Congo and Korea : A Case Study in Divergence

The growth experiences of the Democratic Republic of the Congo and South Korea over the last several decades have been polar opposites. South Korea has had one of the world's fastest growing economies and the Democratic Republic of the Congo one of the slowest. Despite this divergence in economic outcomes, the two countries shared some initial similarities. Both initially were very poor and had high population growth rates. Both suffered from harsh colonial regimes and experienced civil strife following independence. Both experienced military coups that created repressive authoritarian regimes. Both were Cold War allies of the United States and received considerable amounts of aid. On the other hand, there were also important initial differences in population density, ethnolinguistic diversity, natural resource endowments, and geography. If anything, given its enormous mineral wealth, economic prospects probably looked brighter in the Democratic Republic of the Congo than in South Korea. This paper explores the possible causes of divergences in the two countries by discussing initial similarities and differences between the two countries and by documenting to what degree differences in physical capital, human capital, and productivity explain differences in income. The roles of geography and governance are then examined with emphasis being placed on the importance of 'neighborhood' effects