Korean Economy and Development
Joya Debi Leilani Alvarez
Miracle on the Han River
South Korea’s Economy Before the Korean War
● Until the 1950’s, Korea had an agrarian economy that relied heavily on foreign aid
● Small country- dense population
● Resource scarcity
● One of the poorest countries
Seoul in 1945
Aftermath of the Korean War
● Destruction of infrastructure and industries
○ Textile Industries, Chemical Industries
○ Roads, Bridges
● High Inflation
Seoul 1953
Creating a functioning economy
● Need for an economic environment
conducive to effective resource utilization
● Poured money into infrastructure development
● Policy surrounding price setting of key resources
○ 1962 Price control act- set prices of utilities and staple grains
Cheeonggyechun elevated highway, 1970
President Park Chung Hee’s Plan for Korea
● President from 1963-1979
● 1963- Park Chung Hee overthrew the government
○ Proposed Export-driven economy through series of 5-Year Plans
○ Second Republic of Korea focused on Import Substitution Industrialization (ISI)
■ Replace foreign imports with domestic production
5-Year Economic Development Plans
1st 5-Year Plan (1962-66):
● Development of Infrastructure
● Light Industries
2nd 5-Year Plan (1967-71):
● Heavy Industries- Steel Production
- Pohang Iron and Steel Co. (POSCO)
3rd Five Year Plan (1972-1976):
● Heavy and Chemical
Industries (HCI) Drive
Development after Park Chung Hee’s Presidency
(1977-81):
● Reform the HCI Drive
● FDI
(1982-86):
● Technology-Intensive Industries
(1987-91):
● Import
Liberalization
● R&D
(1992-96):
● R&D
POSCO
● Pohang Steel Mill
○ Financed with loans from Korea-Japan Peace Treaty Reparation Settlement in 1968
Chaebols: The Result of Korea’s Miracle Economy
● Responsible for majority of the country’s investment in research and development
● Make up half of South Korean stock market’s value
● Top 10 chaebol own more than 27% of all business assets in South Korea.
Effects of Chaebols
● Corruption between the chaebols and politicians.
○ Scandal - the impeachment of former President Park Geun-hye for abuse of power, corruption, and information-peddling.
○ Samsung was involved in the scandal
● Wage gap among chaebols and SME’s
● Limited job growth
The 1997 Economic Crisis
● Japan went into a recession due to an increase in consumption tax.
● The Korean currency (won) began to lose value.
● IMF came to negotiate massive bailouts in Seoul
South Korea’s Economy Now
Seoul 1953 Seoul 2019
Works Cited
https://www.globaltenders.com/economy-of-south-korea.php https://eh.net/encyclopedia/the-economic-history-of-korea/
https://kellogg.nd.edu/sites/default/files/old_files/documents/166_0.pdf https://www.cfr.org/backgrounder/south-koreas-chaebol-challenge
http://daypdfweek.com/korean-economic-development-jene-k-kwon-free-high- speed-downloads-textbook.pdf
