South Korea as a Model for Developing States

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South-Korea as a model for developing states

In the twentieth century, South-Korea grew from one of the poorest countries in the world to a well-developed industrial country, and is now amongst the top economic countries, and is even part of the ‘rich countries’ club’: the OECD, which focuses on assisting in economic development of other countries. Due to this success story, South-Korea is seen as a model for other developing countries to learn from, in terms of developing economically. However, the South-Korean way of achieving this economic prosperity is no longer applicable to other countries, for several reasons. This essay will first briefly summarize the economic political development of South-Korea throughout the twentieth century to present-day, and then analyze why various aspects of this model are no longer relevant to other countries.

In 1905 an agreement was signed between the U.S. and Japan, dividing the influence territories in Asia(Toussaint 4211). The U.S. obtained the Philippines as an influence sphere, and Japan gained control over Taiwan and Korea. Korea developed only to complement the industry and the needs of Japan. Consequently, after Japan’s defeat during the Second World War, when Korea became independent, the industry was underdeveloped. Korea was divided in two: North-Korea was taken over by Russia, and South-Korea came under control of the U.S. An anti-communist government favorable to the U.S. was put in place, and in 1948 the division of the country became definite(Toussaint 4212). In 1950, North-Korea started a war by invading South-Korea, but with help of the United States’ military force and western allies, South-Korea was able to maintain its borders after the truce in 1953.

From 1945 to 1961, South-Korea received aid, mainly from the U.S. which increased significantly following the Korean war. In order to decrease the threat of communism, the U.S. made several changes to the economic system in South-Korea. Farmers came under state control and were made to pay taxes. Every farmer was required to comply to the production quota the state gave as well as sell the products at fixed prices, which were often below production costs. Economy developed under the suffering of the people.

From the 60’s onwards, the economic policies shifted from establishing economic stability to promoting economic progress. South-Korea received significantly more loans, in particular from Japan(Toussaint 324). All financial systems became nationalized, and the government promoted the development of ‘chaebols’, conglomerates working in various fields such as LG and Samsung(Kim et al 4214). The economy in South-Korea was controlled strictly by the government, with the use of five year plans, every plan focusing on distinct areas of industry. Urbanization increased and workers in industries