SEOUL (Dow Jones)–A half-century ago South Korea was by one measure poorer than Haiti and Ethiopia. Now the country is by that same measure richer than Saudi Arabia, Poland and Russia and poised to showcase its ride from poverty to economic powerhouse as a 2010 host of the Group of 20.
This November, South Korea will become the first country outside of the Group of Seven to host a meeting of G-20 leaders. South Korea sees the summit as a chance to show the world how it has morphed from an aid recipient to an economic leader. It is an especially poignant point after the European Union and International Monetary Fund’s rescue of debt-laden Greece.
“We relied heavily on mostly U.S. aid in the ’50s and early ’60s, but we’ve been giving aid for some time,” said SaKong Il, chairman of South Korea’s G-20 planning committee. “We can relate to the developed world, but the developing world still identifies with us.”
In the 1960s Korea was among the poorest countries in the world. Subsistence agriculture was the backbone of an economy that in 1962 had a per capita income of about $87–lower than that of Haiti and Ethiopia. But by 2004 South Korea had developed a $1 trillion economy, and by 2009 per capita income reached $28,000, according to U.S. government figures.
While both South Korea and the Philippines received aid from foreign governments “the political and economic policies of South Korea over the past 30 years were much more favorable to long-term growth and development than those of the Philippines,” the Congressional Budget Office wrote in a 1997 memo on the role of foreign aid in development.
South Korea devalued its currency, tightened spending and built an export-driven economy, whose Hyundai, LG Electronics and Samsung Electronics brands have since become household names around the world. The country also is thought to have intervened in currency markets several times–including as recently as this week–to hold down the value of the won and keep its exports competitively priced.
“With the right kind of mixture, the souffle will rise,” said Shin Hyun Song, international economics adviser to South Korean President Lee Myung-bak.
Korean officials–under pressure to pull off a successful G-20 that accomplishes concrete results–are planning to share their recipe with other developing nations.
“A lot of developing countries are expecting us to provide technical expertise and lessons,” said Choe Wongi, an assistant professor at a Korean government think tank.
Officials also have another plan to set this year’s meeting of G-20 leaders apart from others. They are planning to host a private sector business summit alongside the leaders summit. That summit will explore the role of the private sector in the global economic recovery and aims to bring out top chief executives from some of the world’s best known companies.
South Korea is scheduled to host G-20 finance ministers and central bankers this weekend and G-20 leaders in mid-November. U.S. Treasury Secretary Timothy Geithner is among those scheduled to be in Busan for this weekend’s meeting.
G-20 leaders are scheduled to meet in Toronto later this month.