South korea was very underdeveloped

By August 16, 2017 Economics


In the beginning of the 20th century, South Korea was really developing. It was a state dwelling of minimum economic activity to vie in the Global markets. South Korea was still integrated with North Korea as one province under the Rulership of Japan. Agriculture played a large function in the economic advancement of Korea under the Communist system. It was merely a affair of clip before Korea would be divided into the North and South After WW2 and the Korean War. But the South would turn out to be much more comfortable than the North, through opening up its markets, its associations with The United States of America and turning into a Democratic province. Its economic transmutation pushed South Korea become a competitory state in the Global market within three decennaries towards the terminal of the 20th century. The undermentioned essay will take a brief expression at Koreas economic advancement in the first half of the 20th century, and so concentrate on how South Korea started to come on economically after WW2. It will besides look at what political and economical reforms took topographic point in order to guarantee economic Liberty of South Korea.

1st Half Of twentieth Century Korea Loses Independence

In 1910, Korea lost its independency to Japan, Korea became a state of the Nipponese province. Initially Korea had been ruled by the Yi province, Korea was known to dwell of Raw stuffs which could be good to other states economic wealth. Other western states such as France, US and the USSR had attempted to subvert the Yi province even before the 20th century, but Korea fought and resisted western domination. Japan on the other manus had surrendered to the USA and had become an Industrialized economic system, it needed natural stuffs in order to spread out its economic system. This was traveling to go on at the disbursal of Korea. The Japanese had backup of the USA, and could easy busy Korea by 1905 after subscribing a pact with the USA called the Taft-Katsura Agreement, saying that the USA will admit the Nipponese business of Korea. The Nipponese eventually got Korea to subscribe the pact of appropriation with it in 1910.

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The Yi province had proven to be weak in footings of opposition to external forces, as it had now lost independency, it had besides lost its power to act upon its Korean people to contend of colonialism. Japan could now hold entree to raw stuffs and groceries, Korea would now hold to go a extremely productive Agricultural province for the benefit of Japans economic growing. This would impede with the growing of the Korean economic system, restricting it to a more rural, developing economic system until the mid 20th century, after the Korean war and WW2.

The Nipponese took over most of the fertile land through their ain landlords, and would increase their exports of nutrients to Japan, this signaled the beginning of development of the Korean people through inexpensive agricultural and rural labor. South Korea experienced a high industrial growing, but the Capital and net incomes were all focussed towards Japans growing. Japan invested high capital towards industries in Korea. Even though there was high development of Korea, there had been attempts by the Korean people to protest against Nipponese regulation, in 1919 people protested against Nipponese regulation but were unsuccessful as 6000 people lost their lives to Nipponese Forces. There was ever a Government- General appointed by the Nipponese authorities to maintain control of Korea. He could take in a dictatorial manner and all Koreans who did non stay by his jurisprudence could be arrested by the constabulary, he had entire control of the Korean personal businesss.

From 1910 onwards, the Government- General implemented a study where utile agricultural land could be determined, if land was found to be utile to the economic system of Japan, the general took control of it. Many of the Korean citizens lost their land as a consequence. By 1930, the Government-general owned 40 per centum of the entire agricultural and forest lands of Korea, most of the land would be sold by the Nipponese authorities to Japanese development companies, land could besides be sold for a inexpensive monetary value to Nipponese persons looking to get down farming in Korea. The land policies implemented by the Director general increased poorness in Korea for the farm population which formed the bulk of the Korean population. This explains why Korea experienced so much poorness and why many of its citizens turned out to be provincials, the General ‘s land policies took many of the Korean citizens and husbandmans land in the affluent countries of Korea. The Japanese did non find their land policies with the involvements of Korean people at bosom, at the same clip a batch of Korean provincials suffered as most of the money they made from reaping on the rented land paid for the rent.

Korea was known to be a major exporter of rice when it came to agriculture, most of its rice was exported to Japan at the disbursal of Korean cheap labor, the land allotment system seemed to be thriving. From 1912 to 1936, over half of the entire rice production was being exported to Japan, this was possible because the Koreans were forced to decrease their rice ingestions. In the Mining sector, the Government-General besides implemented a Mineral appraisal with some major Nipponese Corporations in an effort to pull out mineral resources from Korea. Korea had great resources such as gold, Ag, led, Fe and coal. These resources worked extremely to the advantage of Japan as they could work them during WW1 for military armaments production, the Military armaments could be sold by the Japanese to the Allies.

This proves that the Korean Mineral and Land business was of high importance for a state like Japan, and they were traveling to work it for every bit long as they could, every bit long as Japan kept turning and developed a strong competitory economic system for itself. But this was merely one of two major economic factors Japan were interested in, the fabrication sector besides became an involvement in which the Japanese were focused on. They would accomplish through intense industrial development and inexpensive labor, since many of the husbandmans had lost their agricultural land.

Korea started to see mass industrialisation through Japan, this could be seen as the beginning of Manufacturing on a big graduated table for Korea. The government-General encouraged many Nipponese concerns looking for inexpensive production to put their Capital in Korea. He achieved this through the new policies of fabrication, which opened doors to Nipponese investors to convey in their Capital at really low costs. The Japanese had control of about 90 per centum of all fabricating Capital in Korea, this besides applied to the excavation industry, The Nipponese companies had about 95 per centum of the coal excavation industry of Japan. These per centums were achieved by 1945. The Industrialization of Korea pushed many provincials into going pay workers, by 1944 600 000 Koreans were working in mills and another 350 000 working in mines.

The state of affairs for Korean workers in the mills was so bad that the rewards they got paid by 1935 were 50 per centum less than in 1927.

Peace and comfort did non go on and the Korean people suffered a batch from favoritism and development during the period 1910 to 1945. The Japanese used a military dictator governing manner and got rid of any resistance from the local people. The people of Korea had no backup and could non show their feelings or voice their sentiments as to how they wanted Korea to be run, or how their lives could be transformed from impoverished to better criterions of life. This likely happened because Political and societal groups were banned.

The Japanese, in 1930, formed a basic construction, in the decennary that followed national industrial planning was implemented through the political economic system. This meant that planning could be extended to Japan in order to give major industries in Japan a opportunity to convey in their corporations into Japan through direct investing. State policies were formed by the Japanese, in order to modulate and command the market from the usage of foreign engineering. This was achieved through a licensing system which would command market entry. The new province policies besides introduced large Bankss and big companies owned by the Nipponese, towards the terminal of the 1930 ‘s there were four major industries responsible for the business of the bulk of the Korean population. These companies were Mitsui, Mitsubishi, Sumitomo and Yasuda, they dominated the Nipponese economic system more than any other industries.

These industries belonged and originated in Japan, but because Korea and Japan were so close to each other Geographically, and Japan had direct control of Korea, it meant Japan could easy spread out their economic activities into Korea and incorporate them into the Nipponese markets. This the Nipponese managed to accomplish through investings in railway, ports, communications and monolithic industrialisation in Korea. Because the growing of the Korean economic system was pushed by the colonial province and the economic activities were undertaken by a few major Nipponese corporations, the Japanese ‘s industrialisation of Korea did really small to give the Korean business communities some kind of power or leadings in some of the industries or political relations.

In footings of political relations, Koreas economic system might hold been occupied by the Nipponese, but from the clip Korea was declared a colonised province, there were belowground motions which planned to assist Korea recover its self-respect and independency. These groups consisted of former Korean politicians who were in expatriate and had associations with the Soviet Union, USA and China. The group affiliated with the USA was run by a adult male called Syngman Rhee, he fled to the USA with the hopes of doing friends with politicians from the province and deriving their support for Koreas independency. Another group which was in China, was one led by Pak Hon-Yong which was a communist motion. Finally there was the group ruled by Kim II Sung, this group was a anti-Japanese Guerilla Communist group Kim would subsequently go the long standing swayer of North Korea. There was small influence or success in their efforts to derive the independency of Korea by these groups. But one group which proved to hold greater influence subsequently, would be the group run by Kim Koo, right after the split with Rhee due to differences and dissensions.

This group was the anti- Nipponese Guerilla, it formed close links with the Nipponese Patriots. Koo became president of the organisation in 1931, with the support of the of one of its subdivisions which were in Hawai and USA. Rhee who was in the US at the clip had tried several times to act upon the US group but failed. By 1940, the Probationary Korean expatriate authorities, based in China which was set on contending for Korean independency, it managed to act upon the Chinese authorities and was given the opportunity to organize a general staff for strategic planning against Nipponese colonialism. This would take to the celebrated Pacific Korean war, where the Chinese and Koreans would contend side to side against Japan in Manchuria and China. Korea would occupy Manchuria and declare war on Japan, which would take two and a half old ages before the Koreans could eventually win with the support of the US and USSR

During the continuance of the war, Rhee became president of the probationary Government, in which nine Korean organisations supported by 10 000 Koreans backed the authorities. They set up a meeting in Washington and formed Alliess with the USA in order to find how they would assist the US defense mechanism on schemes of onslaught on Japan. What Rhee was chiefly concerned about was the hereafter of Korea after the war, how would it be run and under what economic policies would it be run? In 1942, during the negotiations of the hereafter of Korea with the Allies, Rhee ‘s conditions were non met and the meeting was unsuccessful. In 1943 at the Cairo conference, Churchill, Roosevelt and Chiang Kai-shek resolved the issue saying that Korea would be declared an independent and free province.

The war continued and as it progressed a trust understanding was signed by the USA and the USSR, saying that they would assist Korea acquire back on its pess economically and politically. The USSR declared war on Japan in 1945, while the USA who had declared war on Japan earlier had now occupied the South of Korea by directing their military personnels to the South of Korea. The USSR would now direct its military personnels to the North of Korea as the pact of Cairo stated. This signaled the birth of what would go two separate universes in Korea, the Division between North and South. The South would thrive enormously due to its Global economic policies and associations and friendly relationships with the allied powers that supported capitalist economy. The North on the other manus, would endure due to their rigorous policies of Nationalization, independency and the support of a Communist system as a manner towards economic transmutation.

New Era, Korea Gains Back Independence

By December 1945, a probationary authorities was set up by a joint group of Alliess ; USA, United Kingdom and Chine. But the probationary authorities have to ever confer with with the allied powers who would hold the undertaking of being in charge of Korea for a period of five old ages. But rightist parties of Korea were against the five twelvemonth trade, as they did non desire Russia doing any determinations, as they believed it had subterranean motivations towards Korea. Therefore they organized the anti-trusteeship organisation.

In the interim, a more democratic commission was set up in the Southern portion of Korea, it had Rhee as its lasting president. The USA established an assembly where elections would take topographic point, but half of the assembly could be appointed and the other half could be voted for. Right flying groups of Korea saw it as the development of a Southern independent Korea and started to put up a separate province.

Soon several elections took topographic point, with those favoring democracy being in resistance with those who believed in Communism. The Battle between USA/ South and USSR/north would result within Korea. By 1948, the Dispute was resolved, where the United Nations Temporary Commission in Seoul gave the Koreans a opportunity to vote in the South, as the Soviets refused them business in the North of Korea. South Korea became declared as an independent province by 1948, but it was called the democracy of Korea alternatively. The USA so withdrew its military personnels from the South in order to avoid farther struggle and to turn out that it was non meaning on busying South Korea.

The new authorities under the rulership of Rhee had become an ally of America, and the best old ages of South Korea were to come. But in the beginning of the South ‘s rulership, it had lost its supply of hydro-power, and coal from the North. At the same clip its population was increasing at a high rate, south Korea experienced a major deficit of nutrient and lodging, unemployment became rife in the province. After the USA and USSR withdrew their military personnels, the North declared war on the South through its communist leader Kim II Sung, but the USA sent military personnels in defense mechanism of South Korea. The war continued for several with Chinese, UN, Japan, Soviet Union and the USA involved. By 1953 the war ended and South Korea like North Korea were to retrace its province economically.

In 1961, Park Chung Hee became the new leader of the South Korea and he intended to beef up South Koreas dealingss with the USA and chiefly other provinces which were capitalist provinces. A batch of attending would be put on the economic growing of South Korea.

First Five-Year Plan

By 1962, South Korea Introduced its first five-year program in order to retrieve economically. South Korea approached Japan as a 2nd major capital investor after the US in 1963 and Japan eventually signed the understanding in 1965. Through these economic moves, South Korea would get down to thrive in footings of economic growing. The Korean economic system was destroyed by the war. After the Korean War Reconstruction was given support by immense sums of foreign Capital from, in the North from Communist states such as Russia, China and East Germany and in the South chiefly from the United States and serious authorities economic development plans. The greatest industrial betterments were made during the sixtiess. North Korea made advancement in industrial growing while South Korea concentrated on feeding its people.

When Park came into power there were certain obstructions he was faced with in retracing South Korea, his initial five-year program started off at a really slow topographic point for developing the economic system, as he was to focused on societal policy foremost before traveling towards economic policies. From Park ‘s economic policy alterations in 1964, South Korea would now get down to travel through three different Democratic rulerships, each with their ain programs of action towards economic transmutation. Park ‘s authorities, of 1963-1973 focused on a kind of limited democracy that wanted to curtail democracy to a certain extent. Park wanted to follow Japan ‘s thought of a military leading, which had ab initio created a batch economic advancement in Japan.

Second Five-Year Plan

In 1964 with the effort at the five-year program for the 2nd clip, Park now shifted his economic programs more to industrial growing alternatively of a focal point on nutrient autonomy. The ends of the program was to increase energy production, grain production and make a demand for exports. Korea had started to hold a growing rate of 8.5 per centum in GDP and the growing of the industry sector had been the major lending factor to the sudden growing of the South Korea economic system. Even though South Korea started to develop, it was largely due to America ‘s part towards its economic system. From the 1960 ‘s, Korea benefited from great dealingss with the United States. The relationship between the USA and South Korea was created because American policy-makers, saw South Korea as an of import platform to face the Soviet Union during the Cold war. American involvements in South Korea allowed it to bask economic benefits in footings of assistance, trade, capital, and engineering from the U.S. It is said that South Korea could non hold survived its economic prosperity if it was n’t for America ‘s aid in the 1950 ‘s and Korean entree to its export markets since the mid-1960 ‘s.

America though, was non happy with Park ‘s economic reforms in the first half of the 1960 ‘s because he had focused on agribusiness in his early rulership. The United States had threatened to retreat its fiscal assistance to South Korea, because it was non deriving good plenty due to Park ‘s economic transmutations in the early 1960 ‘s. America besides had its ain economic jobs and could n’t manage holding to endorse up a slow turning economic system which did non follow a clear system of liberalized market and limited democracy. But the USA was n’t traveling to retreat its assistance that easy because, it feared that with South Koreas shortage disbursement due to its economic schemes, South Korea would see a foreign debt crisis and its economic system would fall in.

Not prepared to allow this go on, the US authorities started to set force per unit area on South Korea to get down concentrating on industrialisation alternatively of agribusiness and societal policy. This the American authorities believed had to be implemented as South Korea could increase its exports and hence lessen its foreign debt. America so put force per unit area on South Korea to beef up its ties with Japan, because Japan could now go an investor in the South Korean labour natural stuff market. Therefore Japan would be able to supply assistance and a market for exports in South Korea which could be really good to the growing of its economic system. The United States so began to publish more financess into the South Korean economic system, US finance in South Korea paid for over 70 per centum of imports, this gave the USA power to command the South Korean Government as the US outgo on South Koreans evidently came with major conditions. As the consequence by 1964, the South Korean Government went into serious trades with the USA, and the conditions meant that South Korea would follow USA orders.

Over the following old ages after 1964 the Koreans would follow the US orders by stabilising monetary values, making more trade dealingss with other western states, raising involvement rates, devaluating the currency, taking down import barriers and increasing export inducements. This way followed by South Korea would subsequently be really good to the state ‘s economic wealth, as it would act upon rapid economic growing in infinite of merely 30 old ages.

Third Five-Year Plan

The 3rd five-year program was to be introduced by Park from 1972-1976, this was and of import epoch as South Korea aimed at occupation creative activity, and chiefly the demand to concentrate on rural development and creative activity of rural labor and revival. A really of import factor by which Park did non adhere to during this clip was the American conditions, which stated to him that he had to loosen the economic system for unfastened trade and instead focal point on deriving economic wealth for the state. Alternatively, Park took his ain steps would turn out really successful before the 4th five-year program. The authorities partially took control of over Bankss and controlled investing. During this period, the authorities imposed monetary value controls, this they wanted to implement for a short period aimed commanding certain inequalities in industries where high net incomes were being made by foreign investors.

These monetary value controls were aimed at cut downing rising prices, but they were non imposed on all industries but a choice major 1s, which contributed extremely to the economic wealth and the 1s which were monopolistic in their markets. There were other countries in the economic system were reconstituting and amalgamations took topographic point, where the authorities intervened during the rapid industrialisation period which was to follow. The ground Park introduced this policy of authorities intercession was because by 1972, South Korea ‘s economic system had produced a high sum of industrial wealth, of which most of it lay in the custodies of a choice few proprietors and political leaders. This created an instability in the economic equilibrium of South Korea. At the same clip, South Korea needed to work out its debts.

Fourth Five-Year Plan

The following measure to be followed by Park would be really economic orientated, the Fourth Five-year program. This program was implemented from 1977-1981 more or less, it was regarded as the large push epoch of South Korea. Park now focused on heavy industrial policy by switching towards electronics, machinery and ship building to call a few. With this policy, Park wanted really minimum foreign adoption of capital as his purpose was to diminish the sum of debt South Korea was faced with. This five twelvemonth program would turn out to be a kind of catastrophe, caused by the oil crisis. Therefore the marks of this program would n’t be achieved to their full potency. At this point the South Korean Chemical industry boosted economic growing and was the major industry which contained the most foreign investing.

South Korea had collaborated with Dow Chemicals from the USA, which was South Koreas largest concern spouse in industry sector, the job now, was that Dow Chemicals was charged by the South Korean authorities for repairing its monetary values through its South Korean spouse, this was aimed at making net incomes which Dow chemicals used to reassign to its other workss out of South Korea. This led to the South Korean spouse objecting to this program, and the Government being in support of the South Korean spouse intervened. Dow so decided to draw out of the joint concern venture. This became a major knock to the province ‘s economic stableness.

South Korea during this period had besides built a major Shipyard, likely one of the universe ‘s largest, the job although was that, in constructing the shipyard, South Korea had to export most of its expertness, machinery, engines and tools from Japan. This created an instability of payments for South Korea and increased her debts extremely. Another major menace to the state ‘s growing was the oil roar of the Middle East, South Korea striked a trade with the Middle East to get down a immense building programme in the Middle East part. South Korea so sent an estimated 293 000 male workers to the Middle East part between 1977-1979 for building. This figure was equal to over half of the South Korean fabricating labour force. It became a job because rewards went higher in the fabrication sector of South Korea but production became slower because of the deficit of workers in the industries.

While this happened, a batch of smaller companies were non doing existent net incomes, at the same clip the province was passing extremely on Industries for growing. Merely the major foreign companies were gaining extremely, doing the economic system of South Korea to go unstable and imbalanced. This meant that industries could non run into the marks of the South Korean export sector, at the same clip the lighter smaller fabrication companies competition internationally. South Korea had become a state which imported a batch, which disadvantaged the economic system during the rapid industrialisation epoch. Technology and Capital goods had to be imported, doing South Korea to set itself in a place of overspending and holding to borrow foreign Capital in order to increase growing.

By 1979 it was clear that authorities growing could no longer profit the economic system, Park had devised a program to work out the debt job by decreasing imports and increasing exports in the smaller fabrication industries which proved to be the major hub of the economic system when they were combined. This caused farther rising prices, forcing the state into a recession GNP fell by 6.5 per centum in 1980. This was the first twelvemonth of really hapless growing since the Korean War, by the terminal of 1980 South Koreas debt increased at a really rapid rate from around $ 20 million to about $ 40 million in1983. Park died in 1979, while he was a dictatorial leader, but to many South Koreans it was seen as new epoch that would open doors to a more Democratic province, being able to better the economic conditions of South Korea.

Unfortunately it was non the instance, another military absolutism occurred, this clip by Chu Doo Hwan, this led to major work stoppages in the labor force which wanted better working conditions and better rewards. The workers had been promised by their labour brotherhoods that after Park ‘s autumn, things would turn out for the better and the workers would be able to acquire better working conditions and rewards. And an terminal to military absolutisms would happen, which was seen as holding a negative consequence on the economic system and lives of the on the job category. Strikes continued for the whole of 1980.

Old ages Of Prosperity Through Exploitation

By August 1980 Chun retired from military and announced that he would go a campaigner for national presidential term place. Chun came into power after the internal election and formed the Democratic Justice Party. But this was merely a forepart, he instantly after coming into power exercised his military absolutisms in order to halt protests. Brutal force and apprehensions were made on protestors and a new jurisprudence which destroyed worker brotherhoods was implemented. This was done by Chun, so worker development could happen, but this would be to the much benefit of the South Korean economic system. In making this, rewards would be at minimum but production would increase. By making forced labour conditions were rewards fell and productiveness increased, became portion of Chuns program to better the economic system. The consequences were enormously high, seting South Korea in the competitory Global sphere as one of the taking export markets through its short term scheme of exploitatory labor in the industries. By 1983 the economic system was ready for enlargement. The US supported this way and became a major technological subscriber towards South Korea, with Japan besides being a major fiscal subscriber.


In less than twenty old ages after the Korean war tore apart the South Korean economic system, economic stableness became the major all South Korean leaders focused on. South Korea turned out from one of the universe ‘s poorest states to one of the richest in a short infinite of clip. This it achieved through test and mistake, and a unfastened market, liberalized economic system towards the remainder of the universe for investing and development of its labour force. It became an Industrial hub of the universe towards the terminal of the 20th century. The rapid industrialisation, as many would reason would n’t hold happened if the USA and Japan had non given fiscal support and counsel towards its economic system. And most significantly, the rapid economic growing took topographic point at the disbursal of the South Korean People ‘s labor and difficult work.


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D. Lewis, Korea: digesting division? P. 31-33

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B.Cummings, The Origins and Development of the North east Asiatic Political Economy. International Organization p.34-36

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J.B Rosser M.V Rosser, Comparative Economics In a Transforming World Economyp.558-561

M. Tcha C.S Suh, The Korean Economy at the Crossroads p.3-4

A. Amsden, Asia ‘s following Giant: South Korea and late Industrialization P.

M.H Landsberg, The Rush To Development: economic Change and Political Struggle in South Korea p.214-222


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