An Investigation into Saemaul Movement: Economic Growth Perspectives
새마을운동 연구: 경제성장론적 관점에서
- 사회과학대학 경제학부
- Issue Date
- 서울대학교 대학원
- Saemaul Movement; Economic Growth; Saemaul Growth Model; Social Capital; Competition; Reward-Penalty Incentive Scheme
- 학위논문 (박사)-- 서울대학교 대학원 : 경제학부, 2015. 2. 이지순.
- The purpose of this thesis is to gain an understanding of the earlier phase of the Saemaul
Movement practiced in the 1970s in South Korea. We can get a better understanding of
the Movement, when we view it from the perspectives of economic growth models.
Studying the Saemaul Movement, in turn, can provide us with new perspectives on the
mechanisms of economic growth and development.
Literatures on the Saemaul Movement are abound. However, most of them are plain
descriptions of the Movement. As such scientific analyses are very scanty. It is somewhat
surprising that there have been no systematic investigations of the Saemaul Movement by
the main stream economists. As increasingly more people, especially the practitioners
from the emerging economies, show interests in the Saemaul Movement, the situation is
about to change. Already there have appeared numerous studies praising the success of
the Saemaul Movement. None of them, however, provide coherent frameworks with
which we can understand why and how the Saemaul Movement had succeeded in the
1970s. Or, why it fell into disgrace when the Saemaul Movement was turned into a means
of political campaign in the 1980s.
When the Saemaul Movement was first initiated in the early 1970s, the rural villages
of South Korea were in dire conditions. Lack of gainful employments, very low
productivity, low income, increasingly more villagers (in particular the young ones)
fleeing to the urban sectors, extremely backward living conditions, and the lack of able
leaders had all made the rural villagers dispirited and impotent. There seemed to be no
hope for progresses.
This was what the government wanted to change. How? Naturally, South Korean
government wanted to put more resources into the rural villagers. In doing so the
government could have adopted the so-called 1/N principle: allocating the resources
equally among all villages and villagers. This road the government did not take, however.
Rather it went into the opposite. The government made it clear from the beginning that it
would give more resources to the villages which achieved better outcomes by mobilizing
more efforts from their constituents. The government had also announced that it would
reward those who succeeded and to penalize those who failed. This principle was
something entirely new to the villagers. They were accustomed to the practices of
government doling out assistances to those who were in need.
It is true that, in villages where the Saemaul Movement was successful, roads were
markedly improved, thatched roofs were replaced with tiles and concrete slabs, wood
burning cooking pits were replaced with coal/oil burning ones, sanitary facilities were
modernized, and village halls were erected. They were, however, only the superficial
aspects of the Saemaul Movement.
More fundamental and meaningful were intangible aspects of the Saemaul Movement.
My investigation suggests that the following three elements were crucial: 1) the
introduction of healthy rivalry and competition among villages, 2) the allotments of
government provided resources based on actual performances, and 3) the transformation
of the mindsets of the villagers.
The idea that a village could compete to achieve better results than others was absent
among the traditional villages. For them peaceful coexistence, even though it means
stagnation, was more important. Thus when the government introduced the rural economy
revitalization program, villagers expected that the government would distribute resources
evenly among villages or distribute based on needs. However, the government informed
them that although the initial allotment would be needs based, from the second year on
she would allocate resources based on the following three criterion: 1) previous years
performances, 2) contribution rates of villagers in terms of efforts, funds, lands, and other
resources, and 3) the extent of cooperation among villagers.
South Korean government grouped some 35,000 rural villages into three levels based
on the previous years performances: Self-reliant, Self-help, and Under-developed. The
self-reliant villages were rewarded, while the under-developed ones were ignored. This
had made the top level villages strive for even better results. More importantly it had
brought the bottom ones into the competition league, too.
In addition to this, the government had tried very hard to instill new spirits to the
villagers. The new spirits were self-help, diligence, and cooperation, which are known as
Saemaul Spirits. For this the government gave bigger rewards to those villages that had
achieved better outcomes through villagers cooperative efforts using more of their own
resources and relying less on outside help. Clearly, the government recognized the
importance of the people. It knew that unless people changed, change would not occur,
and the best way of changing peoples attitudes was to promote competition and
The crucial roles of people as change agents were clearly manifested in the Saemaul
Leadership program that the government introduced from the beginning. Thus numerous
Saemaul Movement camps were opened up and equally numerous men and women from
the villages were groomed as Saemaul Leaders. To them not only the relevant knowledge,
information, and technologies were provided, but the essential spirits of the Movement
were also transplanted. The latter was achieved through practices of competition and cooperation among the leaders who were housed in the training camps. Another essential
component was the transmission of information and knowledge. Both success and failure
stories were told and retold by those who were directly involved in the stories. This way
the leaders from the other villagers could also learn how to achieve success and avoid
Can the modern economic growth theories shed some lights on the Saemaul
Movement? The first step in answering this question is to find out whether the Saemaul
Movement was successful in a meaningful sense. This I check by measuring the total
factor productivities (TFP) of the rural villages applying the growth accounting method.
I show that indeed the growth of TFP in the agricultural sector was higher than the
manufacturing sector during the early phase of the Saemaul Movement.
Why might TFP have grown faster with the initiation of the Saemaul Movement? To
understand this issue, I extend a key model of endogenous growth: Lucas (1988) model
of human capital driven growth. The extended model shows that the Saemaul Movement
has succeeded because it had fostered the growth of the relevant human capital, in this
case the Saemaul Spirits or social capital. The model especially focuses on the presence
of positive externality or spillover effect of social capital. As expected, when the
economic agents, here the villages, take the positive externality into account, they would
exert more efforts to accumulate social capital. The enhanced efforts would in turn raise
the economic growth rate. But how would a government induce the villages to internalize
the external effects? When markets are not developed well, it may be infeasible for the
government to rely on tax/subsidy policy. The usual alternative to this is to use compulsion:
A government can order people to take socially optimal behavior. However, the South
Korean government did not take this option. Rather she entered into a partnership with
each village and directly supported the latters efforts to accumulate village social capital.
What was crucial was that the support was given in proportion to a villages efforts and
performances. This led villages to strengthen their efforts to accumulate their social
capital. They behaved as if they internalized the external effects.
What might one learn from the Saemaul Movement that are relevant for growth
theories? Modern growth theories, for that matter modern economics, take the existence
of the relevant markets and institutions for granted. Thus they tend to claim that when
people work hard, maintain thrifty life style, and save more, invest the saved resources
wisely for future in the form of human capital, physical capital, social capital, and
technology, then economic growth would ensue in time. Is the reality like this? I suppose
not. In reality in many emerging economies, there are neither markets and institutions nor
norms and rules. Hence merely advising them to work hard, save more, and invest wisely
will not go that far. It would be more so when the people are deeply demoralized from the
lack of meaningful progresses. For them it is essential that someone demonstrates that
things actually work. This the South Korean government did with the Saemaul Movement.
It demonstrated to the dispirited villagers that things could get better when they worked
diligently and worked together. By giving larger rewards in proportion to the degree of
success through own efforts and the level of cooperation among villagers, the Saemaul
Movement successfully established relevant markets, institutions, and mechanisms.
Are their cases other than South Korean Saemaul Movement where the so-called
Saemaul spirits may work? In order to answer this question, I investigate three cases of
history. One is to compare the Philippines development records of 1970s with that of
South Korea. Here one may conclude that the lack of development in 1970s Philippines
was partly because the philosophies behind her economic policies were very far from the
Saemaul spirits. Neither they promoted competition, nor they rewarded successes and
penalized failures. Rather they were hostages of the crony capitalism.
The second is to investigate whether the Israels Kibbutz Movement is similar to the
Saemaul Movement. The Kibbutz Movement had also emphasized the importance of
cooperation, but it critically lacked the spirits of competition and rivalry. The 1/N principle
was very strong in the Kibbutz Movement and as a consequence, the movement has long
stopped to progress any further.
The third is the case of performances of the several publically funded medical centers.
Here I find that those public medical centers that were subject to performance based
reward system indeed out-performed those medical centers that were treated with the 1/N
Is there another area that we might apply the lessons of the Saemaul Movement? In
principle, there must be unlimited cases that we might apply the principles. That the
reward-penalty incentive scheme brings out better outcomes than the equal treatment
incentive scheme appears to be so fundamental that all human behaviors are subject to it.
But the actualities are very far from this. The equal treatment principle appears to be very
powerfully ingrained in our brains. Furthermore, frequently we profess that we should
reward those who fail, that is, we should help those who fail. Perhaps it is not fruitful to
debate which principle is better.
Yet, we may think about how we might apply the principles of the Saemaul Movement
to South Koreas overseas aid programs. This is especially so as more and more people
from the emerging countries want to learn the Saemaul Movement and transplant the same
in their own countries. Hence I also look into this issue. By reviewing the current overseas
aid status and adjusting grant aid and concessional loans, we may seek the most efficient
way of transplanting Saemaul Movement principles.
This paper concludes that the Saemaul Movement was not just one political showcase
happened in 1970s of South Korea, but one successful economic strategy which can be
applied in other under-developed countries economic framework. Transferring
academically established Saemaul Movement principles must be the first step to take if
we want to diffuse the lessons of the Saemaul Movement.