Republic of Korea’s Road to Economic Success

Republic of Korea’s Road to Economic Success

The “Miracle on the Han River” is a well-known term for all the economists of our century. This phrase refers the period of high economic growth of the Republic of Korea from 1960s to 1990s. ‘Despite unfavorable initial conditions for development, such as limited natural resources, a narrow domestic market, negligible domestic savings and a lack of development experience’1, the sovereign  undergone impressive development that cannot be compared to any other countries. There are different explanations to this economic growth of South Korea but still many are trying to understand how this country transformed itself to highly developed economy in just one generation. Some will argue that this is a result of foreign interventions and huge economic aids, especially from the United States2 to counter communism in the whole Korean Peninsula. Some will also say that the leadership of the then President Park Chung Hee completely changed the path of South Korea.3 However, there were much more explanations than these. South Korea have three other factors that played majors roles to its advancement: the well-educated population, the Korean entrepreneurs, and the international economic environment of the 1960s.

Han River is a river in South Korea that passes through the metropolitan city of Seoul. It is now a reflection of the country’s economic power. After the Korean War, South Korea was almost flattened. Major cities and industrial zones were destroyed and developments being

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1 Korean Overseas Information Services, A Handbook of Korea (Seoul: Shamwa 1993), 364

2 Jürgen Kleiner, Korea: A Century of Change (World Scientific 2001), 254-255

3 S.E. Solberg, The Land and People of Korea (New York: HarperCollins 1991), 146-155

promoted by western countries were stalled. Presidents after the war tried to rebuild the Republic but failed to address the real needs of its people. During Syngman Rhee’s dictatorial presidency, ‘many pressing needs of the nation were being neglected’.4 Many believed that he was “strongman” and “hero” but his policies, although helped South Korea away from communism, did not really worked for the development of its growing population. For example, he created an absolute hatred of Koreans to the Japanese and not thinking that this country could help their country and its economy because Japan was already achieving economic success at this point of time.

In addition, economist may argue that the South Korea would not be the South Korea that we know today if not for the United States economic aid. ‘Shortly after the end of the Korean War, the United States started growing concerned with Communism's growing popularity among impoverished nations. [United States] decided to aid South Korea in developing its market by subsidizing 70 percent of South Korea's exports.5 This subsidy ensured South Korea’s agricultural products to be more competitive in the international market. Many will also argue that United States transformed South Korea’s economy from producing largely agricultural products to a major manufacturer of goods in just seven years (1953-1960). However, in reality South Korea’s transformation did not began until the 1960s. Little reforms in economic and