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Korean economy independent countries South Korea
Korean Economy: Independent Countries--South Korea (1945- )
Figure 1.--Japan seized control of Korea (1909). At the time Korea was a backward pre-industrialized society as can be seen here in a photograph taken at about the time of the Japanese conquest. Japan turned Korea into a colony and developed a substantial industrial complex in what had a primitive agricultural economy. Almost all of that development was in the north where natural resources like coal were available. The economy of the south continued to be largely agricultural. Thus when Korea was divided after World War II and the Japanese surrender (1945), you not only had a communist north and a non-communist south, but an industrialized north and an agricultural south. Thus it looked like North Korea with its industrialized base and natural resources would dominate the Peninsula. Instead Communist totalitarianism and socialist economics turned the North into an economic wasteland with abject poverty and rampant starvation. Capitalism and democracy turned the South even though it had few resources beyond its people into one of the great success stories of the post-War era. South Korea became one of the Asian Tigers--an industrial giant and one of the most prosperous countries in the world.
Japan committed national suiside by launching the Pacific War (1941). One of the results of Japan's defeat was the end of colonial rule in Korea (1945). Korea was occupied by the World War II victors, the United States in the south and the Soviet Union in the North. The idea of unifying the two occupation zones based on democratic elections soon faltered when Stalin, as in Eastern Europe, moved to install a Comminist police state in the north. The south at the time was poorr area of Korea. It was mostly an agricultural area with few natural resources or installed indistrial base. The Japanese had pursued a program of industrialization, but mostly in the north where the natural resources were located.
North Korea heavily armed by the Soviets invaded the South in an effort to unify the country, launching the Korean War (1950-53). This brough untold destruction and death, but changed the border little. What little modern infrastructure which existed in the south was destroyed. Little changed immediately after the War. South Korea survived on American foreign aid. The country was largely ruled by the Army. The population lived in poverty, not unlike much of Asia. Large numbers of unemployed people struggled in a largely agricultural economy offering little opportunity. General Park Chung-hee seized power (1961). Park launched the Saemaeul movement concentrating on developing rural Korea. Very little industry existed in South Korea at the time. The Park Government was criticized at the time for human rights abuses (mild in comparison to what was going on in the North). Articles appeared in the West charging the Park Government as repressive and undemocratic. The Government began an economic devlopment program using the one resource South Korea had--cheap labor. This would be th catalyst for the Miracle on the Han. A capitalist democracy developed in the south and a Communist totalitarian state in the north. The results were staggering. A rich vibrant market economy with world class industry emerged in the south. South Korea emerged as on of the asian Tigers. The command economy in the north has brough economic decline, hunger, and repression. One Korean scholar writes, "The post colonial decades, when living standards improved rapidly in South Korea, while North Korea returned to the world of disease and starvation. The dramatic history of living standards in Korea presents one of the most convincing pieces of evidence to show that institutions — particularly the government — matter for economic growth." [Cha] One of the most dramatic expression of the differences between North and South Korea is night time satellite imagery. South Korea energes as a bright jewel of modernity while Koreas in the North are visually shown as living in a new Dark Age. Market capitalism in three decades transformed South Korea into one of the most modern prposperous coutries in Asia and Seoul was transformed into a sparkling global city, a major hub of business and finance . South Korea today is an modern nation rivaling Japan and Western Europe with an advanced technological and communications infrastructure.
The North and South Korean economies began their modern independent economic life with the Japanese colonial economy. With Japan's defeat in the Pacific War, they both took over the command economic system established by the Japanese and the Japanese colonial authorities to prepare for the invasion of China and eventually to fight the Pacific War. The Japanese promoted economic development to support Japan's industrial economy, most of which was concentrated in the north to take advantage of available natural resources, especially coal. This raised the standard of living in the North which for the first time exceeded that of the more agricultural south. Until the 19th centuries, economies were based in agriculture. This was a factor leading Kim Il Sung to believe he could successfully invade the South (1950). The War was a disaster for both North and South Korea. The economy recovered slowly, but the American military commitment brought in capital that slowly began to stimulate the largely agricultural South Korean economy. South Korean officials at first adopted the same socialist oriented economics prevalent throughout the developing world, but the economic freedom began to reverse the North/South split of the Japanese colonial era. A major step was the land reform in the South that put land ownership in the hands of small-scale farmers. In the North, collectivization had the same adverse impact that it had wherever tried. The North began to lag behind the faster growing South. At first the difference was marginal. But as a result, when South Korea began to adopt market reforms and embrace capitalism, the economy took off creating the Asian Tiger economy that we all admire today. The moribund North Korean economy with its nightmarish totalitarian society and poverty in the dust. The brutality of the Japanese colonial rule left a legacy of abuse and ill feeling that continued to this day. But it is notable that the Asian Tigers that led the modernization of Asia was led by two former Japanese colonies (South Korea and Taiwan) and two British colonies (Hong Kong and Singapore).
After World War II and the partition of Korea into a Soviet and American 'administrative' zones, the Soviets had the partially industrialized north and the Americans the agricultural south. The economy of South Korea was basically agricultural and based on inefficent, traditional methods. The Japanese had made no effort to industrialize the south, primarily because of the lack of natural resources there. As repressive as the Japanese were, one policy they did pursue was to build a public education system. So both Koreas had that institutional strength to build on. This was also the situation in Taiwan. Much of the land in both South and North Korea was owned by the Japanese and Yangban class. Both Koreas initiated a land reform. Much of ghe land was owned by Japanese interests or the Yangban class. The North Korean land reform was draconian with land owners being shot and despite early promises, the land eventually became owned by the Government in a priocess of colectivization. The United States and South Koreans carried out a land reform that continued private ownership (1945-50). They confiscated and redistributed all land held by the Japanese interests (the colonial government, Japanese companies, and Japanese colonists). The South Korean government land reform reform required large landholders to divest most of their holdings. The result was a new class of independent, private holding family farmers was created. This was the situation when North Korea invaded South Korea (1950). Korea's infrastruture was badly damaged as well as 2.5 million civilin killed and wounded, about two-thirds in North Korea. The United States began repairing the infrastructture destroyed as part of the war effiort, incliding, ports, bridges, rail lines, and roads. By the end of the War, some of the infrastructure was modern and in better shape than before the War. The economy, however was in shables and the country was heavily dependant heavily on foreign aid. The military seized control of the Government (1961). The military would rule Korea for a quarter of a century. It was autocratic, but in truth so was the Rhee suposedly democratic government. At time the military was openly repressive, but was pragmatic and flexible in its commitment to economic development. And unlike military regimes in other areas and the Rhee Government, it decided on capitalist policies that were not popular in most of the developing world. The result was that South Korea became one of the Asian Tigers. At first obscured by the Japanese Economic Mirale, the Miracle on the Han tranbsfiormed South Korea. For three decades the the South Korean economy grew at an average annual rate of nearly 10 percent annually while the North Korean economy stagnated and then plumeted. Agricultural productivity inncewased in the South, but the n=big change was that South Korea rapidly was trandformed from a backward agricultural economy to an effecicent industrial powerhouse with a skilled workfirce. Per capita income increased more than a hundredfold. Not only did Korea develop heavy indudtry, but a very advanced elrctronics and high tech sectors. The highly leveraged economy was hurt by the Asian market melt-down leafing to a $57 billion IMF bailout (1997). It was the largest IMF rescue program. The country also iniated a domestic program, reforming the chaebŏl and liberalizing the economy. The economy quickly recovered. The economy could not be more different than what the Japanese left in 1945. Rather than an agricultural country with lanbdless peasants, less than 2 percent of the economic output comes from agriculture. Korea is now a middkle-class country with most of the populstion living in cities and enjoying prosperous lives.
The Cold War provided real life tests of economic systems. The central test was that betweem the United States, two superpowers with large. well educated populstions, conintal powers with industrial economies and important africulyural secyors and important nstrural resources. Than there was the compeurion between Communidt Eastern Europe and the capitalist West. And then there was the stiking competition within a divided country, communist East Germany and and capitalist West Germany. But the Communist could make excuses, claiming that World War II damage was most severe in the East, delasing recovery. And they could claim thart the West was more developed thn the East before the War, making recovery easier. As for Germny, theyvcould point out that the Soviet occupation zone was largely agriculture and tht Germn industry was primarily loicated in the Western occupation zones. And although they did not openly say so except secretly to the Soviets, reparation payments to the Soviets damaged the East Germsn economy. So the Asian competitioins were particularly interesting China and Hong Kong Taiwan and North and South Korea. The huge differences between China and Hong Kong Korea make commpisons diffiucult. North and South Korea are a different matter. And here unlike East and West Germany, in the was Communhist North Korea that had been far more affluent abd industrislized. The South before World War II had been the poor agricultural section of the country. As a result, unlike East Germany, the Communists have no excuse for economic failure. North Korea was not only the most advanced part of Korea, but was not as danaged as South Korea by the War.
Sources
Cha, Myung Soo. Yeungnam University. "The economic history of Korea," EH.net, undated, retrieved August 22, 2014.
