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Chapter 10. Implications of Korea’s Saemaul Undong for Development Policy: A Structural Perspective

Author(s):
Reda Cherif, Fuad Hasanov, and Min Zhu
Published Date:
April 2016
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Huck-ju KwonThis chapter was initially published in the Korean Journal of Policy Studies in 2010 and substantially revised, drawing on new research.

Although quality of life is higher than ever before, a billion people still live in absolute poverty. To fight it, it is necessary for the developing economies, where the majority of poor people live, to achieve both economic and social development. Nevertheless, it is clear that developing economies cannot tackle poverty by themselves. Governments, civil society organizations, and citizens of developed economies must participate in this fight. One way to help developing economies reduce poverty is to provide financial assistance. Another is to share the development experience of once-poor countries that have made a successful transition to industrialized economies by offering development policy options.

It is in this context that this chapter examines the Saemaul Undong movement (New Village Movement) in Korea from a structural perspective; that is, what socioeconomic conditions made the movement successful, and what role did it play in the country’s transition from a predominantly rural economy to a modern, industrialized one? The chapter seeks policy implications for the international development debate.

The government initiated Saemaul Undong in 1971 as a rural community movement. Through it, the government provided small startup subventions for projects to develop local communities economically. For example, it allocated material for constructing village roads, bridges, electrification infrastructure, and storage sheds crucial for these communities’ economic development. Villagers provided free labor for these projects. Government subventions accounted for 20–30 percent of community expenditures, local residents’ labor and other contributions constituted another 30–60 percent, and private donations and bank loans provided the rest (Kim 1991).

The government spent on average 2.5 percent of gross national product per year on Saemaul Undong projects—an immense amount of social spending, given that there was only a strict, means-tested public assistance program in place in the early 1970s. These policies were combined with a nationwide campaign to mobilize human resources and change the attitudes of ordinary people about socioeconomic development. Saemaul Undong was a social endeavor that combined aspects of a social fund program and a community movement.

Approaches to Development Policy

During the early 2000s, international development policy emphasized good governance as a development strategy, arguing that poor performance in economic development and poverty reduction in many developing economies stemmed from inadequate governance (Grindle 2004). The good governance approach was a response to failures in past state- and market-centered development policy paradigms. Gough and Wood (2004, 15) point out that the lack of effective and efficient state and market institutions in many developing economies is the main obstacle to development. In many of these countries, market institutions are not working well in producing goods, and the state is captured by special interests instead of functioning as a neutral actor to manage different social interests. The authors maintain that good governance in market institutions is necessary for overcoming such difficulties and achieving development.

Good governance requires trust between people, among other things. The simple fact that there are institutions in place does not automatically mean that they are working effectively. It is necessary for public and private actors to work together. This involves rational discussion, persuasion, and coordination. Development strategy based on governance theory is an effort to synthesize state- and market-centered paradigms of development, which are often seen as competing.

The Millennium Development Declaration, in which 189 heads of state and leaders of government pledged support in September 2000, aimed to reduce global poverty by half, based on a strategy of good governance. The World Bank and the United Nations Millennium Project, headed by Jeffrey Sachs, emphasized the importance of good governance as a way to achieve the Millennium Development Goals (MDGs) in general and poverty reduction in particular (UNDP 2005). This led to an emerging consensus among global institutions and policy commentators that good governance would reduce poverty. Some commentators, however, argue that good governance does not necessarily lead to poverty reduction and economic development (Coelho and Favareto 2008; Kwon and Kwak 2008).

After 15 years of implementation, however, the MDGs show a mixed outcome. The goal of reducing the number of people living in poverty by half by 2015 is expected to have been met on a global basis (World Bank 2005). Clearly, this is good news for the MDGs, but progress has been unequal among regions of the world and within nation-states. China’s economic growth accounts for a great deal of poverty reduction in the world, while sub-Saharan Africa, Latin America, and parts of Southeast Asia have not made significant progress (UNDP 2005). Therefore, it is hard to say that we are on track to success in achieving MDG 1, to eradicate extreme poverty and hunger.

As a result, the effectiveness of current anti-poverty strategies in developing countries has been questioned. If market solutions are not enough, and good governance does not reduce poverty as intended, what is the missing link? This chapter argues that a program like Saemaul Undong could link state, market, and civil society efforts for poverty reduction.

Indeed, among the many successful community movements, Saemaul Undong deserves close examination because it shows that a community movement and the state can work together for poverty reduction. Saemaul Undong was able to bring about people’s active participation, which is often missing in development projects. The following sections examine the historical conditions for the movement’s success, and its role in linking state, civil society, and grassroots participation in development. This is followed by examining the land reform that took place in Korea in the late 1940s and 1950s, and the conditions that were instrumental in that success. The chapter then shows that Saemaul Undong was not only a community movement, but also a multifunctional link for development policy that the state could implement for economic development and poverty reduction. Finally, it explains how Saemaul Undong contributed to Korea’s social and economic development through multiple functions, such as social inclusion and the income-generation mechanism.

Historical Background: Land Reform in Korea

Land reform has been a controversial issue in the development debate.1 Some argue that it is a prerequisite to successful economic development, while others hold that it inevitably brings about political turmoil, which disrupts economic development. A body of literature has pointed out that successful land reform in the late 1940s in Japan, Korea, and Taiwan Province of China was strongly related to economic development and poverty reduction (for example, World Bank 2006). Access to even a small amount of land can provide farmers a source of self-employment and an important safety net for the economic contingencies that occur over a lifetime (Dasgupta and Ray 1987; Deininger and Binswanger 1999). Land ownership also affects economic growth through investment in soil improvement and farming tools—an effort that owners are much more likely to make than tenants, because it improves their assets.

Despite this positive relationship between equitable landownership and agricultural productivity, it is not necessarily true that there has been a direct positive relationship between land reform and economic development in Korea. The country’s economic development was not mainly based on the growth of the agricultural sector (Adelman 1997), and some scholars see its land reform as a failure because it did not create an agricultural sector that was dominated by middle-class farmers (Hwang 1985). The mechanism by which land reform contributed to economic development has been discussed in depth elsewhere; this chapter focuses on the link between the land reform and Saemaul Undong.

Korea’s land reform, which took place in three waves from 1946 to 1955, gave people who had been tenants of Korean and Japanese landlords under Japanese rule (1910–45) the opportunity to become independent farmers. After World War II, the American military government (1945–48) took the first step toward land reform in 1946. It limited peasants’ rental payments for land to one-third of the value of the land’s annual harvest, a drastic reduction. In 1948 the American military government sold land that belonged to the Japanese Oriental Development Company (later the New Korea Public Company) to tenants for prices equivalent to three years of harvests.

Concerned by the socialist land reform in North Korea, the sovereign Korean government, established in 1948, promulgated a series of land reform laws, implementing them from 1949 to 1955. These included three basic principles that put more emphasis on equality than growth: (1) only farmers could own farm land, (2) land could be owned up to a maximum of three hectares, and (3) farmers could not contract out their land to others for farming (Sin 1988). Based on these principles, the government bought land from those who owned more than the maximum or did not farm it themselves, and sold it to those who had farmed the same land as tenants.2

Although some landowners sold their land before the implementation of land reform, more than 60 percent of the farmland was bought by government. Landowners were paid with government bonds, while tenant farmers were able to buy the land from the government at a price equivalent to one and a half times the annual harvest, which they could pay over a three-year period (Kim 1997, 307). In 1945, 65 percent of farmers were tenant farmers; by 1951, after the land reform, the figure was 8.1 percent.

It would be fair to say that land reform in Korea was successful in that it helped farmers own their own land, and therefore the inequality of land ownership was reduced sharply. For example, in Yongmun village in Chungnam Province, the Gini index of land ownership declined from more than 0.63 to less than 0.50 as a result of land reform (Cho 2003, 297). Furthermore, the productivity of farming increased.

Land reform provided two vital conditions for the success of Saemaul Undong. It created farmers who owned their own land and whose economic interest was in line with community development in rural areas. Saemaul Undong’s core program was the construction and renovation of community infrastructure. For independent farmers, modernizing the infrastructure of their community would directly lead to the increased productivity of their agricultural land. But tenant farmers would not necessarily see the direct benefits of such efforts.

Saemaul Undong was launched in April 1970 when former president Park Chung Hee addressed rural residents and local officials during a visit to the southeast region. He said, “We need to support ourselves to develop our villages. With aspirations of self-help, self-reliance and cooperation, we can make our village rich and turn it into a good place to live” (Oh 2002).

Park’s statement emphasizes that people in rural communities should not expect the state to help them, but should help themselves. Therefore, the key idea of Saemaul Undong was self-help, which was then extended to self-reliance and cooperation. Citizens who participated in the Saemaul Undong movement needed to contribute their labor and other resources to community projects. Government support, mostly in the form of raw materials and occasionally financial subsidies, accounted for only a small part of what was needed to complete the accomplished projects.

According to newspaper reports in the early 1970s, there was significant support for Saemaul Undong in rural villages (Kim 2004). Such energetic voluntary participation at the grassroots level was made possible not only by government mobilization, but also by the genuine prospect of a better quality of life. Local officials, who were catalytic in this process, enthusiastically supported Saemaul Undong (Table 10.1).

Table 10.1.Growth of Saemaul Undong
Participants and Projects19711972197319741975197619771978
Participants in rural areas1723206753734893514511,336
Total participants1723206931,0691,1691,1751,3722,709
Projects in rural areas13853201,0934156966302,200
Total projects23853201,0931,0991,5988872,4632,667
Source: Oh (2002).

Hundred thousands.

Thousands

Source: Oh (2002).

Hundred thousands.

Thousands

Land reform boosted the expansion of education, becoming a catalyst of Saemaul Undong. The movement’s community leaders, who were educated, were able to organize the movement effectively. And families in rural areas who now owned land and experienced higher productivity were able to send their children to school instead of the paddy fields (Cho 2003).

Education was the biggest item in the government budget after defense in the late 1950s and 1960s. This resulted in an astonishing record of educational expansion compared with other developing economies, which reinforced the effect of the land reform on education. In Korea, the number of students from both rural and urban backgrounds increased 370 percent for liberal arts secondary schools, 299 percent for vocational high schools, and 1,292 percent for higher education from 1945 to 1959; and the literacy rate reached almost 90 percent in the late 1950s (USAID 1959; Cho and Oh 2003, 283). Land reform not only sharply reduced the inequality of land ownership, but also played a powerful role in reducing poverty and increasing the level of education in the rural population.

Saemaul Undong as a Mechanism for Social Inclusion

Another important aspect of Saemaul Undong was its role in promoting social integration during Korea’s rapid industrialization. A large body of literature on Saemaul Undong agrees that it contributed to economic development during the 1970s. While this is certainly true, it is also necessary to take a balanced point of view on this issue. Economic development in Korea in the 1970s and 1980s was mainly driven by industrialization, with a smaller contribution by the agricultural sector (Adelman 1997), where the number of workers decreased steadily (Table 10.2). This suggests that the success of Saemaul Undong, which took place mainly in rural agricultural communities, had only limited impact on overall economic development.

Indeed, some have argued that Saemaul Undong was not a success in that more people left rural communities for cities in the 1970s (3.7 percent of rural dwellers) than in the 1960s (1.3 percent) (Oh 2002). Even so, it is also necessary to look at Saemaul Undong from the perspective of the changing structure of Korean society.

Korea’s economic development has been primarily industrial: first in the form of import substitution, second through exports, and third through heavy and chemical industries. After the 1990s, the economic strategy shifted to advanced technology-based industries such as information technology, electronics, and automobiles. Because this development was not based primarily on agricultural or raw materials, any assessment of Saemaul Undong must take Korea’s industrialization into consideration. In this context, the movement needs to be looked at from a structural viewpoint to examine how it contributed to the structural transition of Korean society, from predominantly rural to modern and industrialized.

Many developing economies that were initially successful in industrialization were not able to sustain this process, as in the cases of Argentina, Brazil, and the Philippines, for example. One of the main reasons for the failure of such countries to achieve sustainable growth through industrialization was their extreme social inequality and inability to tap the huge reservoir of human resources in the rural areas (Kohli 2004; Kwon and Yi 2009).

Table 10.2.Employees by Industry in Korea(Percentage)
YearAgriculture and ForestryManufacturing and MiningService
196657.8910.4831.27
197148.4414.1937.37
197838.4123.1538.44
198524.9424.4450.62
199018.2527.3254.42

Underlying Korea’s successful and sustained industrialization was the fact that rural areas were not left behind. On the contrary, people in rural areas supported a vital core of industrialization by supplying young and educated workers for industrializing urban areas—and this was made possible by mass education and land reform from 1946 to 1955. The latter also seriously weakened the landowner class, who might have hindered the structural changes of industrialization, and provided a vital source of income to families in the agricultural sector.

In 1961, the government adopted poverty-reduction policies that included eliminating usurious loans in rural areas. Usury had been widespread, embedded in an economy based on subsistence agriculture. Shortly after taking power in 1961, the military government enacted measures to ensure that loans were registered. Farmers with high-interest debts could transfer them to agricultural cooperatives—nationwide farmers’ organizations—that offered a longer grace period and lower interest, while lenders received a bond from the cooperatives. Furthermore, usurious practices were made illegal. Agricultural cooperatives then began to play the role of formal rural credit institutions where loans were traded competitively and effectively. These cooperatives were able to respond to the credit needs of specific crop growers or in specific regions with their diversified loan portfolios.

Saemaul Undong developed after these efforts had already brought major social changes to the agricultural sector. Through this movement, farmers renovated their houses, repaired village roads, built community halls, and established cooperatives. These projects in turn raised living standards and drastically reduced poverty (Table 10.3). And, crucially, rural communities kept pace with the changes brought about by economic development.

Table 10.3.Incidence of Absolute Poverty(Percentage)
Households19651970197619801991
Urban households54.916.218.110.48.7
Rural households35.827.911.7 9.02.8
All households40.923.414.8 9.87.6
Source: Kwon (1998, 34).Note: The absolute poverty line was 121,000 won per month (at 1981 prices) for a five-person household.
Source: Kwon (1998, 34).Note: The absolute poverty line was 121,000 won per month (at 1981 prices) for a five-person household.

By contrast, public projects to improve rural infrastructure from the 1960s did not produce effective outcomes. Saemaul Undong’s project frameworks were superior to those used to improve infrastructure: government provided public resources for the start-up of local projects and residents contributed their labor. Such a combination eased the difficulties which community movements often face at the initial stage. Furthermore, Saemaul Undong was not only about improving infrastructure, but also about raising the levels of income of the rural households (Lee 2013). In the early 1970s, the government was able to supply fertilizers, chemical pesticides, and other chemicals to raise agricultural productivity. These were produced locally and were hence much cheaper than imports. The government also encouraged local businesses to establish food processing plants to diversify rural income sources, which bought locally produced agricultural products. At the same time, new rice strains developed by government research laboratories were introduced to improve yields. Saemaul Undong combined these various efforts in the early 1970s.

Saemaul Undong did not simply come out of the blue, and if it had, it would not have received such an enthusiastic reception. It was part of an historical effort that made Korea’s economic development broad-based, marked by effective poverty reduction and a more equal distribution of income. Koh (2006), despite being a critic of of Saemaul Undong, nevertheless recognized that it brought small farmers and their families into the fold of a modern citizenry. In this sense, it was an important factor in Korea’s economic success, although it did not reverse the decline of the rural sector (Figure 10.1).

Figure 10.1.Diversification of Income Sources of Rural Households in Korea

(Percent)

Source: Lee (2013).

Saemaul Undong as a Form of Authoritarian Mobilization

A key idea of Saemaul Undong is self-help, which is extended to self-reliance and cooperation. As mentioned earlier, citizens who participated in the movement contributed their labor and other resources to community projects. The government’s contribution of raw materials and, occasionally, funds accounted for only a small part of the movement’s support. Furthermore, people came together and discussed what projects their communities needed. In other words, this was a quintessential community movement, and one, as already noted, that had enthusiastic grassroots support (Kim 2004). One of the local officials who was involved in Saemaul Undong explained: “We were doing for ourselves not for President Park Chung Hee. We are renovating the road to our village to relieve our hardship. When I explained this to people, they all understood very well.” (Eom 2011) This energetic voluntary participation was the linchpin that linked economic development to poverty reduction. This could be a vital lesson for many other developing economies.

Nevertheless, critics have pointed out, and it would be difficult to deny, that Saemaul Undong was also a political mobilization tool for an authoritarian government (Lim 2004). Although people voluntarily participated in the movement, they were also expected to support the Park Chung Hee regime. To understand this, it is necessary to understand the political context of the early 1970s in Korea.

Park Chung-Hee led the 1961 military coup that crushed a democratic political system. After the coup he first served as vice-chairman and later as chairman of the temporary Supreme Council for National Reconstruction until he had himself elected president in 1963. The new regime had an urgent need to give itself legitimacy. In its first year it published a five-year economic plan (building on planning that had been started under the Second Republic3), in which it presented the coup as a revolution. In its economic policy, the Park government shifted from import-substitution industrialization to export-led development in the mid-1960s, during which the economy grew impressively and poverty fell.

During this period, gross national product increased rapidly and unemployment fell sharply (Table 10.4). Import-substitution industrialization absorbed labor effectively, with employment rising 10 percent despite an increase of the economically active population by 12 percent (Adelman 1997, 514). From 1967 to 1971, labor-intensive industries continued to absorb labor, together with a growing services sector, raising the income of the working population and, in particular, reducing poverty in urban areas. Rising incomes in urban households widened the income gap with rural ones, which on average were 62.6 percent of urban households (Oh 2002, 163). Saemaul Undong was one of the responses intended to correct this gap.

Table 10.4.Major Economic Indicators in Korea
Indicator196119661972198119871993
GNP per capita (dollars)901253061,7413,2187,513
Growth rate (percent)1.66.816.121.310.715.2
Unemployment rate (percent)1172

(7)
15

(6)
10

(4)
10

(4)
5

(3)
4

(3)
Source: Adelman (1997, 535).Note: GNP = gross national product.

This includes both the unemployed and those working fewer than 18 hours a week. Figures in parentheses represent the completely unemployed.

This figure is for 1963.

Source: Adelman (1997, 535).Note: GNP = gross national product.

This includes both the unemployed and those working fewer than 18 hours a week. Figures in parentheses represent the completely unemployed.

This figure is for 1963.

Nevertheless, politics played a role in the voluntary community movement. Park Chung-Hee, serving his second term as president, was supposed to retire from politics in 1971. But he stood for a third term in 1971 after the constitution was changed. He changed the constitution again in 1972 so that he could remain in office for as long as he wanted. Considering that the Saemaul Undong was started in 1970 by Park, it is difficult to tell the difference between voluntary participation in the movement and political mobilization by an authoritarian government (Koh 2006).

Scholars and commentators have long debated the political nature of Saemaul Undong. It is clear that the movement had both strengths and weaknesses in its political nature. Although people participated voluntarily and with great enthusiasm, it is also important to recognize that the movement could be taken advantage of politically.

Policy Implications

Much attention has been paid to the policy implications of Saemaul Undong’s micro-level characteristics. Such an approach is useful for community activists who can learn directly from the experiences of Saemaul Undong. It is also necessary to view Saemaul Undong from a structural perspective, and investigate what socioeconomic conditions allowed it to be so successful and the role it played in facilitating Korea’s transition from a rural economy to a modern industrialized one.

Given that the core features of Saemaul Undong are self-help and self-reliance for community development, I argued that the land reform that created independent farmers in Korea in the 1950s was critical for the movement’s success. Because better community infrastructure improved the productivity of land-owning farmers, Saemaul Undong was able to attract their active participation. Furthermore, despite political mobilization by the government, it is fair to say that Saemaul Undong was organized by local community leaders who knew best what their communities needed. Thus, a community movement for economic development should have a social structure that allows people to participate voluntarily, not only for community development, but also for the improvement of their own well-being.

In terms of the structural role of Saemaul Undong, it contributed to the social inclusion of rural community members in industrialization. Not only did it improve the quality of life in rural areas, but it also brought rural communities into the mainstream of social change. This is a key reason that Korea’s experience of development has been strong and sustainable.

The most critical weakness of Saemaul Undong today is that it seems to remain in its old form. Its present image and perspectives are still set in the context of the Korean society of 30 years ago. Its antiquated form of understanding is becoming irrelevant. The challenge is to transform Saemaul Undong so that it can continue to provide useful guidelines for community movements.

It is also important for scholars and community movement activists to understand developing societies and their social challenges. Attempting to transfer the Korean experience to other societies without understanding those societies would be futile. International collaboration is essential, for example, in the form of academic workshops and common community projects. And the role of the government is critical to ensuring that this collaboration takes place.

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1

This section draws extensively on the author’s previous work in Kwon and Yi (2009).

2

There are three main explanations of the political rationale for the land reform. The first stresses that peasants suffered the most from Japanese rule while many landlords were seen as collaborators. The second is that former president Syngman Rhee wanted to undermine the economic basis of the conservative political elite, many of whom were landlords. The third was that land reform was a U.S. counter-revolution against the communist threat. The United States urged land reform not only to the Korean government, but also to the government of Taiwan Province of China (Kim 1976).

3

The Second Republic was the government in charge for eight months in 1960–61 under the parliamentary system.

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