Cho Soon Interview: Conversations with History; Institute of International Studies, UC Berkeley

Governing a Global City; Conversation with Cho Soon, Mayor of Seoul; 4/25/96 by Harry Kreisler
Photo by L. Carper

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Managing the Korean Economy

When you took a leave from the academy, you went into important economic planning positions both at the Korean Bank and in the office of the prime minister. That must have been a truly exciting time for an academic to be helping to shape the economic miracle of his own country.

The time I was called upon to serve as deputy prime minister and minister of economic planning was particularly difficult for Korea because the democratization movement had reached a great emotional pitch and the wage rate increased a great deal and the prices of land and real estate rose tremendously. There was a fervent speculative movement in all of Korea, and Korea's real economic activities began to show a sign of slowdown so that it was very difficult for me to serve as the minister of economic planning, but then I thought that theory and practice have to go together and I think that I did pursue the policies which were good for the country at that time. I still do not regret that I chose to serve the government.

What sorts of policies were implemented to deal with the problems?

I tried very hard to hold down the speculative fervor. I advocated and pursued a policy of economic stabilization, reduced the increase of money supply, and tried to hold down the increase in the wage rate and so on, which was I think generally good even from the hindsight point of view.

Cho Soon You mentioned theory and practice. That's something that academics often worry about, and many times when academics go to public life it doesn't work. What was the nature of the adaptation that had to occur between the theories that you came with and the actual realities of governing and the academic field?

Theory, as it's well known, is the abstraction from reality, and if one pursues economic theory in too extreme an extent he is likely to be in trouble; you have to consider the reality and blend what you observe as reality with an ingredient of theory, and a little, just a little bit ahead of the time, then you are likely to succeed.

So the difference is feedback and responding to the feedback.

Absolutely, absolutely. Theory is an abstraction from reality. Reality is something a little different from theory so these two have to be really blended together, and you have to have the sense of priority to choose particular policies among so many alternatives.

Do you think that most academics are good at making these adjustments, or is it a rare breed like yourself?

Most academicians are not too good. Schumpeter, for instance, was a great economist, but he didn't do too well as minister of finance for Austria.

Looking over the long period of the development of the Korean miracle, are there lessons for other countries or was the Korean case a special one? I'm talking now about the remarkable things that were done with economy there.

First of all, the Asian miracle, or the Korean miracle -- this particular word "miracle" is somewhat misleading. Asia and Korea had their own ingredients for development and I have to point out that the international atmosphere after the Second World War was extremely advantageous to East Asian countries including Korea, which are labor-surplus and resource-poor countries, and the international economic situation represented by the General Agreement on Trade and Tariffs (GATT) and free movement of goods and services, free movement of capital and so on, made those countries overcome the kind of obstacles that they'd never been able to overcome in the 19th century. They just exploited the advantageous international atmosphere and made use of the surplus labor that they had. So in a sense it was not a miracle at all: they were in a very fortunate position to make very good use of the labor force (which otherwise would prove to be obstreperous) rather than their assets.

What about other distinctive features of your country? Were there other things at work in the culture or society that were helpful?

Yes. People are very energetic and very achievement oriented, so they are in a sense economically motivated. They had a fairly high level of education relative to the level of economic development of the country at that time.

Much is often made of the Confucian culture one finds throughout Asia. Do you think that that makes a difference?

The Confucian culture really did contribute to the initial face of the industrialization because it emphasized discipline and group behavior and so on, which was needed to initiate the industrialization process. It is not very much needed after the industrialization process progresses for a while, but particularly at the initial industrialization, Confucian world outlook and philosophy was, I think, useful for Japan, Korea, Taiwan, and even for China today.

What about the contribution of American policies?

American policies contributed greatly to the Korean development, particularly during the 1950s when American aid contributed to overcoming the shortage of all kinds of materials including raw materials, food, clothes, and so on. As I said, the system of international free trade, which was pursued mainly by the United States, was decisively important for Korea to mobilize the kind of capital and resources that they lacked in initiating industrialization.

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