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 realities.

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.

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