[SELIM Column]

The Ways to the Wealthy Nation

Chang-Jin Kim

Some time ago, an economy documentary TV program, ‘The Ways to the Wealthy Nation' has been aired.  This program was to seek answers to the question of what are the key factors to determine the destiny of a nation, being wealthy or poor nation, in various angles.

This documentary was planned based on a book, [Why Nations Fail] by Daron Acemoglu, professor of Economics at MIT and James A. Robinson, professor of Government at Harvard University.  The main contents and motif were taken from this book and it emphasizes that the key factors for the wealthy nation are ‘institutions factor', not other geographic, people or weather factors.

“The key factors to the wealthy nation are institutions, and we found that many nations in poverty were not equipped with those institutions.”  

No nation of rich resources, racial differences or geographically advantageous positions could become wealthy nation, but those are institutions and the capabilities for actions to practice what make the nation become wealthy.

(Below is summarized based on the book ‘The Ways to the Wealthy Nation' published by Gana Books which is written based on the story of the KBS special TV program, ‘The Ways to the Wealthy Nation' aired.)

The authors emphasize on the theme in the documentary program that ‘the wealth could be build up by active participations from the diverse members in it.  In order to make it possible, inclusive political institutions with broad distribution of political power should be secured.  The economy of the society where the political power is concentrated to minority and majority of people are isolated is supposed to lose its vitality.    

Generally, it was figured out that the institutions are not sufficiently equipped in the societies where people are suffering from the polarization of the gap between the rich and the poor instead of equal distribution.  The people with power monopolize the market with their power and money.  Despite even being equipped with institutions, the equal distribution could not be realized in the society without the effectiveness of institutions.

‘The real wealthy nation means the society where the economic growth and equal distribution is processed many people.  In order to develop this society, the inclusive institutions in which the happiness of many people are pursued and the system in which the wealth could not be concentrated to small number of individuals are required, instead of the extractive institutions in which a small group of people exploit the other level of many people.'       

In the documentary program, the border city of Nogales, which is located in the territory of U.S.A. and Mexico, was spotted as a crucial field case where the difference of the institutions created the gap of the rich and the poor.  Originally it was same city, but after the America's purchase from Mexico in 1853, the residents of Nogales in Arizona, U.S.A. became American citizen and enjoy the benefit of welfare and education under the institutions in U.S.A., while the other area of the city remained in Sonora, Mexico, the residents are living in the city where the most of the people are poor except the small number of rich people like all other Mexicans.  So it was concluded in the documentary program that the difference has come crucially from the difference of the institutions.

The other cases in most of the other countries in the world also show that the difference of the rich and the poor came from the difference of the institutions.

It is explained that many countries in Latin America are facing the difficult the economic situation because of the increased polarization of wealth as it is concentrated to small minority due to the serious level of corruptions.  The historical background runs back to the period when the countries are conquered by Spain.  The exploitation of the colonial institutions by Spain has been lasted and instilled into the whole societies, and this has affected society even these days.   The corruptions spread all over and power, benefits concentrated to small minority make it difficult to build a society of collective power of people.        

On the contrary, British pioneers have enforced the institutions to distribute the land equally to all members in America, in the New Continent.  Accordingly, any early settlers could secure the wealth depending on their endeavor and efforts.  This culture has lasted after the Independence of America and fostered the environments of doing the best as per the ability of the individuals.  Ultimately, this has brought the whole community (the nation, so called as the United States) to the next level by themselves continually.  And this has been settled as American Dream and now become a driving force for the growth of the Unites States.    

The implementation of the inclusive and non-extractive employment institution is important to secure the equal opportunity to all members in the society economically.  These days, the issues on regular, non-regular employment and issues on unemployment of young people as an extension of the regular, non-regular employment have become serious social problems.  Everyone is aware of these issues and saying about those, but it is the current situation that no one brings the answers for the solutions.  

What attracts our attention is a part-time work system in the Netherlands.  Differently from ours Korea, the part-time work system in the Netherlands is the ‘shortened working hour system of the regular employments', all other conditions are same with other regular employees.  There's no differentiation not only in the basic conditions such as welfare benefits, but also other benefits such retirement pension benefits between the part-time employees and other regular employees other than working hours.  This could be a solution idea to replace the non-regular employment system in Korea if each party takes one step back each. (This system is being introduced here as this could be taken as an important reference, despite this could be realistically applied only after the other issues are solved first, or this could be environmentally impossible to be implemented due to many differences.)

In these respects, there is no big difference with the management of the organization in the company.  The organization could keep growing continually when it is managed to minimize the shading area even though it is small part in the organization.  All members will not spare any effort for the common goals and the organization will not fail to achieve the sustainable growth when the interest of the individual in the organization is matching with goal of the organization for the success and growth,        

“No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.”

Adam Smith, Scottish Economist in the 18^th century