South Korea and the environmental Kuznets Curve

Photo1: Chong-gye stream, Downtown Seoul (1950s)	Photo 2: Chong-gye stream, Downtown Seoul (2000s)
Source: Reproduced with permission from Dr. Hwa Soo Park’s presentation at INESAD, May 2011

In 1960, South Korea was desperately poor with only half the income of very poor Bolivia (see Figure 1). South Korea was highly dependent on foreign aid, lacked productive infrastructure, had no natural resources to speak of, and was generally considered a hopeless case.

However, the population was quite well-educated for the level of income, especially the women. In 1970, while Bolivia was still 34% richer than South Korea, adult Korean women (25 years and older) had on average 4.8 years of education, while in Bolivia the same group had only 1.7 years of education. By now, South Korean women have on average more than 12 years of education (exactly the same as South Korean men), while Bolivian women have only half that. And that is just in terms of quantity. South Korean 8th graders are among the best in the world in standardized math tests (beaten only by the Taiwanese 8th graders – by a single point on the 800-point-scale), while Bolivians totally suck at these tests (1).

Source: Author’s elaboration based on data from www.gapminder.org.

The relatively high level of education of women in South Korea encouraged a dramatic drop in fertility rates. In 1970, South Korean women had on average 4.5 children each while Bolivian women had 6.5 children. Today, South Korean fertility levels are well below replacement levels at 1.2 children per woman, while Bolivian fertility levels are still quite high at 3.4 children per woman.

The advantage of low fertility levels is that they permit higher rates of accumulation of productive capacity. There is a big difference between financing the education of 1 or 2 children per family instead of 5 or 6 and between handing over the accumulated family assets to one heir rather than splitting it between 5 heirs. These low fertility rates have allowed South Korean investment rates of 30-40% of GDP each year while the Bolivian equivalent fluctuates around 15% of GDP, which is barely enough to keep productive capacity per person constant. The investment rates in Bolivia have allowed an almost doubling of real incomes over the last 50 years, while the investment rates in South Korea have allowed a 22-doubling of real per capita incomes. In one short lifetime, South Korea changed from a desperately poor country with no easy way to escape poverty, to one of the most advanced, richest and best educated countries in the world. The difference is well illustrated in the photos above.

So, what did average economic growth rates of about 7% per year for half a century mean for the Korean environment? Certainly downtown Seoul looks greener and healthier today than it did 50 years ago according to the photos above. But South Korea didn’t worry at all about the environment, until recently. South Korea is the world’s 4^th biggest energy importer, and among the dozen biggest carbon emitters in the World. This energy use is not just for own consumption, however, but rather to produce all the high tech goods demanded by the rest of the world. South Korea, although a small country (less than a 10^th of the size of Bolivia) with only 50 million people, is one of the world’s ten biggest exporters.

South Korea pledged 84 billion dollars in green investments over the next five years, and I assume Denmark will try to match that, so the combined funds, ingenuity and determination of Denmark and South Korea in the area of green development, allow me to feel optimistic for the first time since I entered the environmental conservation community.

South Korea maintains more than 60% of its small, densely populated territory covered with forest, so I cannot think of a better role model for either the development community or the conservation community than South Korea. I hope this amazing country will help show the way forward for both rich and poor countries in the next crucial decades.

But South Korea has clearly reached a turning point in their environmental policy with their new “Low Carbon, Green Growth” strategy. Last week, South Korea and Denmark forged an unprecedented Green Growth Alliance, pledging to unite their strengths in environmentally friendly technologies, such as fuel cells, hydrogen powered cars, smart grids, and wind energy. Calling Denmark a “first mover” and South Korea a “fast mover” in green technologies, president Lee said that a marriage of the two will create a green growth “smart mover” that will lead the world economy in a new direction (2).

Do you think South Korea’s rapid development has lessons for other developing countries? Leave your reply below.

Lykke Andersen is the Director of the Center for Economic and Environmental Modeling and Analysis (CEEMA) at the Institute of Advanced Development Studies (INESAD), La Paz, Bolivia.

(*) Scientific Manager, Conservation International – Bolivia. The author happily receives comments at: landersen@conservation.org.
(1) www.gapminder.org .
(2) http://www.korea.net/news.do?mode=detail&guid=55130

(c) Institute for Advanced Development Studies 2011. Feel free to circulate in its original form. Past issues can be found at www.inesad.edu.bo/mmblog.htm . The opinions expressed in this newsletters are those of the author and do not necessarily coincide with those of the Institute or of the sponsors.