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| Miracle on the Han River | |
 South Korea'sGNI per capita from 1950 to 2016 (in blue) | |
| Korean name | |
|---|---|
| Hangul | 한강의 기적 |
| Hanja | 漢江의 奇蹟 |
| Revised Romanization | Hangangui gijeok |
| McCune–Reischauer | Han'gangŭi kijŏk |
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| History |
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| Business culture |
| Industries |
| Regional |
| Related topics |
TheMiracle on the Han River (Korean: 한강의 기적) was the period of rapideconomic growth inSouth Korea following theKorean War (1950–1953), during which South Korea transformed from an underdeveloped country into a highlydeveloped 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 hosting of the1988 Summer Olympics[1] and its co-hosting of the2002 FIFA World Cup, as well as the ascension of family-owned conglomerates known aschaebols, such asSamsung,LG, andHyundai.[2][3][4] This growth also encompassed declines in child mortality and increases in life expectancy.[5][6] South Korea during this period has been described as "corporatist" or as practicingstate capitalism. This period of growth was overseen by theDemocratic Republican Party (DRP),[7][8] aconservative, broadlystate capitalist[9] andnationalist party.
The growth has been attributed to the hard work of the labour force.[10] 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,[11][12][13] and becoming the first non-G8 nation to host a G20 leaders' summit in November 2010.[14]
TheHan River is a major river which runs through and bisectedSeoul.[15]
In the early 1960s, South Korean politicians admired what they called the "Miracle on the Rhine": the surprising postwar economic growth ofWest Germany, which is often called theWirtschaftswunder ("economic miracle").[16][17]
In his 1961 New Year's address,Chang Myon, prime minister of theSecond Republic of South Korea, used the phrase to encourage South Koreans in achieving a similar economic upturn. He said:[16]
In order to achieve a so-called "Miracle of the Banks of the Han" ("한강변의 기적") comparable to Germany's, we should have austerity and diligence comparable to that of the Germans.[a]
In June 1962, GeneralJames Van Fleet, who led US forces in Korea during part of the Korean War, gave a speech in Los Angeles entitled "The Miracle on the Han".[18]
Between 1910 and 1945,Korea was annexed and became a part of theJapanese Empire.[19] Partly as a result of Japanese capital investment, especially during the 1930s–1940s, it experienced a phase of moderateindustrialization andeconomic growth.[20][21] With the start of thePacific War ofWorld War II, the Korean economy declined when theJapanese mainland exploited Korea economically. By the end of the Pacific War, Korea was one of the poorest regions in the world.
The division of territory as a result of theKorean War further damaged Korean property by 25%[clarification needed][22] and resulted in the establishment of theFirst Republic of South Korea, ruled by theSyngman Rhee administration until 1960. At this time, the economy was largely agricultural.[17] Through the Farmland Reform Act of 1950, theUnited States Army Military Government in Korea redistributed previously Japanese-owned land, allowing the generation of private funds.
TheSecond 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 MinisterChang 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.[23]
When a military coup in 1961 led by generalPark Chung Hee overthrew the Democratic Party, the result was amilitary junta known as theSupreme Council for National Reconstruction (SCNR). During this time, the first nationalFive-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 ofsocial overhead capital including roads, railways, and ports; full utilisation of idle resources including increased employment; conservation and utilisation of land; export promotion to improve thebalance 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.[24]
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] Park's national reputation as a leader has met mixed receptions[who?]: while praised for his contributions to South Korea's economic recovery,[24] contemporary commentators[who?] also criticize him for systematic disregard of human rights andmedia censorship (because of anti-communist sentiment) as part of a military dictatorship.[citation needed] 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.[citation needed] 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."[citation needed] 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 theKorean Central Intelligence Agency became a much feared institution and the government frequently imprisoned dissenters.[citation needed] Park Chung-hee's rule ended on October 26, 1979 when he was killed by his chief of security services,Kim Jae-gyu.
During theThird Republic, South Korea received US$800 million from Japan for property claims, and was mostly dependent onforeign aid, largely over US$119 billion from the United States[25] in exchange for South Korea's involvement in theVietnam War.[10][26][27] The government used this money to accomplish a self-supporting economy, launching theSaemaeul 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.
During theFourth Republic, with the government backingheavy 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 asconsumer confidence in heavy industries grew.[10]
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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 withSyngman Rhee. These people were known as the "illicit profiteers".
Financial troubles mounted as Korea received short-term relief from the United States whenTreasury SecretaryRobert 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, PresidentKim Young-sam announced that South Korea had gained recognition for its economy by joining theOrganization for Economic Cooperation and Development, consisting of top industrial nations. President Kim then created a new labor law that retained theFederation of Korean 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.
In 1997, South Korea faced widespread economic disaster in the form of theEast 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.[10]Kim Young-sam, the first nonmilitary President in thirty years, failed to protect the economy at the time, and PresidentKim Dae-jung (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 theInternational 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 which experienced similar situations.[citation needed]
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.[28] With the help of government 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. TheKim Young-sam government attempted to assist small businesses during its five-year term from 1993 to 1998 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 fosters huge profits and other rewards for its large business conglomerates.[10]
