South Korea's Economic Success

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South Korea’s Economic Success
A Rise from the Ashes of War

ECON 211:

South Korea’s Economic Success
A Rise from the Ashes of War
After signing an armistice agreement between North Korea, the US and China on July 27, 1953, the next 5 decades South Korea has been pulling itself out of the ashes of a war that divided the country. South Korea has risen to great economic success becoming one of the 15 greatest economies of the world in 2010. This great success did come at a great price and sacrifice to the people of South Korea. Through all the hard work and sacrifices of the people, to the taking back of governments from dictatorial type regimes, the economy has come about and has lifted the people out of those ashes and into the times of great economic success.

As South Korea was finishing its chapter with the brutal Korean War, the “annual per capita income at the time was $100US,” according to Durkop and Ratzer (2010). They also go on to say that “the annual per capita has grown significantly and that Korea has changed from being a recipient nation to that of a donor nation” (2010). The change from a recipient nation means that they are now not receiving any aid, but as a donor nation, they are giving out aid to help those nations in need. With this incredible amount of change we have to wonder what exactly it is that made the progress of the South Korean economy so successful. With this question in mind, I intend to scratch the surface as to what large events played out in across the decades, in the government and the industries to create such a jump from the bottom of the barrel to almost the cream at the top.

After the war, South Korea sustained itself on the aid provided from the United States. South Korea’s government influenced and promoted the growth in manufacturing to quickly boost its GDP and continue its momentum. At the beginning the “main exports were shoes and textiles but eventually got South Korea got into the development of other items such as cars, technologies, metals and fabrics” (Comeback Kid, UNK). Still though, at the very beginning, there was little to no economic progress due to corruption of top political personnel until the coup and rule of the leader Park Chung-hee. Until then the economy wasn’t able to bring itself out of economic hard times (Heo, U and Roehrig, T. 2010).

Park Chung-hee had both a civilian and military education and rose to Brigadier General in the South Korean Army. After the Korean War, he saw the corruption that was rampant in the civilian leadership and staged a military coup in May of 1961. With this coup “he took the power and restructured the South Korean economy to try and revitalize it.” After he set in to motion his plans, he decided to stay in power which led to his assassination in 1979 (Heo, U and Roehrig, T. 2010). During his 18 years of dictatorial like leadership in the Presidential Office, he did implement an economic plan of action and through this helped kick start the economy by designing the economy based on that of exports. President Park “nationalized banks and set export targets, rewarding those business people that exceeded their targets. Imports were tightly controlled, exports were subsidized, and South Korea’s exports were free to be imported to other countries. With this, the economic growth was about 10% per year”, and impressive increase over those 18 years (Holcombe, UNK).

With the subsidizing of certain companies this helped in the progress of the technology and automobile industries. Also with tightly controlling the imports there was less outside products creating more need for in country industry of certain items therefore keeping the money and the jobs in country. With the exports being free of tax to other countries, then South Korea could be able to send their products overseas, look more enticing to buyers and this did increase the GDP of South Korea. This seems to me like they were basically taking other countries...
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