Thursday January 9 2014

Land reforms can narrow the gap between urban and rural incomes

By William G. Naggaga

In 1960, South Korea was a poor and backward country, just like Uganda was then. Mired in history of colonial occupation by Japan, division of the territory into two countries (North and South Korea), occupation by US military forces and subsumption in the Korean War, few expected it to emerge into the economic power it has become.

South Korea is one of the richest countries in the world with a Human Development Index (HDI) of 15, a member of the Organisation of Economic Co-operation and Development (OECD). Uganda on the other hand has remained relatively at the same level it was in 1960 and in some respects gotten worse. It is still a member of the Least Developed Countries (LDCs); a club of the poorest nations in the world, according to the United Nations categorisation.

Why did South Korean beat the odds stacked against it and rise from poverty to fabulous wealth? The answer lies in looking at the leadership of the country under Park Chung- Hee (1961 – 1979) and Chung Doo – Hwan (1980 -88), who are credited with setting the foundation for South Korea’s outstanding and eminent economic growth.

Special emphasis goes to Park Chung – Hee who actually laid the policies and strategies which set the tone for future practices. Though coming from a peasant background, Park was a man of great vision, committed to development and very entrepreneurial. He had a determination to improve the lives of his people and to turn his backward country into a global economic power.

Park Chung- Hee’s government was backed by the military and he was no democrat. Some scholars have argued that the changes he pushed through to enable South Korea scale economic heights, needed an element of benevolent dictatorship and authoritarianism. South Korea would not be where it is today if it had not been for Park. His successor, Chun Doo – Hwan, followed the policies set by him and so he did the democratic governments that followed.

Park Chung- Hee inherited weak state institutions, which he strengthened in order to launch his industrialisation process. He defended the rationale of state intervention to assist young industries. Industrialisation in South Korea started with labour intensive industries where it had comparative advantage. The government also assisted the private sector in the creation of modern diversified industrial enterprises or ‘chaebols’, by giving them incentives like tax exemptions, low-interest loans, protection from competition while setting targets for them to achieve. It is these chaebols that have evolved into world class companies such as Samsung and Lucky –Goldstar, etc.

Park Chung–Hee also embarked on extensive land reforms and modernisation of rural communities. Roads and schools were built and new agricultural technologies and improved crop varieties were introduced. Tenant farming was prohibited and under the “land – to- tiller” scheme, land was transferred from large domestic landowners to their tenants while compensating the original owners. Land reforms and modernization of agriculture dramatically narrowed the gap between urban and rural incomes.

Uganda has since 1962 had eight presidents, including, President Museveni who has been in power since 1986. It has had a tumultuous history for the past 50 years of its independence, most of it self-inflicted by leaders who did not put the country first. All regimes that have ruled Uganda had some sort of visions, strategies and plans for the country, some disastrous like Amin’s 1972 expulsion of Asians who constituted the bulk of the entrepreneurial class in Uganda. Even good initiatives and visions have fallen short of implementation due to poor planning, lack of institutional back-up, rampant corruption and impunity, abandonment, etc.

The theft of public funds, including donor funds has reached epidemic levels and shows no sign of reducing, inspite of the government’s so-called zero-tolerance to corruption. We must carry out reforms and adopt development models such as the South Korean example to move this country forward.

Mr Naggaga is an economist, administrator and retired ambassador.