Series Index
1 The Korean War and Its Global Legacy: From Battlefields to Adoption Airlifts
2. Adoptions after the Korean War
3. Explaining the South Korean Economic Miracle
4. Medical Innovations During the Korean War
5. New Archives Analysis on the Origins of the Korean War
6. The Korean War Transformed the Cold War?
7. Religion After the Korean War on the Peninsula
8. American Intervention in Korea
9. A Focus on Some Veterans in South Korea and France
10. Anti-Americanism in South Korean Society
By Riyad Moosoody
Why is the South Korean miracle impossible to replicate? South Korea's state-led industrialization project was the product of a complex set of circumstances on which its success depended. It is impossible to understand why the country experienced such economic boom without understanding Korean history, the nature of post-war global structures and Korea's position within them (Pirie 2008, p.75).
South Koreans often attribute their country's economic growth to traditional values loosely associated with Confucianism. These include hard work, discipline, learning and the importance of family. In the past, Western researchers associated traditional Confucian values with conservatism, hierarchy rather than equality, and group conformity rather than individualism, and blamed them for Korea's and China's economic backwardness. Then, in the 1980s, some authors began to speak of a "Confucian ethic" that contributed to the economic success of South Korea, Singapore, Hong Kong and Taiwan. The South Koreans also attributed much of their success to these traditional values.
Traditional values can be linked to the hard work, emphasis on education, high esteem for public servants that attracted talented technocrats to state service, and even the willingness to delay gratification that led to the high savings rate that characterized the period of rapid economic growth. However, the South Korean population possessed this Confucian heritage before 1961, just as the North Koreans did. It is, therefore, necessary to examine specific development policies and historical contingencies to explain the economic transformation.
American aid is often cited as the reason for South Korea's economic miracle. Large amounts of aid poured into the country. From 1946 to 1976, the United States provided $12.6 billion in economic aid; only Israel and South Vietnam received more per capita. During this period, $6.85 billion went to Africa as a whole, and $14.89 billion to Latin America as a whole (Harrington 2012, p.533). Most of the aid to Korea was emergency aid, not development aid. In the decade following the war, more substantial aid was provided for reconstruction, food aid and the supply of building materials. Aid also provided much of the financial support for the government of the Republic of Korea. In addition to financial aid, the South Koreans received technical training from the United States. This ranged from a training program for statisticians to the many economists and engineers who benefited from American training. Although this represented only a small part of the aid programs, it provided the country with a large core of well-trained and educated bureaucrats, educators and other professionals.
The stability brought by the presence of American troops, which made the country less risky for foreign investors, and the opening up of the American market to South Korean exports were probably more important than raw financial aid. These two factors were particularly central after 1961, when the country encouraged foreign investment and export-oriented industries. In other words, it was not only direct United States aid, but also the favorable conditions created by the United States that South Korea was able to take advantage of during the crucial years of economic growth, from the early 1960s to the 1980s.
South Korea's position on the front line of the Cold War also played a role, as did its involvement in the Vietnam War, which brought aid as well as construction contracts. Korean immigrants were sometimes useful as a link to American commerce. Americans were often skeptical of South Korea's development plans. In the 1970s, the United States, through the World Bank, pressured the country to temporarily abandon its plans for a steel industry. The South Koreans learned much from their American counterparts, but it was often by ignoring United States advice and going their own way that they were most successful (Pirie 2008, p.129).
Another factor was the rivalry between South Korea and its northern neighbor. Both Koreas sought to establish themselves as the true representatives of the Korean nation by demonstrating their ability to create a strong, prosperous and self-sufficient society. North Korea's rapid industrialization in the 1950s and 1960s threatened the very legitimacy of the South Korean state (Cho 2006, p.54). Consequently, Park Chung Hee and his fellow military leaders saw economic development as vital to South Korea's survival. This competition with the DPRK, combined with South Korea's intense nationalism, made economic development a patriotic duty, as Park's regime constantly reminded the population.
Japan has often been credited with South Korea's economic development. Some observers of the country's economic development attribute it largely to the colonial legacy, which, they argue, left behind a good infrastructure such as the railway network, a skilled workforce, experienced bankers and entrepreneurs, as well as a high level of education and bureaucratic efficiency. Admittedly, many features of South Korean industrialization were directly derived from the Japanese colonial model: the close relationship between government and business, the role of the state in guiding the economy to achieve national goals, and the concentration of capital in large chaebŏls that closely resembled pre-1945 Japanese zaibatsu (Kihl 1984, p.68).
However, we must be wary of attributing too much of the country's economic development to Japanese rule, which was harsh and exploitative, and left a country that was essentially agrarian and poor, with an economy oriented towards and dependent on Japan. Moreover, most of the highly-skilled jobs were held by Japanese who had left the country, and the education system they had set up was far from meeting the nation's needs or the public's demands. Nevertheless, South Korea benefited from its proximity to a booming Japan, in search of foreign investment. South Korea was close and shared many cultural similarities, and there were Japanese entrepreneurs in Korea with pre-war business experience. Japanese investment and essential technology transfers were significant, but total Japanese investment in Korea was lower than in the United States. The desire to emulate Japan's success was both an incentive and a practical example to follow. Japan, like North Korea, was also a competitor, prompting South Korean leaders to promote economic development by linking it to national security.
South Korea's economic success is generally explained by the presence of a strong state, capable of ensuring that vested interests prevail. After 1961, the military rulers reinforced the centralization of authority and focused the state on economic development. The state was then able to gain autonomy and impose its will on society. This argument seemed most valid for the 1960s and 1970s, when the military government was able to assert its authority over the business community and suppress trade union movements. It lost relevance after 1980, when the chaebols became powerful interests, workers became more assertive, and the middle class insisted on having a greater say in policy-making (Steinberg 2004, p.42).
About the Author
Riyad Moosoody conducts research on the role of the United States on the Korean Peninsula with a focus on hope and peace. He has researched the historiography of the Korean War and the role of veterans. His areas of study include the Korean reunification, the Cold War and the social, political and economic impacts of the Korean War on several countries across the world. He devotes his efforts to considering the ongoing impact of wars on geopolitics in a new Cold War era between the United States, Russia, China, India, the two Koreas and Europe.
Korean version available here.
