Thus, manufacturing grew in real terms at 6% per year during the long period from 1912 to 1940 and by more than 7% per annum in the 1930s. Both Taiwan and Korea had a higher rate of GDP growth than Japan between 1911 and 1938 (Japan 3.4%, Korea 3.6 and Taiwan 3.8%). Because of Japanese investment in manufacturing in South Korea, combined with an earlier presence of high education for centuries, managerial and technical resources were very high.
This abundance of human capital was the factor that propelled rapid change. For example, in South Korea in 1960, the manufacturing sector alone had 4,424 engineers, 31,350 managers, 5,025 sales executives, 13,660 white collar workers, 17,330 workers classified as “clerical” and 404,735 workers in industrial plants (blue collar jobs). Indeed, the education level of the South Korean work force in 1963 was high by any standard; only 5.5 percent of all workers lacked formal schooling.
However, 53% had finished primary school, 34% had completed secondary school. To add to this, there were one million South Korean migrant workers in Japan and another one million in China, a significant percentage of whom worked in Japanese factories and therefore had technical skills to support rapid industrialisation when they returned home after the civil war.
Compare this with Uganda, at the time one of the most educated countries in Africa. A survey was done in 1963 on Uganda’s stock of “high level manpower.” It set out to cover all people in Uganda who had a minimum of 12 years of formal education or who were in posts that, for replacement purposes, would be filled by someone with 12 years of formal education.
Note: 12 years corresponded with 6 years primary, 2 years junior secondary and 4 years senior secondary schooling. The survey covered all sectors of the economy except the army i.e. it included central and local government, parastatal bodies, the private sector, the self-employed and churches and missions. The total came to a 20,440 people most of who were non-Ugandan and left the country after independence – i.e. left Uganda with limited skilled manpower.
In 1960, Uganda’s entire public service excluding nurses, police and all but a few hundred teachers was a little more than 5,000 strong in a country of more than six million people. Out of the top 10 percent of the civil service jobs categorised as “professional”, Ugandans occupied only 10 percent i.e. 90 percent were non-nationals – Europeans and Asians.
Then out of the next tier 30 percent categorised as “technical” jobs, only 40 percent were Ugandans; and out of third tier 30 percent categorised as “sub-technical”, 65 percent were Ugandans. The rest of the jobs categorised as clerical were largely occupied by Ugandans; showing limited managerial skills.
Looking at Taiwan, many studies show that the welfare of the Taiwanese peasant in the first half of the 20th century may have exceeded that of the Japanese peasants; their colonial masters. As part of the agricultural development effort, the Japanese instituted agriculturally oriented two-year secondary schools in the more populous parts of the country – one in each township.
Nor were Taiwanese excluded from modern professions as was happening in European colonies in Africa. By 1940, there were five times as many Taiwanese managers as there were Japanese, three times as many agricultural technicians and medical technicians and the same number of professional workers. By 1945, Taiwan was probably the most agriculturally, commercially and industrially advanced of all the provinces of China.
Taiwan and South Korea had long been involved in international trade. By the end of the 1930s, Taiwan was the biggest trader in East Asia even though most of this was with Japan. The annual per capita trade of Taiwan was $39, Korea $26 and Japan $23, Philippines $18 and China $1. For Korea, the proportion of international trade to GNP in 1929 was 69.6%; in 1920s, the proportion of international trade to GNP in UK was 38%, France 51%, Japan 35%, USA 11%, Germany 31%, Denmark 57% and Norway 53%.
I have seen studies (one of them by Dani Rodrick – How South Korea and Taiwan Grew Rich), which, relying on economic regressions suggests that 90 of the growth of Taiwan and South Korea after 1960 was a result of these “initial conditions”. African countries did not have this social infrastructure.
It did not matter really how good a president was, what public policies he promoted, what institutions he put in place. Without a critical mass of of engineers and other skilled professionals in marketing, management, accounting and architecture, you cannot build a manufacturing industry. But more critically, limited education creates grounds for bad politics.
Taiwan and South Korea had a large skilled work force relative to their physical capital and income levels. So the latent return on capital accumulation was high. This means their rapid transformation was not a miracle. It is consistent with their initial endowments.
The country that has actually been a miracle is Botswana because at independence in 1966, it lacked almost everything – level of education, attitudes for modernisation, an indigenous middle class, etc. It only had social cohesion and a sense of common identity. This means that it is Rwanda, Burundi, Lethotho, Swaziland and Somalia, which shared this quality that lacked good leadership.
Since 1960, Africa has been putting in place these initial conditions. A sense of nationhood has taken root; education has greatly expanded with primary and secondary schools being built and university education becoming commonplace. Technology, its diffusion and the willingness to apply it is now widely spread.
No wonder most Sub Saharan African economies are now growing rapidly. And it seems the form of government does not matter; democracies and dictatorships; strong ruler governments versus weak-fragmented leadership governments; corrupt and honest governments and natural resources rich and natural resources poor countries are all growing just as rapidly.
So Ghana and Rwanda, Zambia and Eritrea, Angola, Kenya and Uganda, Liberia and Sierra Leone, Malawi, Senegal, Ivory Coast and Chad – all are growing just as rapidly even though their political arrangements differ. It is all possibly because African leaders of today have a rich inheritance from post-independence leaders.