INDIA VS SOUTH KOREA

A COMPARISON FACTORS THAT AFFECT DEVELOPMENT

RAUL HARISH
1730714

Submitted to:
Joshy K J

B.A. - ECONOMICS, POLITICAL SCIENCE AND SOCIOLOGY

DEPARTMENT OF ECONOMICS
(DECEMBER 2019)
INTRODUCTION

India has one of the fastest growing major economies in the world. It is expected to become
one of the top three economic powers of the world over the next 10-15 years, backed by its
strong democracy and partnerships. India’s nominal GDP growth rate is estimated at 12% in
2019-20. The estimate for 2018-19 was 11.5%. During the first quarter of 2019-20, GDP
grew by 5%. India is the third largest start-up base in the world with over 4,750 technology
start-ups. According to the National Association of Software and Services Companies
(NASSCOM) 1,400 new start-ups were founded in 2016. India has one of the largest labour
forces in the world. The labour force is expected to touch 16-17 crores by 2020, based on rate
of population growth, increased labour force participation, and higher education enrolment,
among other factors, according to a study by the Associated Chambers of Commerce and
Industry of India (ASSOCHAM) and Thought Arbitrage Research Institute.

South Korea has the 12th largest economy in the world. It is a developed economy and has
had a remarkable improvement over the years in terms of economy and development. The
rapid economic growth, commonly called The Miracle on Han River, was due to good
planning and a hardworking population. Technical assistance from Japan and the western
countries like USA also helped. Today, South Korea has a nominal GDP of $1.720 trillion
and Purchasing Power Parity (PPP) of $2.235 trillion. Their per capita income is $38,260
(PPP) as of 2017.

In this essay, I will be comparing India and South Korea based on 4 factors that affect
development.

POVERTY

Poverty is an issue that has plagued India since the birth of the nation. The number of poor
people in India is approximately 250 million. This is despite the fact that poverty levels have
declined from 37.2% in 2004-05 to 29.8% in 2009-10. The government has for decades come
up with many poverty eradication and poverty minimization programmes, subsidies to poor
people, pension schemes to poor people below the poverty line. Every political party
promises to eradicate poverty and minimum income to all, but this is a dream yet to be
realised. The poverty and vast number of poor people is a major developmental issue. There
is a lot of burden on the economy to take care of these people. Due to capitalistic nature of
society, it is very difficult for the poor to come up as lack of money leads to them not getting
the resources like education and healthcare that is necessary for then to improve. The huge
population is also a reason for poverty. Educated people practice birth control and have fewer
children whereas the poor who lacks education have many children. The vicious cycle of
poverty also hinders these people from improving their condition.

Absolute poverty rate in South Korea has drastically decline since the mid-20 th century.
Relative poverty was also in decline until the late 1990s but has risen since then. While only
about 2% of South Koreans are affected by absolute poverty today, about 14-15% of these
2% are elderly and are affected by relative poverty. According to official estimates, about
15% of South Koreans live below the poverty line. Poverty in South Korea is defined as
relative poverty. Relative poverty is not the same as absolute poverty, which is a better
indicator, and operationalized as the share of the population living on less than half of the
median income. About half of all citizens over the age of 65 are living in poverty. According
to a survey, the number of adults that have the mindset of caring for their parents has gone
down from 90% to 37% in the last 15 years. The Organisation for Economic Co-operation
and Development (OECD) listed several factors among the reasons for poverty in South
Korea. Two major reasons out of this are:

 Public social spending in South Korea is low. Social spending by the government in
South Korea was 7.6% of GDP in 2007, compared to the OECD average of 19%. The
reason for this low spending is that Koreans have traditionally depended on family
and the private sector to provide for such services
 South Korea has a dualistic labour market, which means that the labour market is
divided into primary and secondary sectors. Many workers are hired on temporary
contracts with low wages and no or few benefits. This has resulted in inequality in
income.

Poverty in Korea is affecting mostly the elderly: nearly a half of the elderly live in relative
poverty, which is the highest proportion among OECD countries. But in India poverty is a
problem faced by all age groups. As of 2011-12, 21.9% of Indians lived below the poverty
line. South Korea has 15% people living under the poverty line as of 15%. But this is relative
poverty which means poverty compared to other citizens. India faces absolute poverty.
Poverty in India is on the decline. As per the World Poverty Clock, 44 Indians escape
extreme poverty every minute.
INFRASTRUCTURE

Improving infrastructure has always been a challenge for India. There is a major lack of
planning in the development of towns and cities. India’s electricity supply keeps having
interruptions and this occurs even in the developed cities like Bangalore and Mumbai. Lack
of backups like generators and proper facilities like heating and cooling facilities during such
power failures affect businesses and add to their operating costs. The public transport too is
not effective and cannot cater to the vast population of the country. The roads, bridges and
other such infrastructure are often substandard and cannot handle the footfall that it receives.
India is coming with new plans for public transport like a hyperloop and magnetic levitation,
but these are all future technology that are still mere theories. They have not been tested and a
viable model has still not been built in any country. Education infrastructure too needs to
improve. Private schools have private funding. So, they have good infrastructure and with
high fees they can maintain such infrastructure. But government schools cannot do this as
they must be accessible to all. The poor cannot afford high fees. But these schools have very
poor infrastructure and often lack the basic necessities like tables and chairs, toilets,
blackboard, etc. Many of the teachers here too are incompetent. India provides healthcare too
all and have hospitals setup by the government. But these are often badly equipped and
cannot treat most illnesses. A huge chunk of the population also does not have health
insurance. In India, most people do not understand the importance of having an insurance.
The insurance received by many people are often inadequate and does not cover most
illnesses.

South Korea has very good infrastructure. It has been an important aspect to the people and
government since the 1960s. The government and private sector contribute to improving the
infrastructure in South Korea. They also regularly check and replace failing infrastructure
with new ones. Recently, the government pledged to spend 27.2 billion dollars over the next
4 years on replacing and upgrading aged urban infrastructure. It has a well-kept system of
roadways and bridges that are regularly improved to keep up with the needs of the society.
The power system in South Korea is well maintained. It attempted to privatize power systems
but suspended this effort after facing backlash. Public transport too is very efficient. There
are many methods of transportation like trains, buses, ferries and trams.

UNEMPLOYMENT
Unemployment is a major social issue in India. As of September 2018, according to the
Indian government, India had 31 million jobless people. The unemployment rate has been in
the 3.4%-3.6% range. There are many reasons for unemployment. The vast population is a
major reason. There are not enough jobs to cater to the number of applicants. But this issue is
mainly faced by the educated class. For those working in agricultural sector, employment is
usually seasonal. This means they do not have the guarantee of a year-round job. The jobs
they receive are also often having low pay and no such benefits as these are mostly
undocumented and unregulated. There is also a massive immigrant issue. Many people from
countries like Bangladesh come to India illegally in search of work. This affects Indian
labourers as there are more people looking for jobs and the immigrant workers are usually
ready to work for lower wages than Indian workers. Labour immobility is also an issue.
Attachment and maintenance of proximity to family is a major priority for many Indian
citizens. The result is that people avoid traveling long distances from their families in pursuit
of employment. Additionally, language and religion also contribute to low mobility of labour.
When many of those who are suited for the jobs are unable to travel to reach them,
unemployment is magnified.

The government too never planned for accommodating such vast number of people for
employment. They did not foresee so many people looking for jobs. There were no
nationwide plans to account for the significant gap between labour supply and labour
demand. It is crucial that the supply and demand of labour be in balance to ensure that those
who need jobs can get them. Otherwise, many individuals will compete for one job. This also
leads to the working population having to drag the weight of the unemployed. The
government too must provide for them. Those funds could have been very well used in some
other sector for progress.

The unemployment rate in South Korea is 4.8%. While this is higher than that of India, South
Korea has a much smaller population. There are around 1.197 million unemployed in South
Korea. This is nothing compared to India. Due to rapid globalisation and well-planned
development South Korea has managed to keep a low number of unemployed people. But
over the last decade, unemployment has been rising. There are many reasons for this rise. The
rapid dip in employment levels coincided with new government policy mandating a higher
minimum wage, causing employers to let go of lower-paying jobs, particularly in the
manufacturing, retail and construction industries. Outsourcing is another issue. This is the
collection of goods by contract from an outside supplier. At 22% in 2015, the rate of
temporary, outsourced contract workers in the Republic of Korea was double the OECD
average. Outsourcing also involves moving business overseas. The continuous increase of the
minimum wage in the Republic of Korea has prompted firms to relocate their factories
overseas to lower-wage rate countries in order to save costs. Massive improvements in
technology and mechanisation of jobs that used to be done by people too have led to
unemployment. South Korea is at the top of the International Federation of Robotics (IFR)’s
robot density list – 631 robots per 10,000 employees. Also, gender inequality has led to a
larger unemployment rate of women in the workforce of South Korea.

There also reason to believe that the unemployment figures are skewed and that the actual
level of unemployed people are lesser. South Korea’s measurement does not factor in
students who are pursuing higher education like PhD. They are counted as unemployed
though they should not be. Also, The Republic of Korea’s ‘economically inactive’ population
is thought to be hiding many individuals that are employed to the standards of the
International Labour Organisation, but not the official Korean measurement system.
Individuals over the age of 15 who are neither employed nor unemployed, housewives who
primarily act as caregivers, students attending school, and volunteers are included in the
‘economically inactive’ population and do not contribute to the official unemployment rate.
But the unpaid family workers are counted as employed only if they work 18 hours a week.
But the standard followed by other OECD countries require them to work only 1 hour every
week to be categorised as employed.

POPULATION

India is the second most populated country (133.92 crore) in the world with nearly a fifth of
the world’s population. The population growth rate is 1.19%. 63.6% of this population is
between the age of 15 and 64 which means we have a good number of populations that can be
employed. But as mentioned earlier, there are not enough jobs and many of these people are
uneducated. Due to such issues, the population is currently a burden to the country. The
government has had to provide for these people and a lot of money goes in schemes for
providing for the poor. But enough money is not spent to improve aspects like education that
would be a tool for the poor to uplift themselves. Lack of family planning is also affecting
India. Poor people have more children due to lack of knowledge on family planning and its
benefits and due to lack of good healthcare. This means they face significantly higher
mortality rates. Also, in poor families, child labour is a common practice. So, they tend to
have more children.

South Korea has a population of 5.15 crore people. The issue they face with population is a
rapidly ageing one. South Korea has the lowest fertility rate with 1.1 children per woman.
The low fertility rate means that the country does not meet the replacement rate standard ratio
of 2:1. Women aren’t having enough children in South Korea to stabilise its population
without migration. Some South Korean women are opting to forego romantic relationships
entirely. An increasing number are choosing never to marry at all and are turning their backs
on legal partnerships and casual relationships in favour of having independent lives and
careers. Also, the high life expectancy rate is ironically also an issue contributing to this.

CONCLUSION

We can see that South Korea is a developed country and India is still developing, even
though both countries started their initiative towards improvement at around the same time.
But we need to keep in mind that South Korea is a small country with a population which a
fraction of that of India’s. India also has a culturally diverse population whereas South Korea
is largely homogeneous. We cannot follow the same methods of development as South Korea
as the dynamics is different. We also see that though the country is developed, it is facing
problems too. The economy is on a decline and working population is diminishing.

The main problem with India’s development is that the mentality of the people is to tackle the
problem once it occurs and not to prevent it. Not enough resources are being used to uplift the
poor and create opportunities for the people. Instead the government is either hiding behind
the few good things it has done or coming up with measures that are only an immediate relief,
albeit a small one, for some people. The policies do not reach all those who it targets. One
thing I feel India can learn from South Korea is involving the private sector more in helping
with development. The private sector has made major contributions to South Korea’s
development. India should look at getting as much support from them as possible.

QUESTIONS

1. What are the major issues South Korea faces with regards to population?
South Korea has a population of 5.15 crore people. The issue they face with
population is a rapidly ageing one. South Korea has the lowest fertility rate with 1.1
children per woman. The low fertility rate means that the country does not meet the
 replacement rate standard ratio of 2:1. Women aren’t having enough children in South
Korea to stabilise its population without migration. Some South Korean women are
opting to forego romantic relationships entirely. An increasing number are choosing
never to marry at all and are turning their backs on legal partnerships and casual
relationships in favour of having independent lives and careers. Also, the high life
expectancy rate is ironically also an issue contributing to this.
2. What are India’s challenges with respect to infrastructure?
There is a major lack of planning in the development of towns and cities. India’s
electricity supply keeps having interruptions and this occurs even in the developed
cities like Bangalore and Mumbai. Lack of backups like generators and proper
facilities like heating and cooling facilities during such power failures affect
businesses and add to their operating costs. The public transport too is not effective
and cannot cater to the vast population of the country. The roads, bridges and other
such infrastructure are often substandard and cannot handle the footfall that it
receives. India is coming with new plans for public transport like a hyperloop and
magnetic levitation, but these are all future technology that are still mere theories.
They have not been tested and a viable model has still not been built in any country.
Education infrastructure too needs to improve. Private schools have private funding.
So, they have good infrastructure and with high fees they can maintain such
infrastructure. But government schools cannot do this as they must be accessible to
all. The poor cannot afford high fees. But these schools have very poor infrastructure
and often lack the basic necessities like tables and chairs, toilets, blackboard, etc.
Many of the teachers here too are incompetent. India provides healthcare too all and
have hospitals setup by the government. But these are often badly equipped and
cannot treat most illnesses. A huge chunk of the population also does not have health
insurance. In India, most people do not understand the importance of having an
insurance. The insurance received by many people are often inadequate and does not
cover most illnesses.

REFERENCES

1. https://www.bbc.com/worklife/article/20191010-south-koreas-population-paradox
2. https://www.compassion.com.au/blog/why-do-the-poor-have-large-families
3. http://www.yourarticlelibrary.com/pollution/4-major-population-problems-of-india/
31389
4. https://www.intelligenteconomist.com/unemployment-in-india/
5. https://en.wikipedia.org/wiki/Energy_in_South_Korea#Electric_power
6. https://economictimes.indiatimes.com/indias-infrastructure-a-reality-check/
articleshow/2560438.cms?from=mdr
7. https://www.adb.org/countries/india/poverty