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Why India is no match for South Korea

Despite having similar backgrounds to start with, South Korea has surpassed India on several socio-economic parameters. So much so that the tiny Asian nation can offer us a better yardstick than China

Published: Jul 11, 2015 06:52:36 AM IST
Updated: Jul 11, 2015 08:07:14 AM IST
Why India is no match for South Korea
Image: {Shutterstock}

India is now officially the hottest major economy as per the new GDP computation methodology. Given that many Asian countries began their journey out of poverty at roughly the same time, comparisons with India are logical. South Korea, in particular, makes for a good comparison.

Here’s why: a) Both countries were roughly the same size in 1990 (about $300 billion in GDP); b) they historically suffered from extensive poverty; c) they have hostile neighbours (South Korea is still officially at war with the North); d) they began to assert their economic might from the late ’80s; e) they have their private sector dominated by giants and f) suffered endemic corruption and rent-seeking behaviour.

The only key difference is the population size: India’s large population is viewed as a constraint or a demographic dividend, depending on whom you talk to.

South Korea is today considered to be a developed country, a long way off from 1988 when the Seoul Olympics was conducted in a city of slums. Samsung, Hyundai, Posco, LG and Kia are Korean companies that have asserted themselves globally. Conversely, India’s largest companies have grown either on domestic strengths or as service providers to the developed world.

Interestingly, all these Korean companies have a significant Indian presence but corporate India’s presence in South Korea is marginal.
Also worth considering is the fact that South Korea has prospered despite military tensions with the North, huge defence spending, rampant corruption at the highest level, multiple health epidemics and the ’97 Asian financial crisis.

While the machismo around beating China’s GDP growth rate makes good headlines, this much smaller Asian country offers a better benchmark.

Here’s a look at the graphical comparison between the two Asian economies.

Why India is no match for South Korea

(This story appears in the 24 July, 2015 issue of Forbes India. To visit our Archives, click here.)

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  • Satyenhacks

    Koreas population is just 51 Million wherever our single state UTTAR PRADESH is approx 205 Million. No doubt they are doing well but it\'s really not suitable to have a comparison with such a small country. Less population has its own advantages and they are doing it properly.

    on Aug 17, 2016
  • Ateengirl

    I somehow disagree at the last. The statistic of 2015-16 showed that the people living in South Korea are unhappy , especially the teenage people as the education system is too hard there compare to India thus many teenagers had done suicide. And there is really less job opportunity in Korea as compare to India. Thus both country shares same things. And in South Korea, people still uses Internet explorer even if it's a developed country and it has poverty same as India. We shouldn't look down in any of those country and we should just look towards how to increase the friendship among those both country

    on Aug 9, 2016
  • Ranadev Chatterjee

    It is a comprehensive article as can be expected from Forbes. However having worked for weeks as Indian owners representatives in few top Korean companies - I felt the basic difference - a South Korean is usually very proud of being a Korean where as an average Indian employee is more willing to comply with foreigner than another Indian. I think this is happening due to long period of foreign brutal occupation of our country.

    on Aug 1, 2015
    • Ujval Nanavati

      Thank you. Your point is true to a large extent, especially in traditional segments where \'foreigners\' have a much longer and successful track record. The sense of pride is definitely very visible, especially in South East Asian countries. Enterprise has been encouraged in all these countries and there is a sense of nationalism in private endeavor. Unfortunately, this is only beginning to catch on in India and there is some way to go. Glass is half full, as they say.

      on Aug 5, 2015
  • Anshul

    But still my country is doing well when you compare the huge population load it has to cater to besides all economics.

    on Jul 19, 2015
    • Ujval Nanavati

      Yes Anshul, that is true. The demands of a very large population base and that too a large section of it poor is a massive drag on growth. The growth between 2001 and 2008 has pulled a number of these people out of abject poverty. It is now critical to use this population base as an asset rather than a liability from here on so that India becomes the benchmark to beat for every other country.

      on Jul 20, 2015
      • Anshul

        Aye Aye Sir!

        on Jul 20, 2015
  • Anon

    Population is an asset if used wisely but can break a countries back if not. We are infinitely more diverse culturally as well as economically which brings a whole set of problems not faced by any country.

    on Jul 17, 2015
    • Ujval Nanavati

      Agreed. Before the Green Revolution, the population was like a deadweight around India\'s ankle; food had to be imported to avoid widespread starvation. Thankfully, we have come a long way since then in the last 50 years. Not many countries have had to face that kind of challenge. Yet, the extent to which the population had/has become a liability due to mis-governance, corruption, inefficiency and wrong policies, is a deep loss - not only was an opportunity for asset creation squandered but it was converted into a liability.

      on Jul 20, 2015
  • Bishnu Prasad Padhy

    South Korean companies have a large presence in India while Indian companies have small presence in South Korea, that is why a large portion of dividend flows to South Korea from India. Question is why Indian companies have small presence in South Korea. Reason is Indian Govt wants to raise life style of India's 1 billion population. Indian companies cannot cater to it.So Indian Govt has allowed foreign investors. While South Korean companies themselves can support their population to raise their life style. Thanks.

    on Jul 13, 2015
    • Ujval Nanavati

      Yes, that is true. It\'s not just India; S Korean majors like Hyundai, LG and Samsung have made a mark globally for quality products at low cost. In fact, Tata (Daewoo Trucks) and M&M (SsangYong) both made acquisitions in S Korea in order to get their hands on technology and R&D.

      on Jul 21, 2015
  • Rajendra Prasad Yadla

    This a good analysis to inspire the Indians and other countries to catchup.

    on Jul 13, 2015
    • Ujval Nanavati

      Thanks! Many inspiring stories indeed.

      on Jul 21, 2015
  • A Mookherjee

    South Korea is making rapid strides owing the focussed direction and fairly educated population. General attitude of mass towards professionalism is high. This has translated into values addition and increased GDP. On the contrary, India with such high population and a mix of educated class is like an elephant which is moving slowly and at a steady pace. The projected increase in GDP is an example. The only constraint is that the effectivness of all our efforts donot always translated into the desired results. This implies that we have the numbers ( population) to push our collective performance.

    on Jul 12, 2015
    • Ujval Nanavati

      Indeed. In fact a lot of the GDP growth is owing to the consumption catch up that is underway in India. That story still has a long way to go. In fact, China and India now need to reverse their models - India needs to move into investment mode as China tries to move into consumption mode.

      on Jul 21, 2015