Growth and Structural Transformation, and: The Developmental Role of the Foreign Sector and Aid, and: Education and Development in Korea (review)

142LIM Growth and Structural Transformation. By Kwang Suk Kim and Michael Roemer. Harvard East Asian Monographs, 86. Cambridge: Harvard University Press, 1979. xxiv, 195 pp. Graphs, bibliography , index. $15.00. The Developmental Role of the Foreign Sector and Aid. By Anne O. Krueger. Harvard East Asian Monographs, 87. Cambridge: Harvard University Press, 1979. xxiii, 256 pp. Bibliography, index. $15.00. Education and Development in Korea. By Noel F. McGinn, Donald R. Snodgrass, Yung Bong Kim, Shin-Bok Kim, and Quee-Young Kim. Harvard East Asian Monographs, 90. Cambridge: Harvard University Press, 1980. xxvi, 285 pp. Graphs, bibliography, index. $15.00. These volumes are joint publications of the Harvard Institute for International Development and the Korea Development Institute, and are part of a multivolume study of economic and social modernization in Korea financed largely by the U.S. Agency for International Development. This undertaking has two objectives : "to examine the elements underlying the remarkable growth of the Korean economy and the distribution of the fruits of that growth, together with the associated changes in society and government; and to evaluate the importance of foreign economic assistance, particularly American assistance, in promoting these changes.'" The specific choice of these three volumes for review was based primarily on my personal interest, though the topics contained in them are closely related and provide much essential information about South Korean industrialization . Each of the three volumes incorporates previous studies, along with new material , to provide an overall picture of the specific area it treats. On the whole, the three volumes are well documented with facts and figures that will prove useful to students interested in Korean affairs or development in low-income countries. The interpretations and evaluations are generally cogent, though some of the conclusions seem questionable, as discussed later. I recommend the works highly, both because of the authors' analytical competence and because of the stimulus that each provides for further inquiry into the motivating factors behind South Korean industrialization. The first volume, Growth and Structural Transformation by Kwang Suk Kim and Michael Roemer, provides analyses of such GNP components as savings , investment, and imports and exports, and their contributions to growth. Structural changes (proportions of agriculture, manufacturing, and services) are discussed chronologically beginning with the Japanese occupation of Korea (1910-1945, chapter 1), the impact of partition and war on the Korean economic structure (1945-1953, chapter 2), and economic policies and the growth process (1953-1973, chapter 3). Chapters 4 and 5 present a sources-of-growth analysis of the industrial sector and the economy as a whole. Chapter 6 compares the Korean BOOK REVIEWS143 pattern of development with the Chenery-Syrquin norm, and with Japan and Taiwan . Chapter 7 is the concluding chapter. Throughout, discussions of economic policies are bolstered with statistics that lead the authors to the following conclusion : Rapid growth was made possible by a significant increase in total factor productivity . These developments have launched Korea on a path of modernization traversed previously by Japan and remarkably similar to that of Taiwan. Government actively pursued policies that caused significant and crucial shifts in relative prices, especially during the 1960s, and contributed profoundly to Korea's development. Finally, growth appears not to have caused serious disparities in an income distribution that has been remarkably egalitarian for a developing country (pp. 153-154). These conclusions are generally convincing, though one might question certain minor points. However, the authors' enthusiasm leads them to state that "At the margin, national saving financed from 70 to 100 percent of the increase in investment since 1960 (p. 155). ... At the margin, increased exports financed all the ninefold increase in imports from 1961 to 1974" (p. 156). These statements are erroneous. For most of the years covered in the analysis, annual increments in national savings were much smaller than annual increments in gross domestic capital formation. The gap was filled by current account deficits in the nation's balance of payments. Likewise, annual increments in exports did not finance the annual increments in imports; in fact, trade deficits increased continuously throughout the period covered by the analysis. Regarding income distribution, the authors merely speculate without hard evidence. The following provides an example of their reasoning: It...