Korean Economy: Independent Countries (1945- )


Figure 1.--South Korea was the undeveloped, agricultural sector of Korea. And what lkttle infrastructured that existed was largely destoyed by the War (1950-53). For several years after, little pogress was made not only in repring the damage, but in developing a modern economy. Here we see a scene from Seoul (1955). The press caption read, "Old Scars: Children play around a fountain in the center of Seoul, after the war which left the city a mass of ruins. In the backgroun are some of the war-damaged buildings. More than two years after the end of the fighting , the city has changed little. Planned rebuilding is still largely in the talkin stage. With rents and food prices sky-high the struggle for existence takes the full energy of most of the people."

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. Noth Korea 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. 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. The command ecinomy 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 Noryh and South Korea is night time satellite imagery. South Korea energes as a bright jewel of modernity while North Korea is visually shown as living in a new Dark Age.

North Korea

When the Communists took over after World War II, the north was the wealthiest, most productive area of Korea. Kim Il Song sinstalled in power by Stalin pursued Soviet-style central planning and integrated the country into the Soviet economic system. The Korean War (1950-53) did considerable damage and was followed by a long period of economic decline when a series of large centrally planned projects proved economic failures. At the same time the South which pursued capatalist free enterprose economics brought about an economic miracle accomplished without important natural resources which made it one of the richest countries in Asia. Communist North Korea is the world's most centrally directed and least open economies. The result has been unmitigated disaster. Economic problems are endemic, but largely hidden while the Soviet Union subsisized the regime and forced its Eastern European satellites to do the same. The fall of Communism in Eastern Rurope and the Soviet Union, ended North Korea's ability to arrange barter deals. State policies preventing foreign competition has neant that industry fell behind that of other countries. The country's industrial capital stock is thus old an inefficient, suffering from underinvestment and shortages of spare parts and unable to produce products saleable outside of the country. As in other Connunist countries, agriculture is also a failure as a result of collectivization and mismanagent. Combined with droughts, crop failures have resulted in famine, only ameliorated by food shipments from countries the regime vilifies (America, Japan, and South Korea). All of this is further compounded by the maintenance of a huge military and weapons programs which absorbs much of the country's economic output.

South Korea

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 baased 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 ntion rivaling Japan and Western Europe with an advanced technological and communications infrastructure.

Sources

Cha, Myung Soo. Yeungnam University. "The economic history of Korea," EH.net, undated, retrieved August 22, 2014.






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Created: 4:44 AM 12/2/2014
Last updated: 9:12 PM 9/1/2017