Korean Economy


Figure 1.--The Japanese seized control of Korea and began building a modern economy (1909). The Japanese oversaw a developing industrial ecinimy in the north where raw materils were located. The south remained largely agricultural which was basically the situation at the time the North Koreans invaded launching the Korean War (1950). Since that time, South Korean has developed into a vibrant modern country with a world-class industrial economy. North Korean has declined into a backward totalitarian nighmare that can not even feed its people.

Korea has a long history as has for centuries maintained its independence from both powerful neigboring states, China and Japan. We do not yet have any information on the economy of ancient Korea. We have somne information on more modern era. The Chosôn dynasty dominated Korea for 5 centuries (1392-1910). The Chosôn imposed a tribute command system on largely peasant economy. The Chosen collected taxes in non-monetary forms in the form of products and commodities. They also mobilizing labor services in the form of a corvée. This was not a very efficent system and was static, limiting reade and economic growth. It was the originopf the term 'Hermit Kingdom'. It was, however, not only a way to collect taxes, but for the Chosôn to control the population. It did enable the Chosôn to obtain the food, handicrafts, and labor it needed or desired. Korea gradually fell behind the neigboring China and Japan. A Korean scholar calls it Malthusian stagnation. [Cha] Invading armies from China and Japan began to rave the countryy (late-16th centurty). This shattered Korea's command system. The Chosôn as a result could not prevent a shift to more market-based economic activity. The Chosôn bureaucracy was badly damnaged by the invasions. They began to demand takes in commodities with a money value maning easily traded. Two of the most important were rice and cotton textiles. In turn, they began minting copper coins and eased restrictions on tradeand commerce. The invading armies and wars seriously damaged the traditional Chosôn labor system, both slavery and forced labor services. Thus labor markets began to emerge.[Cha] The Chosôn over their long history at times were independent and at other times a client state, especially of China. The Meiji Restoration and begining of industrialization in Japan altered the traditional balance. Japan emetged victorious in the Sino Japanese War (1894-95) and then the Russo-Japanese war (1904-05). This enabled Japan to convert Korea from a Chinese client statre to a Japanese colony (1909). Japan annexed Korea as a colonial ruler began to make wide-spread changes in the Korean economy. Japanese rule was brutal and suppressed all vestages of Korean nationlism, including the use of the language. They intoiduced a range of modern economic changes while exploiting their new colony's developing economy. Japan founded Korea's industrial econmy. Most of the new industry was in the north where most of the raw matetrial needed by industry was located. The south remained mostly agricultural. 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]

Ancient Era

Korea has a long history as has for cenbturies maintained its independence from both bowerful neigbiring states, China and Japan. We do not yet have any information on the economy of ancient Korea. Korea for much of its existence has been a client state of China and thus tied in with the Chinese economy.

Chosôn Dynasty (1392-1910)

The Chosôn dynasty dominated Korea for 5 centuries (1392-1910). The Chosôn economy was remarkable for its static nature, termed by some as 'stagnation'. Ironically it began why the ecoinmy of Europe was quickening and would soon lead toa maritime outreach that would connect East abd West. The Chosôn imposed a tribute command system on largely peasant economy. The Chosen collected taxes in non-monetary forms in the form of products and commodities. They also mobilizing labor services in the form of a corvée. This was not a very efficent system and was static, limiting reade and economic growth. It was the originopf the term 'Hermit Kingdom'. It was, however, not only a way to collect taxes, but for the Chosôn to control the population. It did enable the Chosôn to obtain the food, handicrafts, and labor it needed or desired. Korea gradually fell behind the neigboring China and Japan. A Korean scholar calls it Malthusian stagnation. [Cha] Invading aemies from China and Japan began to rave the countryy (late-16th centurty). This shattered Korea's command system. The Chosôn as a result could not prevent a shift to more market-based economic activity. The Chosôn bureaucracy was badly damnaged by the invasions. They began to demand takes in commodities with a money value maning easily traded. Two of the most important were rice and cotton textiles. In turn, they began minting copper coins and eased restrictions on tradeand commerce. The invading armies and wars seriously damaged the traditional Chosôn labor system, both slavery and forced labor services. Thus labor markets began to emerge.[Cha]

Japanese Colony (1909-45)

The Chosôn over their long history at times were independent and at other times a client state, especially of China. The Meiji Restoration and begining of industrialization in Japan altered the traditional balance. With the decline of the Chinese Empire and the arrival of the Russians in the Far East, Korea and Manchuria became a bone of contention. Korea was a very traditional, agricultural country with little indusry or a modern military. Japan emetged victorious in the Sino-Japanese War (1894-95) and then the Russo-Japanese war (1904-05). This enabled Japan to convert Korea from a Chinese client statre to a Japanese colony (1909). Japan annexed Korea as a colonial ruler began to make wide-spread changes in the Korean economy. Japanese rule was brutal and suppressed all vestages of Korean nationlism, including the use of the language. The Japanese developed mineral resources and introduced heavy industry. Most of the industrial development occurred in the north where the mineral resources were located. Japan systemtically exploited the economy of its new colony. North Korea thus was an important part of the Japanese World War II war industry. North Korean industry was largely beyond the range of the American strategic bombing campaign and thus unlike Japanese industry survived the War.

Independent Countries (1945- )

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.

Cold War Economic Tests

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.






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Created: 6:21 PM 8/22/2014
Last updated: 11:33 AM 6/5/2018