Miracle on the Han River

For the historical context of this phrase, see Economy of South Korea.
Miracle on the Han River
South Korea GDP (PPP)
Korean name
Hangul 한강의 기적
Hanja 漢江의 奇蹟

The Miracle on the Han River was the rapid economic growth of South Korea following the Korean War, transforming from a developing country to a developed country, and the rapid reconstruction and development of the economy of South Korea, leading to events such as the successful hosting of the 1988 Summer Olympics and co-hosting of the 2002 FIFA World Cup, as well as the prosperity of chaebols (family-owned conglomerates), such as Samsung, LG, and Hyundai.[1] The term was coined by analogy with the phrase "Miracle on the Rhine", used to refer to the economic rebirth of West Germany after World War II, resulting partially from the Marshall Plan and by a Korean journalist and politician who observed Wirtschaftswunder since late 1950s. For instance, Chang Myon who was prime minister of the Second Republic of Korea said that South Koreans should be enthusiastic about one's work and bear a hard life in order to accomplish miracle on the Han River like miracle of West Germany, emphasizing necessity of development of South Korea at his New Year's address of 1961.[2] Today, South Korea is often mentioned a role model for many developing countries in Asia.[3]

Before the war (–1950)

South Korea was a colony of Japan Empire from 1910 to 1945 so that Korea experienced modernization and economic growth[4] that included industrialization because of expansion of Japanese capital especially in 1930s–1940s.[5] So GNI per capita of Korea was $103 in 1938[6] which is the same level as GNI per capita of 1 billion in less developed countries in 1950.[7] However, since Pacific War occurred, Korean economic had declined on account of excessive delivery by Japan and then breakdown of trade relations between Korea and japan, division of territory and Korean War damaged Korean property by 25%.[8]

The First Republic (1948~1960) and Korean War

Although legislation of Farmland Reform Act delayed by the legislative and Syngman Rhee administration until 1950, redistribution was implemented owing to a fair distribution Japanese-owned land by United States Army Military Government in Korea and voluntary disposal by landowner saw the first constitution of Korea. Private funds generated here flowed on disposal of vested firms left by Japanese, so vested firms became large firms. According to a Korean study, out of 89 of South Korea's large company in 1950's, 40 were from vested firms. A total of seventy five percent of the cotton textile companies hailed from vested firms, and a total of eighty percent of the metal and machine large companies hailed from vested firms.[9] 8 large companies were founded in the Japanese colonial period, while other firms grew by having enormous aid goods and foreign-exchange profit. When Syngman Rhee and the Liberal Party rigged the vice-presidential election of 1960 in an attempt to consolidate their power, nationwide demonstrations led by angry students brought about the end of Rhee's regime, to be succeeded democratically by Chang Myon, the leader of the Democratic Party.

The Second Republic (1960~1961)

The Second Republic of South Korea existed only one year but they had a great effect on economy and history of South Korea by ideology and policy. Chang Myon and the Democratic Party was extreme anticommunism like first republic, however, being different in that they advocated the Economic First Policy with the State-led Capitalism and promoted amity with Japan for economic cooperation.[10] In second republic, the Korean won-US dollar exchange official rate raised from 65 to 130,[11] supporting plan for an export industry was introduced,[12] Public Utility Rate was rationalized by raising.[13] Siting of Mega-Project over 45,000,000 man-days began to reduce unemployment rates by government.[14] at the same time ministers prompt to acquire a loan briskly for basic industries such as construct oil refinery, the greatest chemical fertilize factory. plantrefinery[15][16] it was obstructed by General Park Chung Hee who staged a military coup however he succumbed shortly.

One of the most important contributors to the Miracle on the Han River was the 5-year Economic Development Plan prepared by Chang Myon who was Prime Minister of the Second Republic of Korea. Although The plan was announced by a general Park Chung-Hee it was built by ‘Council for the Development of Industry(Mar. 1958. - May. 1961.)’ under the ‘Ministry of Revival(Feb. 1955 ~ May. 1961.)’ which was formerly the ‘Ministry of Work’ with Dr. Caharles Jr Wol follow Chang Myon’s instructions on constructive criticism of the 3-year Industry Development, That is a part of 7-year plan made by Rhee administration.[17] a first 5-year plan to boost the South Korea economy with several goals:

While this 5-year plan did not bring about an immediately self-reliant economy, there was a rapid period of growth out of this policy. The ambitious plan had simply looked for better policies in modernizing and preparing for long-term economic success. The government's efforts were designed to bring about policy reform.[18]

The SCNR (1961~1963)

A military coup led by General Park Chung Hee overthrew the Democratic Party, giving rise to a military junta. The junta declared martial law shut down 1200 newspapers ordered to arrest bureaucrat and illegalized politics and gathering congregation in 2 years. at the same time, Park induced a city dweller to go rural areatried, reinforcing agricultural policy in order to do populism for prepare election.

The Third Republic (1963~1972)

In third republic, South Korea received hundreds of millions of dollars from japan under the Korea's property claims against Japan and was mostly dependent on foreign aid, largely from the U.S. in exchange for South Korea's involvement in the Vietnam War.[19][20] the government used this money to accomplish a self-supporting economy. Government's Saemaeul movement focused on developing rural Korea. The strong leadership of the government, though criticized as repressive and heavy-handed, and the effective use of cheap labor, served as a catalyst for the South Korean economy.

The Fourth Republic (1972~1981)

In the fourth republic, South Korea concentrated investment on heavy chemical industry for import-substituting effect. For this, encourage advance to the Middle EastThat way, there would be enough capital in circulation. Civilians cooperated by investing in the markets and the business employers did their part making sure employees were loyal, improving labor cost savings. This continued to be the case even when the consequences of marginal utility seemed to be looming because of the overproduction of goods. Another motivating factor in the industrial sector was the influence of a series of "policy loans" that were closely associated with negative interest rates. With the government backing heavy industries, electronics and steel industries flourished. Another benefit of industries promoted by the government was the freedom for leaders in the industrial sector to spend money without feeling constrained by a budget due to the government’s commitment to keep the business running. Therefore, the government expected positive results when they pressured businesses workers to perform well. Money subsequently came pouring into the economy as people became confident in investing in successful heavy industries whose rewards they were enjoying.[19]

The dominance of chaebol in the Korean economy

Chaebol refers to corporate groups in South Korea, mainly run by families, that exercise monopolist or oligopolist control in product lines and industries. They can be compared with conglomerates of the United States and the Zaibatsu of Japan. Sometimes the Korean military itself is considered a chaebol. During the industrialization period of South Korea, President Park supported the rise of chaebol groups, facilitating the improvements of these groups for the benefit of economic growth. Inside the operations of chaebol groups, there are many branches that family members control and operate. Every Korean chaebol business was started by a family group and 70 percent of chaebol are still managed by family members, and in order for the power and standing of these groups to grow stronger, many chaebol form alliances through marriage, with examples including Samsung and Hyundai.

Many political affiliations are created within the chaebol. One-third of chaebol occupy high-ranking offices in three branches of the government. The chaebol, tired of new generals coming in and seizing their property or directing them to invest in favored industries, moved in the same direction as the middle class toward democratic elections and the rule of law. According to George Ogle, ten chaebol families managed 60 percent of the "Miracle on the Han".[21] With the help of governmental help and associations, chaebols are still an enormous influence on the Korean economy, though they are also accused of inhibiting small businesses or independent entrepreneurship. The Kim Young Sam government (1993–98) attempted to assist small businesses by providing more loan money but this did not deter the chaebols from continuing to expand. In 1992, Korea was rated 100 out of 100 on wage rates and 100 on tax burden or lack thereof (with Spain the next highest at 71, and the United States third at 55). In other words, the Korean state still provides a relative capitalist heaven for their big business groups (Cumings, 330–331).[19]

Economic problems

By the end of 1995, South Korea had established itself as the eleventh largest economy in the world after being in economic shambles at the end of the war. However, systemic problems remained with its political and financial systems. Earlier, whenever problems arose that hindered economic development, the junta harassed the wealthy for funding. The junta also gathered a group of high earners, who had attained their wealth due to their corrupt relations with Syngman Rhee. These people were known as the "illicit profiteers".

Financial troubles mounted as Korea received short term relief from the United States when Treasury Secretary Rubin and other senior officials agreed to a 57 billion dollar bailout package in exchange for drastic restructuring of Korea's markets. As the country came under pressure to restructure the financial sector and make it more transparent, market oriented, and better supervised, its firms were obliged to restructure in a way that would allow international organizations to audit them. Around December 1996, President Kim Young Sam had announced that South Korea had gained recognition for its economy by joining the Organization of Economic Cooperation and Development, consisting of top industrial nations. President Kim then created a new labor law which retained the Korean Federation of Trade Unions, a large, state-controlled trade union, as the only officially approved labor organization for five more years, leaving the independent Korean Confederation of Trade Unions out in the cold. This new law undercut workers' interests.

The IMF Crisis

In 1997, the "miracle" on the Han River temporarily ended. South Korea again encountered an economic disaster in the form of the 1997 Asian Financial Crisis. Korea's reserves were severely limited with a total of only $6 billion remaining. The majority of this money was allocated for spending in the upcoming term.[19] Kim Yong-sam, the first nonmilitary person to become president in thirty years, failed to protect the economy. President Kim Dae-jung (1998–2003) took office after Kim Yong-sam with considerable damage to repair. Kim was openly opposed to the chaebol and the current system of finance and government, and with the efforts of the citizens, a new president, and 58 billion dollars put together by the International Monetary Fund, the country paid its debts and surmounted the problem. Through such actions South Korea's financial crisis was severe but relatively brief compared to other countries who experienced similar situations.

In 1999, the G20 was established out of a group of twenty finance ministers and central bank governors and 19 countries. This group was formed to bring together established industrial and emerging-market countries from all regions of the world. South Korea acceded to the G20 in November 2010, capping a successful sixty-some years of rebuilding and modernization.

Seoul

Sometimes, the term refers to the economic growth of Seoul, through which the Han River flows, although it is generally used in reference to the country as a whole. In less than four decades, Seoul was transformed into a global city, a center of business and commerce in Northeast Asia and a highly developed economic hub, laying the grounds for an advanced technological and communications infrastructure. Koreans consider this rapid growth a symbol of national pride and self-sufficience. Besides the Saemaeul movement, the Korean government carried out another effective economic development plan called the There were more than five plans created, and they were designed to revive the economy. Each of the plans contributed greatly to industrialization and enlarging the marketplaces of South Korea.

Criticism on Park Jung Hee

"Treat employees like family" was Park's new motto, which also led to Korea's economic success. With this motto, Korean workers were claimed to be 2.5 times more productive than American workers even though Korean workers were paid one-tenth of American wages.[19] Park's rule is remembered by Koreans with mixed emotions. Many praise him for the contributions he made to Korea's economy and its recovery,[17] but contemporary opinions criticize him for systematically disregarding human rights and censoring the media as part of a brutal military dictatorship. Following a military coup in the 1960s Park established a strong authoritarian rule characterized by a one-party regime. In this authoritarian state, the leading party only had to appease a small constituency of the ruling or military elite. During Park's tenure Korea suffered from censorship in the press and media. Because of strong antipathies toward communism, Korean journalism and free speech were tightly controlled. Disregarding human rights and violations, Park would utilize the abundant supply of cheap labor and place his foremost priority on Korea's economic restoration. Morality laws established mandatory curfews and regulations on attire and music. In his program of Yushin Kaehyuk (Revitalizing Reforms), he caused Korean cinema to enter into a moribund period considered by many to be the lowest periods in the history of Korean cinema. Such enormous growth of economy came with costs to freedom. Although Park was successful in bringing economic recovery to Korea, he trampled on human rights and often imprisoned those who questioned his rule. Park had believed that South Korea was not ready to be a full democratic nation nor a free nation. As he stated, "Democracy cannot be realized without an economic revolution." Park argued that the poverty of the nation would make it vulnerable, and therefore an urgent task was to eliminate poverty rather than establish a democratic nation. During his presidency the Korean Central Intelligence Agency became a much feared institution and the government frequently imprisoned anyone who opposed them. Park Chung-hee's rule ended on October 26, 1979 when he was killed by his chief of security services, Kim Jaegyu.

Challenges to the term "Miracle on the Han"

The time between the years 1961–1996 was a period of economic boom for South Korea which few would have predicted before about 1960 (Cumings, 300).[19] South Korea's leap from the destruction of the Korean War to become the eleventh largest economy in the world did not happen by supernatural might: "Koreans in the South have worked their fingers to the bone to create the industrial country that we now see" (Cumings, 341).[19]

See also

References

  1. ↑ http://www.archives.go.kr/next/common/downloadBoardFile.do?board_seq=94602&board_file_seq=1; "세계 최빈국을 반세기만에 국민총생산 세계 13위의 경제강국으로 발전시킨 「한강의 기적」"
  2. ↑ http://newslibrary.naver.com/viewer/index.nhn?articleId=1961010100329102003&editNo=3&printCount=1&publishDate=1961-01-01&officeId=00032&pageNo=2&printNo=4576&publishType=00010; "신년에는 우리도 남과같이 좀 잘살아야겠읍니다… 여기에 현 정부가 표방한 경제제일주의의 목표가 있습니다… 우리도 독일과 같이 이른바 한강변의 기적을 낳기 위해 독일사람 못지 않은 내핍과 근로가 있기를 바라마지않습니다."
  3. ↑ S. Korea Is a Role Model for Africa: Obama The Korea Times, 2009-11-07
  4. ↑ Mizoguchi Toshiyuki , Umemura Mataji, Basic Economic Statistics of Former Japanese Colonies 1895-1938 Estimates and Findings 6-1, 6-4; Average annual growth rate about from 1914 to 1938 is 0.97%
  5. ↑ 溝口敏行『台湾・朝鮮の経済成長』、岩波書店、1975. 溝口敏行; average annual growth rate for manufacturing of south korea only between 1914 and 1927 is 4.89%, average annual growth rate for manufacturing of south korea only between 1928 and 1940 is 9.7%.
  6. ↑ http://newslibrary.naver.com/viewer/index.nhn?articleId=1957050700329201012&editNo=1&printCount=1&publishDate=1957-05-07&officeId=00032&pageNo=1&printNo=3602&publishType=00020; 전기 일구삼팔년의 국민소득이 매인 103불에 달하였음
  7. ↑ GENERAL AGREEMENT ON TARIFFS AND TRADE, International Trade. 1959: GATT Annual Report published; total population of low-income countries in 1950 was 999 million. total Gross national income of low-income countries in 1950 was 102.9 billion. so the average per caput national income of the less developed countries is $103.
  8. ↑ 이대근, 현대한국경제론: 고도성장의 동력을 찾아서, 경기: 한울 아카데미, 2008, p.60
  9. ↑ 1950년대 한국의 자본가 연구,공제욱, 백산서당, 1993
  10. ↑ http://newslibrary.naver.com/viewer/index.nhn?articleId=1961042300329101008&editNo=3&printCount=1&publishDate=1961-04-23&officeId=00032&pageNo=1&printNo=4688&publishType=00010
  11. ↑ http://newslibrary.naver.com/viewer/index.nhn?articleId=1961020200329101001&editNo=3&printCount=1&publishDate=1961-02-02&officeId=00032&pageNo=1&printNo=4608&publishType=00010
  12. ↑ http://newslibrary.naver.com/viewer/index.nhn?articleId=1961042600329102003&editNo=3&printCount=1&publishDate=1961-04-26&officeId=00032&pageNo=2&printNo=4691&publishType=00010
  13. ↑ http://newslibrary.naver.com/viewer/index.nhn?articleId=1961050200329101001&editNo=3&printCount=1&publishDate=1961-05-02&officeId=00032&pageNo=1&printNo=4697&publishType=00010
  14. ↑ http://newslibrary.naver.com/viewer/index.nhn?articleId=1961020900329201001&editNo=2&printCount=1&publishDate=1961-02-09&officeId=00032&pageNo=1&printNo=4615&publishType=00020
  15. ↑ http://newslibrary.naver.com/viewer/index.nhn?articleId=1961033100329102001&editNo=3&printCount=1&publishDate=1961-03-31&officeId=00032&pageNo=2&printNo=4665&publishType=00010
  16. ↑ http://newslibrary.naver.com/viewer/index.nhn?articleId=1961010100329106005&editNo=3&printCount=1&publishDate=1961-01-01&officeId=00032&pageNo=6&printNo=4576&publishType=00010
  17. 1 2 Ch'oe, Yong-ho, Peter H. Lee, and Wm. Theodore de Bary "Politics and Economy in South Korea" Sources of Korean Tradition Volume II: From the Sixteenth to the Twentieth Centuries. Columbia University Press, 2006. Pages 370–373.
  18. 1 2 Lee, Peter H., and Bary William Theodore De, eds. Sources of Korean Tradition. Vol. 2. New York: Columbia UP, 2000. Print.
  19. 1 2 3 4 5 6 7 Cumings, Bruce. Korea's Place in the Sun: a Modern History. New York: Norton, 2005. Print.
  20. ↑ Korea: A Century of Change By Jürgen Kleiner
  21. ↑ Ogle, George E. South Korea: Dissent within the Economic Miracle. London [England: Zed, 1990. 35. Print.

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