ADMINISTRATION OF RURAL DEVELOPMENT
(DAF 215)
SUMMARY OF LEARNING ACTIVITIES TO BE SUBMITTED
MODULE 3
1. Describe the development characteristics of these countries that contributed to
their level as “Asia’s Industrial Giant” or “Asian Tigers”. Between the early
1960s and 1990s, they underwent rapid industrialization and maintained
exceptionally high growth rates of more than 7 percent a year.
a. Japan
b. South Korea
c. Taiwan
A. JAPAN
Japan, the Land of the Rising Sun, is the first non-Western country to achieve successful
industrialization, and the dominant perception of its ‘industrial policy’ has over-emphasized specific
characteristics of Japan. It’s fast growing economy gained international attention from 1950s to
present era. One major thing about it is the so-called Japan Model of Economic Development and
the Abenomics. Japan Model is among the famous examples where government and business came
together as an alliance to build the present Japan while Abenomics is Prime Minister Shinzo Abe’s
signature economic strategy that has delivered a remarkable period of stability and produced a
number of successes in the said country, making Japan the second largest economy in the world
within relatively short span of 15 years, between 1955 and 1970. For three decades from 1960,
Japan experienced rapid economic growth, which was referred to as the Japanese post-war
economic miracle. So, what are the causes and conditions that made Japan as one the wealthiest
and most advanced country in the world? Taking up the Japan Model, the country has three
fundamental targets it has to achieve: (1) macroeconomic stability; (2) human resource
development; and (3) economic infrastructures.
Macroeconomic stability is, without a doubt, essential for steady economic development. The
macroeconomy in the later half of the 1940s in Japan was in chaos: depression in the supply of
goods due to decreased capital stock, demilitarization of industries, and shortages in raw materials
and equipment were extremely serious. GDP growth rate has fallen and structural reform was
needed to raise the anemic growth rate. Japan then initiated an economic stabilization plan in 1949,
the Dodge Line, which imposed the discipline of balanced government budget as well as a single
foreign exchange rate regime. However, due to a serious shortage of foreign currency, very tight
management of international trade was continued. International trade was prohibited although some
exceptions were allowed. After gaining independence in 1951, Japan had the freedom to set its own
tariffs and established a new tariff system, then normal international trade was finally established
after the Guideline of Trade and Exchange Liberalization was announced in 1960. External
environment for Japan was finally normalized by the beginning of this year. Japan gradually
established ample domestic saving rates that enabled high investment rates. The current
administration at that time managed to balance the country’s domestic savings and investments.
Once the economy picked up, trade deficits developed, and the government had to cool down the
economy by imposing reduced economic activity policies. Massive exports paved the way,
investments on mining and manufacturing became fervent, making the economy thrived. Today,
Japan managed to have much greater flexibility in managing current reserves and balance of
payments and then last year, it was relatively stable when compared to other advanced economies.
Japan’s declining population and shrinking workforce has already translating into stronger per capital
performance. The Japanese people have always had the huge ability and mindset of saving and this
was prevalent and most useful during that period of postwar.
Japan almost never had a high educational background during the postwar era which
triggered a serious shortage of human resource development. However, in the late 1940s and the
early 1950s, the country had a solid background in basic education but did not have a fully
established upper secondary and tertiary education. This prompted the government to take a step
toward realization of such development. It took Japan 20-25 years to achieve a respectable
educational level. The quantitative expansion of Japan’s educational scheme was because of its
creation of universal compulsory education system which includes elementary school and junior high
school. It was reformed mainly according to the German and French model which experts regarded
as the most suitable and advantageous. A characteristic of the Japanese school system are
entrance exams, and with them high competitiveness among students. During the application of
these exams, many students attend special preparation schools besides regular classes to be able
to land on the best institutions or universities. As a result, many Japanese people were surprisingly
well-educated and the employment rate of the country was greatly impacted because of this system.
It also helped the government in earning corporate loyalty among its constituents which is lacking in
other countries. On the same hand, it also indicated a high human capital accumulation which was
an essential element of successful industrialization and of the preparation for the new phase of
competitiveness. The higher the employment rate, the higher the household income of the general
public, the higher the life standard and the higher the productivity.
Japanese citizens were well regarded with their capacity and willingness to work long hours.
Following the implications of such notion, it was Japan’s foundation to work hard to fulfill its one key
target which is the establishment of economic infrastructures. With the production of competitive
workforce, Japan was able to advance its technologies to be able to surpass the lack of efficiency
among efforts during the downfall of its economy. Little by little and step by step, Japan’s technology
flourished which aid in innovation and eventually, in the acquisition of better propositions in building
its infrastructure. Yet technology is not enough in this battle of development. During the postwar,
borrowing from abroad is limited and public private partnerships (PPP) were still unknown. To
finance investment in economic infrastructure, the Japanese government extensively utilized a fiscal
investment and load programme (FILP). The FILP is a budgetary system prepared in addition to the
central government’s general budget, and was financed mainly by postal savings until fiscal year
2000. During the year 1955-1984, spending on social infrastructure was maintained at low level, at
around 30 percent, while substantial amounts were allocated to economic infrastructure. Japan
received loans from World Bank for investment mainly in power plants, steel plants, freeway
construction and the bullet train, however, it caused serious manifestation in Japan’s total
investments. Japan Development Bank (JDB) was later established to provide long-term loans for
development. The speed of infrastructure development was impressive from mid-1950s to mid-
1970s. Roads construction gave length to general national highways and expressways and was
financed mostly through toll collection.
Looking upon the struggles and sacrifices Japan has gone through, it is only relevant to say
that it did well with its current economy. Having the courage to invest heavily in industrialization,
building major industrial estates, offering tax incentives to foreign investors and implementing
compulsory education for its young population secured their present status as one of the most
advanced country in the world.
B. SOUTH KOREA
Once an agricultural country, South Korea spent much of the 20 th century driving modern
industries such as electronics, robotics, and software development. This strategy has paid off
surpluses – according to the World Bank, South Korea’s GDP grew by an average of 10% per year
between 1962 and 1995 and it is now regarded as one of Asia’s Tigers, the leading economies of
the Southeast nations.
To cope up with new challenges of the economy, the Korean government has made and
implemented economic measures including the “Economic Package” and the “Stabilization Policies”.
The major objectives and policy directions contained measures such as inducement of capital
investment in manufacturing and research and development; stabilization of prices, wages and real
estate speculation, and encouraging management and labor unions to set up a “wage increase rule”;
development of rural areas, supporting low-income urban classes and the poor, and supporting
small and medium enterprises; formulation of external policies for greater international cooperation
import liberalization; impartment of development experience with other countries; and promotion of
the policy to establish ties with socialist nations.
South Korea is famous with its “Five-Year Economic Development Plan”. It ranges on the
heavy promotion of foreign investment in relation to tax incentives, the free trade schemes and
agreements in relation to exporting high quality products, well-developed infrastructures,
technological savviness, and relatively high Gross Domestic Product per capita.
South Korea underwent stages of innovation in which comprises of the four phases of
development. The first phase of development constituted recovery from the devastation of the war,
Korean economic growth in this period was highly dependent on US aid and investment savings and
vulnerable to concentrated instability. The Park coup determined the second phase of the
development: the advancement of light industries and export-oriented growth. At this stage, Korea
was no longer reliant with US aid thus marked the beginning of the utilization of its cheap labor force
to grow through exportation of light industrial goods. This phase highlights the introduction of the
Five-Year Economic Development Plan initiated by Park Chung Hee. The plan helped in the
establishment of clearer macroeconomic targets in investment, industrial structure and trade
balance, and establishment of trade, industrial and macroeconomic policies in pursuit of these goals.
This was called “guided capitalism”, in which “the state shall either directly participate or indirectly
render guidance to key industries, particularly the labor-intensive light industries that would lead to
rapid export growth. The third was indicated by the explosion of export, thus a lot of foreign currency
was earned and reinvested in the advanced technologies. This articulated Park’s second Five-Year
Plan which is the development of heavy and chemical industries, supported by legislation and key
policy instruments. Foreign capital then boosted growth and exports which grew exceptionally higher
annually. During this period, the longest of the phases, factor input increases, both in capital
accumulation and in quality of labor thru education, which eventually accounted for a massive
degree of growth in industrial output. The fourth phase, consequently the current one, made forward
with the launching of high tech industry. There was international demand for Korean goods, coupled
with a dramatic increase in domestic consumption and higher standard of living in the society. This
progression featured Korea’s “successful state/; status.
In Korea’s economic history, it denoted four distinct phases of development: a period of
Import Substitution Industrialization; the development of light industry; the development of heavy
industry, increased in labor quality through education; and finally the development of the high tech
industry. We can infer that during this periods of time, there is remarkably steady GDP growth,
therefore making the country advancing to a more developed society and economy.
Having sharp focus on exports, educated poplulace and high saving rates is a highlight of
South Korea’s Economic Development Plan. Taking a hindsight of South Korea today, we can
conclude that its plan on economic development resulted to increase wealth within the country,
strengthened political stability by loyalty and trust, established clearer policies and dissemination of
economic objectives, and most especially, envisioned of the future as one of the most advanced
countries in the entire humanity.
Taking further results of the said plan, South Korea is now the home of unbelievable
inventions and astonishing heights, the country of fast transportation and efficient communication
system, well-regarded kind of educational system and gadgetry, sophisticated health care structure,
beneficial creations of people’s needed tools and devices, and place where living standard is high
and quality life is integrated and preserved. It is all thanks to Park Chung Hee’s economic
development plan.
C. TAIWAN
