South Korea developed rapidly after the Korean War, achieving impressive economic growth under authoritarian governments led by Park Chung-hee from 1961-1979. South Korea's economy grew at an average annual rate of over 9% during this period, transforming the country from a poor agricultural nation into an industrial powerhouse and one of Asia's economic tigers. This success was driven by a system of close ties between government and businesses, high savings and investment rates, and an emphasis on export-led industries. While this development model was successful, it was also unstable, as shown by the Asian financial crisis of 1997-1998. South Korea has since transitioned to a democratic system of government and a more sustainable economy less dependent on debt and foreign capital

1. Development in South Korea

4. Japanese rule (1910-45)
• Control educational system
– Japanese language and culture
• Control land (40% of entire country)
• Infrastructure
– railroads and telegraph lines
• Industrialization
• Provisional Government-in-exile (1919)

5. 38th Parallel (1945-50)
• Soviet & U.S. divided Korea along 38th
parallel after Japan surrendered in 1945
• 1948-08-15, Republic of Korea
established
– 43% area, 60% population
– President: Rhee Syngman
• 1948-09-09, Democratic People’s
Republic of Korea established
– Premier: Kim Il-Sung

6. Dulles, Rhee, & MacArthur
• nationalist goals vs. Cold War strategies

7. Korean War (1950 - 1953)
• Most fighting happened 1950 - 1951
• truce negotiations 1951 - 1953
• Military Demarcation Line (MDL) (1953 - )

8. Republic of Korea
• President Rhee Syngman (1948 - 60)
– autocrat resigned amid popular protests
• 1961 military coup by Park Chung-Hee
– relations with Japan normalized in 1965
– economic takeoff
– assassinated in 1979
• Army General Chun Doo Hwan (1980-7)
• 1980 Kwangju massacre

9. ROK Economic Takeoff
• Park’s authoritarian rule (1961-79)
– annual economic growth rate of 9.2%
– one of the four Asian “little dragons”
year per capita GDP (US$) export (US$)
1962
87
56.7 million
1980
1,503
17,500.0 million

10. Development in South Korea
• Development a matter of survival
– high population density (48 mil./105km²)
– few natural resources
– external military threat
• one of the “Four Tigers” of East Asia
– an incredible record of growth
– integration into the high-tech modern world
economy

11. Development in South Korea
• Three decades ago GDP per capita was
comparable with levels in the poorer
countries of Africa and Asia
• Today its GDP per capita is roughly 20
times North Korea's and equal to the
lesser economies of the European Union
• GDP p.p.p. $1012 (ranks 12th in the world)

14. Success through the late 1980s
• a system of close government-business
ties
– directed credit
– import restrictions
• import of raw materials and technology
• at the expense of consumer goods
– sponsorship of specific industries
– a strong labor effort

15. Savings ratio
• savings and investment over consumption
– savings 36.2% of GDP
– Japan 31.4%, US 16.2%
• small social welfare expenditure
Social Welfare Expenditure / GDP
50
45
40
35
30
25
20
15
10
5
0
South Korea
USA
UK
Japan
France
Sweden

16. South Korea's Export & Import (in constant 1995 US$)
3E+11
2.5E+1
1
2E+11
1.5E+1
1
1E+11
5E+10
19
98
19
96
19
94
19
92
19
90
19
88
19
86
19
84
19
82
19
80
19
78
19
76
19
74
19
72
19
70
19
68
19
66
19
64
19
62
19
60
0

17. South Korea's Trade Partners
100%
90%
5
8
17
9
Other
80%
70%
32
28
East Asia
60%
Europe
50%
13
40%
Japan
14
30%
50
20%
North America
24
10%
0%
1970
1993

18. Trade Partners 2011
• Exports ($552 billion) to
– China 24%
– US 10%
– Japan 7%
• Imports ($520 billion) from
– China 17%
– Japan 13%
– US 9%

19. Asian financial crisis
• The Asian financial crisis of 1997 - 1998
• exposed longstanding weaknesses in
South Korea's development model
• high debt/equity ratios
• massive foreign borrowing
• an undisciplined financial sector

21. Democratization in ROK
• 1987 election, former general Roh Tae
Woo defeated opposition leaders Kim Dae
Jung and Kim Young Sam
• 1987, Declaration of Political Reforms
• 1988 election, opposition parties won
majority in National Assembly
• Kim Young Sam won presidential election
in 1992 (1st elected civilian president)

22. Current President
• President Park Geun-hye (2013 - )
• Daughter of former president Park Chunghee