The Miracle on the Han River refers to the period of rapid
economic growth
Economic growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy in a financial year. Statisticians conventionally measure such growth as the percent rate o ...
in
South Korea
South Korea, officially the Republic of Korea (ROK), is a country in East Asia, constituting the southern part of the Korea, Korean Peninsula and sharing a Korean Demilitarized Zone, land border with North Korea. Its western border is formed ...
, following the
Korean War
{{Infobox military conflict
, conflict = Korean War
, partof = the Cold War and the Korean conflict
, image = Korean War Montage 2.png
, image_size = 300px
, caption = Clockwise from top:{ ...
(1950–1953), during which South Korea transformed from a
least developed country to a
developed country
A developed country (or industrialized country, high-income country, more economically developed country (MEDC), advanced country) is a sovereign state that has a high quality of life, developed economy and advanced technological infrastruct ...
. The rapid reconstruction and development of the South Korean economy during the latter half of the 20th century was accompanied by events such as the country's successful hosting of the
1988 Summer Olympics
The 1988 Summer Olympics (), officially known as the Games of the XXIV Olympiad () and commonly known as Seoul 1988 ( ko, 서울 1988, Seoul Cheon gubaek palsip-pal), was an international multi-sport event held from 17 September to 2 October ...
and its co-hosting of the
2002 FIFA World Cup
The 2002 FIFA World Cup, also branded as Korea Japan 2002, was the 17th FIFA World Cup, the quadrennial Association football, football world championship for List of men's national association football teams, men's national teams organized by ...
, as well as the ascension of family-owned conglomerates known as
chaebol
A chaebol (, ; ) is a large industrial South Korean conglomerate run and controlled by an individual or family. A chaebol often consists of multiple diversified affiliates, controlled by a person or group whose power over the group often exc ...
s, such as
Samsung
The Samsung Group (or simply Samsung) ( ko, 삼성 ) is a South Korean multinational manufacturing conglomerate headquartered in Samsung Town, Seoul, South Korea. It comprises numerous affiliated businesses, most of them united under the ...
,
LG, and
Hyundai Hyundai is a South Korean industrial conglomerate (" chaebol"), which was restructured into the following groups:
* Hyundai Group, parts of the former conglomerate which have not been divested
** Hyundai Mobis, Korean car parts company
** Hyundai A ...
. This growth also encompassed declines in child mortality and increases in life expectancy. From 1961 to 1979, child mortality declined by 59%, the second fastest decrease in child mortality of any country with over 10 million inhabitants during the same period. South Korea during this period has been described as "corporatist" or as practicing
state capitalism
State capitalism is an economic system in which the state undertakes business and commercial (i.e. for-profit) economic activity and where the means of production are nationalized as state-owned enterprises (including the processes of capital ...
. This period of growth was overseen by the
Democratic Republican Party (DRP),
[Kohli, A. (2004). ''State-Directed Development: Political Power and Industrialization in the Global Periphery''. Cambridge: Cambridge University Press. p. 92.] a
conservative
Conservatism is a cultural, social, and political philosophy that seeks to promote and to preserve traditional institutions, practices, and values. The central tenets of conservatism may vary in relation to the culture and civilization in ...
, broadly
state capitalist[Kim, B. K. & Vogel, E. F. (eds.) (2011). ''The Park Chung Hee Era: The Transformation of South Korea''. Harvard University Press. p. 125.] and
nationalist
Nationalism is an idea and movement that holds that the nation should be congruent with the state. As a movement, nationalism tends to promote the interests of a particular nation (as in a group of people), Smith, Anthony. ''Nationalism: Th ...
party.
The term "Miracle on the
Han River" was coined after the phrase "
Miracle on the Rhine" was used to refer to the economic rebirth of
West Germany
West Germany is the colloquial term used to indicate the Federal Republic of Germany (FRG; german: Bundesrepublik Deutschland , BRD) between its formation on 23 May 1949 and the German reunification through the accession of East Germany on 3 ...
after
World War II
World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the World War II by country, vast majority of the world's countries—including all of the great power ...
.
This analogy was incorporated by
Chang Myon
Chang Myon (hangul: 장면; hanja: 張勉; August28, 1899June4, 1966) was a South Korean statesman, educator, diplomat, journalist and social activist as well as a Roman Catholic youth activist. He was the only prime minister of the parliament ...
, prime minister of the
Second Republic of South Korea
The second Republic of Korea was the government of South Korea from April 1960 to May 1961.
The Second republic was founded during the April Revolution mass protests against President Syngman Rhee, succeeding the First republic and establishi ...
, in his New Year's address of 1961, in which he encouraged South Koreans to bear difficulties in the hope of achieving a similar economic upturn. The resultant growth has been attributed to the hard work of the labor force.
External factors include the enormous economic and technical assistance provided by foreign countries, particularly Japan (see: ''
Treaty on Basic Relations Between Japan and the Republic of Korea'') and the United States, access to Western and Japanese markets, and the acquisition of foreign currency by Korean migrant workers in the early stages of economic growth.
Following the Miracle on the Han River, South Korea has been held as an economic model for other developing countries and acceded to the
G20 in November 2010, capping a successful sixty-some years of rebuilding and modernization.
History
Background
Between 1910 and 1945,
Korea
Korea ( ko, 한국, or , ) is a peninsular region in East Asia. Since 1945, it has been divided at or near the 38th parallel, with North Korea (Democratic People's Republic of Korea) comprising its northern half and South Korea (Republic ...
was annexed and became a part of the
Japanese Empire
The also known as the Japanese Empire or Imperial Japan, was a historical nation-state and great power that existed from the Meiji Restoration in 1868 until the enactment of the post-World War II 1947 constitution and subsequent forma ...
. Partly as a result of Japanese capital investment, especially during the 1930s–1940s, it experienced a phase of moderate
industrialization
Industrialisation ( alternatively spelled industrialization) is the period of social and economic change that transforms a human group from an agrarian society into an industrial society. This involves an extensive re-organisation of an econo ...
and
economic growth
Economic growth can be defined as the increase or improvement in the inflation-adjusted market value of the goods and services produced by an economy in a financial year. Statisticians conventionally measure such growth as the percent rate o ...
. With the start of the
Pacific War
The Pacific War, sometimes called the Asia–Pacific War, was the theater of World War II that was fought in Asia, the Pacific Ocean, the Indian Ocean, and Oceania. It was geographically the largest theater of the war, including the vas ...
of
World War II
World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the World War II by country, vast majority of the world's countries—including all of the great power ...
, the Korean economy declined when the
Japanese mainland
is a term to distinguish the area of Japan from its outlying territories. It was an official term in the pre-war period, distinguishing Japan and its colonies in the Far East. After the end of World War II, the term became uncommon, but s ...
exploited Korea economically. By the end of the Pacific War, Korea was one of the poorest regions in the world.
1948–1960: The First Republic and Korean War
The division of territory as a result of the
Korean War
{{Infobox military conflict
, conflict = Korean War
, partof = the Cold War and the Korean conflict
, image = Korean War Montage 2.png
, image_size = 300px
, caption = Clockwise from top:{ ...
further damaged Korean property by 25% and resulted in the establishment of the
First Republic of South Korea
The first Republic of Korea () was the government of South Korea from August 1948 to April 1960. The first republic was founded on 15 August 1948 after the transfer from the United States Army Military Government that governed South Korea si ...
, ruled by the
Syngman Rhee
Syngman Rhee (, ; 26 March 1875 – 19 July 1965) was a South Korean politician who served as the first president of South Korea from 1948 to 1960.
Rhee was also the first and last president of the Provisional Government of the Republic of Ko ...
administration until 1960. At this time, the economy was largely agricultural.
Through the Farmland Reform Act of 1950, the
United States Army Military Government in Korea
The United States Army Military Government in Korea (USAMGIK) was the official ruling body of the Southern half of the Korean Peninsula from 8 September 1945 to 15 August 1948.
The country during this period was plagued with political and eco ...
redistributed previously Japanese-owned land, allowing the generation of private funds.
1960–1961: The Second Republic
The
Second Republic of South Korea
The second Republic of Korea was the government of South Korea from April 1960 to May 1961.
The Second republic was founded during the April Revolution mass protests against President Syngman Rhee, succeeding the First republic and establishi ...
existed for only one year, but had a great effect on economy and history of South Korea through ideology and policy. Prime Minister
Chang Myon
Chang Myon (hangul: 장면; hanja: 張勉; August28, 1899June4, 1966) was a South Korean statesman, educator, diplomat, journalist and social activist as well as a Roman Catholic youth activist. He was the only prime minister of the parliament ...
and the Democratic Party held a stance of extreme anti-communism (as did the First Republic), but also advocated an Economic First Policy with State-led Capitalism, promoting amity and economic cooperation with Japan.
1961–1963: The SCNR
When a military coup in 1961 led by general
Park Chung-hee
Park Chung-hee (, ; 14 November 1917 – 26 October 1979) was a South Korean politician and army general who served as the dictator of South Korea from 1961 until his assassination in 1979; ruling as an unelected military strongman from 1961 ...
overthrew the Democratic Party, the result was a
military junta
A military junta () is a government led by a committee of military leaders. The term ''junta'' means "meeting" or "committee" and originated in the national and local junta organized by the Spanish resistance to Napoleon's invasion of Spain in ...
known as the
Supreme Council for National Reconstruction (SCNR). During this time, the first national
Five-Year Plan (1962–1966) was implemented, becoming an important factor in the Miracle on the Han River. It aimed to develop the nation's economy through expansion of agriculture and energy industries such as coal and electric power; development of basic industries such as chemical fertilizer, cement, oil refinery, iron, and steel; expansion of
social overhead capital
Unbalanced growth is a natural path of economic development. Situations that countries are in at any one point in time reflect their previous investment decisions and development. Accordingly, at any point in time desirable investment programs th ...
including roads, railways, and ports; full utilisation of idle resources including increased employment; conservation and utilisation of land; export promotion to improve the
balance of payments
In international economics, the balance of payments (also known as balance of international payments and abbreviated BOP or BoP) of a country is the difference between all money flowing into the country in a particular period of time (e.g., a ...
; and promotion of science and technology.
While this first Five-Year Plan did not bring about an immediately self-reliant economy, it brought a period of growth and modernization in preparation for long-term economic success and policy reform.
Park's motto of "treating employees like family" has been credited with increasing productivity within the South Korean workforce and thus as contributing to the nation's economic success. Park's national reputation as a leader has met mixed receptions: while praised for his contributions to South Korea's economic recovery,
contemporary commentators also criticize him for systematic disregard of human rights and
media censorship
Censorship is the suppression of speech, public communication, or other information. This may be done on the basis that such material is considered objectionable, harmful, sensitive, or "inconvenient". Censorship can be conducted by governments ...
(because of anti-communist sentiment) as part of a military dictatorship. In the one-party regime of the SCNR, the leading party answered to a small constituency of the ruling or military elite, and South Korea's economic restoration was prioritised at the expense of human rights as Park utilized the abundant supply of cheap labor.
At the same time, 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. 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
Korean may refer to:
People and culture
* Koreans, ethnic group originating in the Korean Peninsula
* Korean cuisine
* Korean culture
* Korean language
**Korean alphabet, known as Hangul or Chosŏn'gŭl
**Korean dialects and the Jeju language
** ...
became a much feared institution and the government frequently imprisoned dissenters. Park Chung-hee's rule ended on October 26, 1979 when he was killed by his chief of security services,
Kim Jae-gyu
Kim Jae-gyu (Hangul: 김재규, April 9, 1924 – May 24, 1980) was a South Korean politician, army lieutenant general and the director of the Korean Central Intelligence Agency. He assassinated South Korean President Park Chung-hee— ...
.
1963–1972: The Third Republic
During the
Third Republic, South Korea received US$800 million from Japan under property claims, and was mostly dependent on
foreign aid, largely from the U.S. in exchange for South Korea's involvement in the
Vietnam War
The Vietnam War (also known by #Names, other names) was a conflict in Vietnam, Laos, and Cambodia from 1 November 1955 to the fall of Saigon on 30 April 1975. It was the second of the Indochina Wars and was officially fought between North Vie ...
.
The government used this money to accomplish a self-supporting economy, launching the
Saemaeul movement in order to develop rural areas. The strong leadership of the government (though criticized as repressive and heavy-handed) as well as the effective use of cheap labor served as catalysts for the growth of the South Korean economy.
1972–1981: The Fourth Republic
During the
Fourth Republic, with the government backing
heavy industries
Heavy industry is an industry that involves one or more characteristics such as large and heavy products; large and heavy equipment and facilities (such as heavy equipment, large machine tools, huge buildings and large-scale infrastructure); or ...
, electronics and steel industries flourished. Another benefit of government backing 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. Money subsequently came pouring into the economy as
consumer confidence
Consumer confidence is an economic indicator that measures the degree of optimism that consumers feel about the overall state of the economy and their personal financial situation. If the consumer has confidence in the immediate and near future e ...
in heavy industries grew.
1981–1997: Market restructuring
By the end of 1995, South Korea had established itself as the eleventh largest economy in the world, in contrast to the bleak economic landscape at the end of the war. However, systemic problems remained within 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
Syngman Rhee (, ; 26 March 1875 – 19 July 1965) was a South Korean politician who served as the first president of South Korea from 1948 to 1960.
Rhee was also the first and last president of the Provisional Government of the Republic of Ko ...
. These people were known as the "illicit profiteers".
Financial troubles mounted as Korea received short term relief from the United States when
Treasury Secretary
The United States secretary of the treasury is the head of the United States Department of the Treasury, and is the chief financial officer of the federal government of the United States. The secretary of the treasury serves as the principal a ...
Robert Rubin
Robert Edward Rubin (born August 29, 1938) is an American retired banking executive, lawyer, and former government official. He served as the 70th United States Secretary of the Treasury during the Clinton administration. Before his government ...
and other senior officials agreed to a US$57 billion 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
Kim Young-sam (; or ; 20 December 1927 – 22 November 2015) was a Demographics of South Korea, South Korean politician and activist who served as the seventh president of South Korea from 1993 to 1998.
From 1961, he spent almost 30 year ...
announced that South Korea had gained recognition for its economy by joining the
Organization for Economic Cooperation and Development, consisting of top industrial nations. President Kim then created a new labor law that retained the
Federation of Korean Trade Unions
The Federation of Korean Trade Unions (FKTU) is a national trade union center in South Korea formed in 1960. It represents the company union tendency of the South Korean labour movement, as opposed to the more militant Korean Confederation of T ...
, 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.
1997–1999: Currency crisis
In 1997, South Korea faced widespread economic disaster in the form of the
East Asian financial crisis
The Asian financial crisis was a period of financial crisis that gripped much of East Asia and Southeast Asia beginning in July 1997 and raised fears of a worldwide economic meltdown due to financial contagion. However, the recovery in 1998–1 ...
. The country's reserves were severely limited at US$6 billion, the majority of which was allocated for spending in the upcoming term.
Kim Young-sam
Kim Young-sam (; or ; 20 December 1927 – 22 November 2015) was a Demographics of South Korea, South Korean politician and activist who served as the seventh president of South Korea from 1993 to 1998.
From 1961, he spent almost 30 year ...
, the first nonmilitary President in thirty years, failed to protect the economy at the time, and President
Kim Dae-jung
Kim Dae-jung (; ; 6 January 192418 August 2009), was a South Korea, South Korean politician and activist who served as the eighth president of South Korea from 1998 to 2003.
He was a 2000 Nobel Peace Prize recipient for his work for democra ...
(1998–2003) took over the office with considerable damage to repair. The new President was openly opposed to the chaebol and the financial and governmental system of the time, and his election along with the efforts of the citizens and US$58 billion put together by the
International Monetary Fund
The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster globa ...
, the country paid its debts and surmounted the problem. Thus, South Korea's financial crisis was severe, but relatively brief compared to other countries which experienced similar situations.
Dominance of chaebol groups in Korean economy
Chaebol refers to corporate groups in South Korea, mainly run by families, that exercise
monopolist
A monopoly (from Greek el, μόνος, mónos, single, alone, label=none and el, πωλεῖν, pōleîn, to sell, label=none), as described by Irving Fisher, is a market with the "absence of competition", creating a situation where a speci ...
or
oligopolist control over product lines and industries. They can be compared with conglomerates of the United States and the
zaibatsu
is a Japanese language, Japanese term referring to industrial and financial vertical integration, vertically integrated business conglomerate (company), conglomerates in the Empire of Japan, whose influence and size allowed control over signi ...
of Japan. During the industrialization period of South Korea, President Park Chung-hee supported the rise of chaebol groups, facilitating the growth of these groups in order to trigger 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 formed within chaebol groups. 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 E. Ogle, ten chaebol families were responsible for 60 percent of the growth of the South Korean economy during the Miracle on the Han River.
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 as unethical behavior and corrupt practices. The
Kim Young-sam
Kim Young-sam (; or ; 20 December 1927 – 22 November 2015) was a Demographics of South Korea, South Korean politician and activist who served as the seventh president of South Korea from 1993 to 1998.
From 1961, he spent almost 30 year ...
government (1993–98) attempted to assist small businesses by providing more loans, but this did not deter the expansion of the chaebols. In 1992, Korea received the maximum rating of 100 on both wage rates and tax burdens 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 haven for its large business conglomerates.
See also
*
Chinese economic reform
The Chinese economic reform or reform and opening-up (), known in the West as the opening of China, is the program of economic reforms termed " Socialism with Chinese characteristics" and "socialist market economy" in the People's Republic of C ...
s
*
corporatism
Corporatism is a collectivist political ideology which advocates the organization of society by corporate groups, such as agricultural, labour, military, business, scientific, or guild associations, on the basis of their common interests. The ...
*
Đổi Mới
(, ; ) is the name given to the economic reforms initiated in Vietnam in 1986 with the goal of creating a " socialist-oriented market economy". The term itself is a general term with wide use in the Vietnamese language meaning "innovate" or ...
*
Economic liberalisation in India
The economic liberalisation in India refers to the opening of the country's economy to the world with the goal of making the economy more market and service-oriented, thus expanding the role of private and foreign investment. Indian economi ...
*
Economy of South Korea
The economy of South Korea is a highly developed mixed economy. By nominal GDP, it has the 5th largest economy in Asia and the 13th largest in the world. South Korea is notable for its rapid economic development from an underdeveloped natio ...
*
Four Asian Tigers
The Four Asian Tigers (also known as the Four Asian Dragons or Four Little Dragons in Chinese and Korean) are the developed East Asian economies of Hong Kong, Singapore, South Korea, and Taiwan. Between the early 1960s and 1990s, they underwent ra ...
*
Japanese post-war economic miracle
*
Korean Wave
*
Miracle of Chile
The "Miracle of Chile" was a term used by economist Milton Friedman to describe the reorientation of the Chilean economy in the 1980s and the effects of the economic policies applied by a large group of Chilean economists who collectively came ...
*
Taiwan Miracle
The Taiwan Miracle () or Taiwan Economic Miracle refers to the rapid industrialization and economic growth of Taiwan during the latter half of the twentieth century.
As it developed alongside Singapore, South Korea and Hong Kong, Taiwan became ...
*
Tiger Cub Economies
The Tiger Cub Economies collectively refer to the economies of the developing countries of Indonesia, Malaysia, the Philippines, Thailand and Vietnam, the five dominant countries in Southeast Asia.
Overview
The Tiger Cub Economies are so named b ...
*
Tiger economy
A tiger economy is the economy of a country which undergoes rapid economic growth, usually accompanied by an increase in the standard of living. The term was originally used for the Four Asian Tigers (South Korea, Taiwan, Hong Kong, and Singapor ...
*
Wirtschaftswunder
The ''Wirtschaftswunder'' (, "economic miracle"), also known as the Miracle on the Rhine, was the rapid reconstruction and development of the economies of West Germany and Austria after World War II (adopting an ordoliberalism-based social marke ...
References
External links
"Miracle on the Han" Lesson Plan for High School Students (PDF)
{{DEFAULTSORT:Miracle On The Han River
Economic booms
Economy of South Korea
1950s in Seoul
20th century in South Korea
Economic history of South Korea