimulated further growth, in turn. “Although Dubai’s economy was built on the back of the oil industry, revenues from oil and natural gas currently account for less than 6% of the emirates’ revenues” as the year of 2005[i] However, it is hard to say that they have substantial social capitals. The country is still maintaining power centralized monarchy and there is little civic involvement.

South Korean politicians were once eulogized the splendid development of Dubai and even insisted that we had to learn the model. However, Dubai asked bail-out money from IMF recently since investors rushed out the city right after the global economic crisis. The prosperity of Dubai turned to be built on bubbles, which was not a real development.

I was raised in a country where economic growth had absolute priority in all development aspects. Social welfare, labor’s right, political diversity, wealth distribution, and environment were ignored for a long time. That is why we have still unstable society although we achieved a significant economic growth. We were not allowed to raise considerable civic society in the past. We were taught that economic growth is the most important thing for everyone and we had to endure and even sacrifice our generation, if necessary, for the nation’s future. However, I do not think the fruits have not been evenly distributed. Economic growth and social capital have to be grown at the same time, affecting and complementing each other.

Related to the issue, I remember one impressive moment when I visited Vietnam three years ago. I was there to report the emerging economy of Vietnam and its government-driven development policy called ‘Do-E-Mo-E’. In Vietnam, there are corruption problems in public sector and the decision making process is not transparent. Hence it is very important to make a good relationship with bureaucrats when you run a business, which is not surprising at all in developing countries. At that time, I visited one of Korean construction companies who had won a big project after several years’ formal and “informal efforts”. But the company representative said the project was in danger of becoming null since indigenous civic society was strongly against the project because of environmental issue. (There was a big national park on the spot where the construction project was about to be started.) I was so impressed because the fact that Vietnamese people were concerning not only economic development but also environment protection at the same time. Despite of corrupted government, I could see hopes for the future of Vietnam.

[i] Wikipedia, http://en.wikipedia.org/wiki/Dubai#Economy

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