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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).
Japan committed national suiside by launching the Pacific War (1941). Korea was a Japanese colony and part of the Japanese war effort. During the war, Korea was an important support for the Japanese war effort. Impprtant raw materials existed in the north, especiall iron and coal. And the Japanese developed one of the most important industrial coplexes in Asia outside of the Home Islands. The South had very little industrial development and was almost entirely agricultural. Thus Korea contrinuted both industrial ana agricultural production to the Japanese war effort. The Japanese also conscripted Koreans, mostly to seve in labor brigades. Some women and girls were forced in prositution as 'comfort girls'. Fortunately for Korea, the industrial targets were in the north, beyond the effective range of American bombers.
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. This division was meant to be temporary until elections could be held. 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. Korea like divided Germany would become a test case for comparing democracy and capitalism with Communist totalitarianism and socialism.
The Republic of Korea (ROK) emerged in the south after the Paciic War. As strange as it may seem today, the South at the time was poorer area of Korea. It was mostly an agricultural area with few natural resources or installed industrial base. The Japanese had pursued a program of industrialization, but mostly in the north where the natural resources were located. Before World War II, colonial Korea's trade was controllrf by Japane authoritiesnand thus almost entirely with Japan. The de-colonization process and political division disrupted trade both with Japan and within Korea. This caused causing serious economic turmoil. The United States provided limited economic assistance. The U.S. military government seized and privatized properties previously owned by the Japanese government and civilians and transferred the assetts to Korean authorities. The basic economic activity at the time was agriculture. The South Korean government when established, carried out a land reform, making land ownership more egalitarian (1948). This would adversely affect many peasant recpients when the Communists invaded. The Comminists were prone to execute land owners, even small propritors.
The North Koreans Army crossed the 38th parallel on June 25, 1950 to forcibly unify Korea. The Soviets had provided modern weapons in great quantity to the North Koreans. Embolded by the Communist victory in China during 1948-49, Kim-il-Jong obtained Stalin's approval for the attack. President Truman immediately ordered war material be provided the South Koreans and then air support for the South Korean Army. Seoul fell within days. Truman went to the United Nations which, because the Soviets were boycotting the Security Council, approved a military opperation to repell the North Korean attack. Truman than ordered American military intervention. The Soviets had helped the North Koreans build a powerful military force. The United States after World War II had significantly scled back its conventional military force. As a result, the North Koreans pushed the South Koreans back to a small perimiter around the southern port of Pusan. Generl MacArthir from Japan organized an amphibious invasion at Inchon which caught the North Koreans between two forces. North Korem resistance collapsed and MacArthur rushed north accross th 38th parallel to completely defeat and occupy North Korea. Tuman was skeptical, but MacArthur assured him that Chinese warnings to intervene were bluff. They were not an America norces approaching the Yalu River were mauled by a massive Chinese attack. For a while it looked like the Chiese would tota;lly defeat the U.N. forces, but the front was finally stabilized north of Seoul. What followed was 2 years of stalemate which became a major political issue. Peace talks with the Communists were frustrating. Th major issue became the Communist demand that all POWs be returned, even the ones who did not want to be repatriated. Finally a ceasefire was reached. Stalin died in 1953. Eisenhower became president in 1953 and fulfilling a campaign promise, went to Korea. The armistice went into force (July 27, 1953). More than 3 million Koreans were killed as a result of the War. Millions more were made homeless refugees. About 1 million Chinese soldiers are believe to have been killed. American casualties totaled nearly 55,000.
Much of the limited modern infrastructure which existed in the south was destroyed in the Korean War. 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 mostly agricultural economy using primitive methods. The economy offered little opportunity. The country was short of everything, including food in an agricultural area. The only resource the South had was a relatively well educated people, in part thanks to the Japanese. The United States paid little attention to Korea before the Korean War. Beginning with the War the United States began a major aid program. The military presence of the United States and other counries by itself provide an economic stimulus. With the end of the Korean War, ROK officials set about rebuilding a destroyed economy. They pursued similar policies adopted by other new countties in the de-colonization process in Asia and Africa. ROK economic managers attemnpted to stimulatie economic growth by promoting indigenous industrial firms. The Government selected companies in industries considered important. They were given preferential treatment. such as access to foreign currencies and and credit at preferential rates. The Government erected high tariff barriers to protect domestic industries. Imports of manufactured goods was virtually imported. The theory was that the protection would give domestic manufactures the ability to become modern, efficent producers. The economic policy was known as import-substitution industrialization (ISI). In practice, however, rather than develop into competive corporations, Korean entrepreneurs, like businessmen in other developing countries attempting this policy in reality tended to be more concerned in maximizing Government support than the more difficult task of building a modern competive manufacturing concern. The commonly obtained favors by bribing Governmen bureaucrats and politicians. This same outcome was occuring throughout the many new states created by de-colonization. Economists created a new term for what occurred -- directly unproductive profit-seeking activities (DUP). The result rather than creating conditions for the development of a modern manufacturing industry, the efficiency of existing manufacturing actually declined. Living standards stagnated at very low levels. This was part of the reason that the Firt Republic collapsed (April 1960).
General Park Chung-hee and the ROK Army seized power (1961). Park launched the Saemaeul movement concentrating on developing rural Korea. Very little industry existed in South Korea at the time and vrtually no efficent manufacturers. 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, which was accurate in trms of Western standards. The Government began an economic devlopment program using the one resource South Korea had--cheap labor. This would be the catalyst for the Miracle on the Han. A capitalist democracy developed in the south and a Communist totalitarian state in the north.
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). Japana acquired Formosa (Taiwan) after the First Sino-Japanese War (1894-95), its first major territorial acquisition beginning gthe construction of the Jpanese Empire. A little over a decade later, after the Russo-Japanese War, Japan acquired Korea (1909). Japan applied the same policies in both of the territories, essentially the Japanization of society includung use of the Jaoabese language. The reaction of the population in these two territories was different. The Taiwanese did not resiust to any extent, the Korean people did. As a result, terrible brutality was necessary to impose Japanese rule in Korea. It should not be thought that all Koreans resisted the Japanese. Because if the Japanese brutality there was a high degree of compliance on the part of the Koreans. As Japan wentt to war first with China (1937). Military units were recruited in Korea. These were not conscript units, but volunteer units. And their were far more volunteers than requiired. These units were primarily used as labor batallions. With the onset of the Pacific War (1941), some Koreans were used as prison guards. Allied POWs report tht some were especially brutal.
The Ameruicans csme in contact with rghese units during ghe Pacific War, beginninf uith Guadakcanal. The Americans did not at first understand the differemce, exceopt thast they were less inclined to fight to the death. The Koreans for their part were shared the Japanese fear of the Americans basedon the information provided by Jaoanese war propaganda. .
One consequence of the Japanese occupation policies is that the Japanese are remembered differently on Tiwan and in Korea, with some affection on Taiwan and virtually uniform loathing in Korea, even today. Despite this difference, the Japanese era resulted in a degree of economic moderizxation and wide-spread public education--a rarity in Asia. There was a degree of economic development, but little industrial development in South Korea aand Taiwan. (There was industrial development in North Korea because of the coal another naural resources there.) Surely the Japanese era and public education system was part of the reason why these two countries became Asian Tigers and so successful once capitalist economic policies were adopted. The success of captalism in Japn and Taiwan suggest that traditional culture is also important.
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