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The Historical Roots of Modern Korean Growth

The Historical Roots of Modern Korean Growth. Chapter 3. Key Factors of Growth in Korea. Confucian emphasis on education and discipline Industrial agricultural labor force Traditional innovative potential Japanese colonial rule of 1910-1945 North-South division of the country.

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The Historical Roots of Modern Korean Growth

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  1. The Historical Roots of Modern Korean Growth Chapter 3

  2. Key Factors of Growth in Korea • Confucian emphasis on education and discipline • Industrial agricultural labor force • Traditional innovative potential • Japanese colonial rule of 1910-1945 • North-South division of the country

  3. Korea’s Long-Term Development • Period 1: Slow agrarian development of the Choson dynasty (1392-1910) • Period 2: Colonial development and destruction (1910-1953) • Period 3: Post-war recovery and rapid growth since 1954

  4. Korea’s Unique Heritage • Chang Pogo (the ninth century): an extensive maritime trade network connecting regions in Korea, China and Japan (compare to the European Dark Ages) • Establishment of the Koryo kingdom (918-1392), hence the Western name for the country • First moveable metal printing type (1235) • Celadon praised even by the Chinese; Japanese “relocation” of celadon pottery villages during 1592-1597 occupation • A spinning wheel and a water clock

  5. The Chosun Kingdom (1392-1910) • Established by General Yi • Confucianism adopted as the state religion and oppression of Buddhism • King Sejong (1419-1950) • The system of government-maintained rain gauges, hence the oldest continuous record of rainfall measurements in the world • 1443: the creation of Hangeul (Korean alphabet) • ‘It is a combination of twenty-four extremely simple symbols, which in combination can represent almost any conceivable sound’ • 1592: Yi Sun-Shin, the turtle ship (거북선)

  6. Opening Up the Hermit Kingdom • 1876: coercion by Japan to open ports to the other nations (chiefly Japan, China and the US) • Steady growth of population leading to a fall of farming land per capita • The strictly observed class system (scholars, farmers, manufacturers, merchants) • 농자 천하지 대본 (the great foundation under heaven is agriculture)agriculture dominates the government policies • Korean agricultural productivity traditionally very high

  7. Korean Society during Chosun Dynasty • Korean society consisted of three classes • 양반 (literati) directed the economy, government and culture • 상민 (commoners) • 천민 (lowborn—compared to India’s untouchable)—slavery existed until the end of WWII • A few landlords, but a lot of land tenants

  8. Commerce and Money • More agrarian a country compared to Japan and China • 장날, the market day system, up until 1950s • Introduction of money early in the 17th century, the development of private commerce • However, the money system was rather poor: it took six men or one pony to carry a $50US of copper coins (the actual traveling account)

  9. Government Finance • Cash payments were not widely accepted as payment medium for the government officials • Lack of finance for the government (public) projects • Pieces of land given to government officials, output used for covering the government expenditures • Corruption due to ability to tax population if land output not enough to cover expenses of the government • Foreign trade going on more for political, as opposed to economic, reasons

  10. The Japanese Occupation • Tu Wei-Ming (Harvard University): “Confucianism strongly encourages people to ‘adapt’ themselves to the existing social system, but does not encourage people to ‘transform’ society” • Leaders of Chosun dynasty were isolated from foreign ideas completely lacking world view • Lack of a world view is in many ways responsible to the loss of the country to Japan in 1910, the North-South division and the Korean War • Growth rate of Korean economy was 4% during the Japanese colonial rule, however, the well-being of the people was very low (GDP per capita increased remarkably, but the GNP did not)

  11. The Japanese Agricultural Policies • 1912-1936: average increase in agricultural output around 1.6% per annum • Rice exports from Korea to Japan soaring (more than half of production shipped) • ‘Many Koreans experienced an absolute, not just a relative, decline in their standard of living’ • Koreans’ GDP per capita only $80 (sic!) in 1960

  12. Factors of Deterioration of Korean Economic Welfare during Colonial Period • Korea regarded by Japanese as supplier of cheap rice • Infrastructure (irrigation, reservoirs) mostly to satisfy Japanese need for rice • Japanese lumbering companies were given extensive logging rightserosion and flooding • Korea also regarded as a place to settle Japanese surplus population (an increase of 170000 to 770000 between 1910 and 1945) • Coercion of land away from farmersimmigration to China and Siberia • Usage of cheap Korean workers for Japanese mining and manufacturing industries • Forcible draft of young Koreans to Japanese military force during WWII

  13. Education Policy during Colonial Period • Koreans restricted to no more than primary education • Only two (!) Koreans allowed to become college professors during 35 years of colonization • Koreans mostly used at lower position in officeslack of expertise in terms of leadership, management and negotiation • Imbibement with “Koreans are helpless” mentality

  14. The Positive Side of Colonial Period • Education system • Infrastructure • Management experience in modern organizations • Japanese ways of doing business and managing the economy • Unique position to make a selective use of Japanese institutions

  15. North-South Division • Truce of 1953: the North-South division • Best mines and most advanced heavy industries developed and left in the North • Destruction in Seoul severe (over 80% of industrial plants, 50% of dwellings destroyed during the war) • Mainly agricultural South left with 2/3 of the population (a flood of refugees from the North due to communist regime there) • Military threat from the Nort6% of Korean GNP spent on defense until recently • The fifth largest army in the world (600000 persons) • Competition with the North and catching up

  16. An Overview of Korean Transition to Modern Economy • The pre-1876 isolation made Korea one of the least developed nations in the region • Japanese investments into infrastructure resulting in rapid economic growth before 1910 (the beginning of the 35 year long occupation) • Long-term trend of economic growth during 1910-1945 resembled that of Japan • Yet, Korean GDP far exceeded its GNP • Dualism: Korea had a developed industrial sector owned by the Japanese, and a backward agricultural sector owned by both Koreans and Japanese, producing output to the benefit of the Japanese • Interrupted development during 1945-1953 • North-South division • Political turmoil during American occupation of 1945-1948 • Korean War (1950-1953) • American decision to cut aid to support level due to belief Korea cannot maintain economic growth

  17. The Slow Recovery after War • Economy war-ravaged • Economic policy focused on import substitution (clearly a mistake) • Massive investments in education (paid off rather handsomely) • First Five-Year plan in 1962 and rapid growth thereafter

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