Miracle on the Han River
Miracle on the Han River refers to the period of rapid economic
South Korea following the
Korean War (1950–1953), during
South Korea transformed from a developing country to a developed
country. 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 and its co-hosting of the 2002 FIFA World Cup, as well as
the ascension of family-owned conglomerates known as chaebols, such as
Samsung, LG, and Hyundai.
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 after World War II. This analogy was incorporated by
Chang Myon, prime minister of the Second Republic of South Korea, 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 labour force, in terms of which the phrase's use of "miracle"
may be seen as a misnomer. Following the Miracle on the Han River,
South Korea has been held as an economic model for other developing
countriesand acceded to the
G20 in November 2010, capping a
successful sixty-some years of rebuilding and modernization.
1.2 1948–1960: The First Republic and Korean War
1.3 1960–1961: The Second Republic
1.4 1961–1963: The SCNR
1.5 1963–1972: The Third Republic
1.6 1972–1981: The Fourth Republic
1.7 1981–1997: Market restructuring
1.8 1997–1999: IMF crisis
2 Dominance of chaebol groups in Korean economy
3 See also
5 External links
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Between 1910 and 1945, Korea was a colony of the Japanese Empire. As a
result of Japanese capital investment, especially during the
1930s–1940s, it experienced a phase of industrialization,
modernization, and economic growth. During the period of
Japanese colonialism, eight large companies were founded and other
firms grew as a result of aid and foreign-exchange profit.[citation
needed] However, the fruits of economic growth were dedicated to the
Japanese inhabitants of Korea, and most Korean people remained poor.
The Korean economy declined further with the Pacific War, when the
Japanese mainland exploited Korea both economically and humanly.
Koreans were forced to assimilate into Japanese culture and Korea was
one of the poorest countries in the world.
1948–1960: The First Republic and Korean War
The division of territory as a result of the
Korean War further
damaged Korean property by 25% and resulted in the establishment
of the First Republic of South Korea, ruled by the Syngman Rhee
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 redistributed previously
Japanese-owned land, allowing the generation of private funds.
1960–1961: The Second Republic
The Second Republic of
South Korea 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 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 overthrew
the Democratic Party, the result was a military junta under the 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
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; 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.[citation
needed] South Korean workers were reportedly 2.5 times more productive
than American workers, even though they were paid a tenth of American
wages. 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 (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
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 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
1963–1972: The Third Republic
During the Third Republic,
South Korea received .3 billion dollars
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 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, 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 in heavy industries grew.
1981–1997: Market restructuring
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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. These people were known as the "illicit profiteers".
Financial troubles mounted as Korea received short term relief from
the United States when Treasury Secretary
Robert Rubin 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 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
1997–1999: IMF crisis
South Korea faced economic disaster in the form of the 1997
Asian Financial Crisis. 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, the first nonmilitary President
in thirty years, failed to protect the economy at the time, and
Kim Dae-jung (1998–2003) took over 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 country paid its
debts and surmounted the problem. Thus, South Korea's financial crisis
was severe but relatively brief compared to other countries who
experienced similar situations.
Dominance of chaebol groups in Korean economy
Main article: Chaebol
Chaebol refers to corporate groups in South Korea, mainly run by
families, that exercise monopolist or oligopolist control over 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 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 behaviour and corrupt
Kim Young-sam 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 was rated a
maximum score 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 haven for its large business conglomerates.
Economy of South Korea
Four Asian Tigers
Tiger Cub Economies
Japanese post-war economic miracle
Chinese economic reforms
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"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
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溝口敏行; The average annual growth rate for manufacturing of
South Korea between 1914 and 1927 was 4.89%. Between 1928 and 1940,
the average annual growth rate for manufacturing of
South Korea was
^ 이대근, 현대한국경제론: 고도성장의 동력을
찾아서, 경기: 한울 아카데미, 2008, p.60
^ "네이버 뉴스 라이브러리". newslibrary.naver.com. Retrieved
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"Miracle on the Han" Lesson Plan for High School Students (PDF)
An article on the post-industrial "Miracle on the Han"