About Korea I



Korea: The impossible country_Part I South Korea: One of the world’s great success stories heads to the polls
About Korea I
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1. Intro: South Korea, one of the poorest countries in the 1950s

The Korean peninsula has a rich history of 4,000 years; due to its geographic location, crises were prevalent.

  • The origin of Korean people--also called “han-min-jok”--comes from a nation-state named Gojoseon founded in B.C. 2333. Since then, they settled in the Korean peninsula.
  • The peninsula is surrounded by what are now China, Russia, and Japan and its size is no bigger than half of California when we take the territory of North Korea also into account.
  • Thus, many dynasties in the Korean peninsula (Gojoseon, Three Dynasties Period, United Shilla, Goryeo, Joseon) and Korean people have been subject to invasions from the powerful neighbor countries such as China, Japan, and Russia.

Especially in the early 1900s when the world economy was growing exponentially with the boost of the Industrial Revolution, the Korean peninsula experienced the worst invasion and civil war and became one of the poorest countries in the world.

  • Influenced by the Industrial Revolution started in the 18th century England, some western countries and Japan went through industrialization and modernization which led to unprecedented economic growth.
  • Japan which succeeded in modernization invaded the Korean peninsula and robbed of Joseon Dynasty’s sovereignty, resources, and manpower.
  • In 1945, after Japan lost in the World War II, the peninsula could gain independence from Japan but was subsequently and tragically divided into North Korea that upheld Soviet socialism and South Korea that preferred the American libertarianism.
  • Started in 1950, the Korean War turned the peninsula into a battlefield where superpowers such and Soviet Union and China supporting North Korea and the United States supporting South Korea intervened and wrestled. As a consequence, most of infrastructure and industrial facilities in the peninsula were destroyed.

After the Korean War, the Republic of Korea (South Korea) became one of the poorest countries in the world.

  • After the war, 44% of factories, 42% of machineries, and 80% of power plants were destroyed; there were more than 200,000 war widows and 100,000 orphans.
  • In 1955, the GNP per capita of South Korea was around $65, the GDP was $1.3 million, and the foreign exchange holding was $23 million. (In comparison, the Philippines’ GNP per capita was $170 and that of Thailand was $260.
  • Observing the Korean peninsula that was completely demolished, journalists across the globe assessed that the damages are “not likely to be repaired even after 200 years.”

However, 60 years from the Korean War, South Korea is now the world’s top 10 economic power.

  • Based on the GDP (2016), South Korea ranked top 11, following Canada which came 10th (1st the United States, 2nd China, 3rd Japan, and 4th Germany)
  • The GNP per capita reached approximately $30,000 in 2016 (Compared to 1950, it increased 460 times)
  • In 2016, South Korea became the 6th biggest exporter (China $2,274B, Japan $625B, South Korea $567B)
  • In December 1996, South Korea joined the OECD and in 2016, became the 21st member of the Paris Club (group of major creditor countries).

What kind of miracle happened in South Korea to make all these possible? What was the engine of the miracle? Can the miracle continue in the future? What do we need to do to ensure that?

2. 1960 - 1998: a miracle created by the grandparents’ generation

While the Korean people were not strangers to crises due to numerous incidents in their history of 4,000 years, the post-Korean-war circumstances in 1950s were especially harsh to restore the economy.

  • Shortage of resources: while 70% of South Korean territory is surrounded by forest, it lacks any natural resources that are useful for industrialization such as oil, gas, and iron ore.
  • Inadequate technology: due to 50 years of Japanese invasion and occupation as well as the Korean War, South Korea did not develop modern technology.
  • Small population (market): South Korean population was no more than 20 million at the time which implies that its domestic market was not big enough.

But the grandparent generation devoted themselves to doing the groundworks for industrialization so that their legacy would not be poverty.

  • In 1961, President Park Junghee met President John F. Kennedy to request a loan but was refused on the grounds that South Korea already receives aid from other countries.
  • Same year, South Korea requested a loan of 150 million marks (around 35 million USD) to Germany but found it difficult to find a guarantor for the loan.
  • South Korean government wrote a memorandum of understanding that 5,000 South Korean miners will be sent to West Germany and that their salary will be the payment guarantee to secure the loan. From 1963 to 1977, 8,000 miners and 12,000 nurses were sent to Germany as a result.
  • With the loan from Germany, South Korea started developing industrial facilities for light industry (cloth and shoes manufacture). Countless South Korean men and women worked day and night to manufacture products for export which led to securing foreign currency.

With the foreign currency secured through light industry, South Korea started developing heavy industry (steel, shipbuilding, automobile, and construction) and electronics.

  • In the late 1960s, South Korea founded a steel mill to produce one of the most essential sources for industrial development: steel. Instead of requesting a foreign country to build and manage the steel mill, South Korean construction companies and workers participated in constructing the mill and learned how to manage the steel mill.
  • South Korea built an oil and gas plant to refine and process oil in the southern coast. While the construction was commissioned to a developed country and the processing technology was imported, a South Korean company participated in constructing the plant to acquire the technology.
  • In Ulsan and Guhjedo area, a shipbuilding yard was built so that ships could be used for exports. With the loan and technology transfer from the U.K., they started building low-value ships such as bulk carriers and container ships; shipping industry also started to develop by managing the fleet on their own.
  • In 1970s, Korean workers were sent to the Middle East for infrastructure and plant construction projects when other countries were reluctant to do it. South Korea secured more foreign currencies and accumulated experience.
  • In 1980s, South Korea benchmarked Japanese automobile and electronics companies and started to export value products while the quality did not exceed Japanese products.
  • In the late 1990s, South Korea invested in semiconductor, chemical, and cutting edge parts industries and sophisticated the industries.

This history is stunning considering that South Korea was able to develop technology without all the resources and big markets but only with the strong will of the people.

  • American steel and petrochemistry industry: steel and petrochemistry industry developed during the process of developing iron ore, oil, and gas in the United States. Construction industry also developed in the same process.
  • British and Japanese shipbuilding industry: The U.K. and Japan--developed countries that also happened to be in islands--developed shipbuilding and shipping industry while managing the export and import items.
  • South Korea developed these industries without resources, market, technology, and trade but only with people’s will.

But another crisis dawned on South Korea in the mid-1990s when it was going through a rapid economic development.

3. 1998 - 2014: Another Crisis Faced by the Parents’ Generation and Another Crisis
Will continue on “Korea: The impossible country-Part II”

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