PCDForum Column #32,   Release Date May 1, 1992

by Walden Bello

The world’s nongovernmental organizations (NGOs) are taking an increasing
interest in the human rights, social justice, and ecological implications of
national and global economic policies. This interest is well placed and reveals
a growing sophistication. Consider for example, the implications of
export-oriented industrialization (EOI).

The IMF-World Bank conference in Bangkok last October was a veritable
celebration of the "success" of EOI strategies in South Korea, Taiwan,
Singapore, and Hong Kong and more recently in Thailand, Malaysia and Indonesia.
Viewed purely in terms of growth, these countries are indeed success stories.
The gross domestic product of their region grew by 6 percent per annum from
1960-82, and by 8 percent per year from 1982-87. Yet such figures hide important

EOI strategies depend on a cooperative relatively low-cost labor force.
Before they embarked on EOI, both Korea and Taiwan had been building strong
integrated domestic economies based on agrarian reform and high rural incomes.
With the introduction of EOI, such progressive policies were abandoned. During
the 17-year rule of Korea’s President Park Chung Hee from 1962 to 1979, a series
of laws were passed that virtually outlawed strikes and banned independent
unions. In government controlled unions hundreds of agents of the Korean Central
Intelligence Agency assured that no uncooperative union leaders could win
election at the national level. When more subtle tactics failed, the Korean
military imprisoned, tortured and assassinated recalcitrant workers.

The pattern of exploitative labor relations is also revealed in the
substantial preference for female workers. Women comprise as much as 85 percent
of the total labor force in Taiwan’s three export processing zones for a simple
reason: women can be hired for lower wages and are considered more obedient. It
is not uncommon for them to be housed in barracks reminiscent of 19th century
Manchester, have their lives totally controlled both on and off work, and to be
subject to regular sexual harassment and exploitation.

The EOI strategies of Korea and Taiwan also featured low food prices. This
made life cheaper for urban workers while lowering farm incomes and forcing
agricultural workers into the cities to compete for industrial jobs. This
exerted downward pressure on urban wages. The resulting low wage costs served
the interests of international competitiveness. Industrialists prospered at the
expense of farmers and urban labor. Inequality intensified.

The environmental costs of EOI have been comparable to its social costs. The
rapid disappearance of Southeast Asia’s forests is only one example. The Taiwan
government admits that twenty percent of the country’s farmland is now polluted
by industrial waste water. Thirty percent of the rice grown on the island is now
contaminated with heavy metals, including mercury, arsenic, and cadmium.

Throughout the region the unregulated dumping of industrial and toxic waste
has killed rivers, damaged coastal systems, and poisoned aquifers. In April
1991, the 10 million Korean’s who drew their water from the Nakdong River were
told that the funny smell they had noticed in their tap water was caused by the
surreptitious industrial dumping of some 325 tons of waste phenol, a highly
toxic, cancer-causing chemical. High concentrations of sulfur dioxide make
Seoul’s rain so acid that it poses a hazard to human beings. Asthma cases among
Taiwanese children have quadrupled over the last 10 years. Necessary
environmental laws and regulatory bodies are often in place, but the inspectors
do not act for fear of chasing away investors, many of whom set up shop there to
take advantage of a lax environmental regime.

Korea and Taiwan are also prime illustrations of EOI’s must fundamental
economic flaw its dependent character. Their economies continue to be dependent
on low wages, access to U.S. markets and Japanese technology. Rising labor costs
make them noncompetitive with the lower wage economies of Southeast Asia and
China. The U.S. is becoming increasingly protectionist. Japan is unwilling to
share more advanced technologies that would allow graduation to high tech
production. EOI is, in short, a fragile base on which to build a solid economy.

Industrial policy is not a familiar subject for most NGOs. Yet it is central
to many of their concerns. They must prepare themselves to be active players in
industrial policy debates. They should also create public awareness that EOI
strategies are seriously flawed even from a purely economic perspective and are
potentially disastrous from a social and ecological perspective.

Walden Bello is executive director of the Institute for Food and Development
Policy, 145 Ninth Street, San Francisco, California 94103, U.S.A., and a
contributing editor of the People-Centered Development Forum. This column was
prepared and distributed by the PCDForum based on his articles on "The
Spread and Impact of Export-Oriented Industrialisation in the Pacific-Rim,"
Third World Economics, Nos. 29 & 30, 1991.

Back ] Home ] Parent Page ] Next ]