How Did South Korea Economic Growth
South Korea has achieved great economic growth within the last half century despite having been devastated by the korean war and having a GDP per capita in 1960 comparable to the current Republic of Congo[1]. Todays South Korea has a total GDP similar to that of Italy and Canada[1] but how did it get there? The following essay will examine how South Korea achieved this growth and will focus on how foreign aid, education, import substitution, exports and the chaebol helped South Korea’s economic development.
Foreign Investment constituted about 60% of all investment up to 1968 and South Korea received a total of four billion dollars in grant aid from 1953 to 1974[2]. With the change of government from a democratically elected president to …show more content…
In the 1950s investment went into education and by 1984 the percentage of semiskilled workers went from 17.6% in 1967 to 59.3% in 1984[4]. Despite increases in education labour remained cheap until the 1980s when unionisation lead to higher wages and better working conditions[8]. Because South Korea focused on labour intensive industry like manufacturing and later electronics and chemicals[5][6], it was able to capitalise on its advantage in labour. Education is also necessary when delving into high tech industries like mechatronics and semiconductor production, as South Korea did later on[6]. An educated cheap labour force seemed to have been essential for South Korea to gain an advantage in the international market and establish itself as an economic force to be reckoned …show more content…
It could focus on agriculture, which would have been impossible, since only 22% of the land is arable and South Korea had less rain than other countries that also focused on growing rice[5][7]. The second option would involve using import substitution and concentrating on the domestic market, which would also be bad due to the small population of 29 million[5]. The third remaining option would focus on exports, which is exactly what South Korea did[5]. South Korea first built the foundations needed for economic growth, namely education. The second step was to decrease imports through import substitution. After that one needs to actually export something, so South Korea moved from Agriculture to Manufacturing. By 1989 only 21% of the workforce worked in agriculture[6] and by 1991 43% of South Korea’s GDP was generated by Industry[2]. Before ~1960 exports made up less than 2% of the country’s GNP, but by 1970 exports accounted for 10% of the GNP[9]. This was achieved by various policies, which encouraged exports. These included offering loans and credit more readily to companies which exported more and reduction of taxes for companies who increased their exports[9]. A change of mindset in the Park administration also aided export increases. The government tried to create a mindset where all agencies and organisations would be judged by their contributions in exporting goods. Increasing exports was the last major
Foreign Investment constituted about 60% of all investment up to 1968 and South Korea received a total of four billion dollars in grant aid from 1953 to 1974[2]. With the change of government from a democratically elected president to …show more content…
In the 1950s investment went into education and by 1984 the percentage of semiskilled workers went from 17.6% in 1967 to 59.3% in 1984[4]. Despite increases in education labour remained cheap until the 1980s when unionisation lead to higher wages and better working conditions[8]. Because South Korea focused on labour intensive industry like manufacturing and later electronics and chemicals[5][6], it was able to capitalise on its advantage in labour. Education is also necessary when delving into high tech industries like mechatronics and semiconductor production, as South Korea did later on[6]. An educated cheap labour force seemed to have been essential for South Korea to gain an advantage in the international market and establish itself as an economic force to be reckoned …show more content…
It could focus on agriculture, which would have been impossible, since only 22% of the land is arable and South Korea had less rain than other countries that also focused on growing rice[5][7]. The second option would involve using import substitution and concentrating on the domestic market, which would also be bad due to the small population of 29 million[5]. The third remaining option would focus on exports, which is exactly what South Korea did[5]. South Korea first built the foundations needed for economic growth, namely education. The second step was to decrease imports through import substitution. After that one needs to actually export something, so South Korea moved from Agriculture to Manufacturing. By 1989 only 21% of the workforce worked in agriculture[6] and by 1991 43% of South Korea’s GDP was generated by Industry[2]. Before ~1960 exports made up less than 2% of the country’s GNP, but by 1970 exports accounted for 10% of the GNP[9]. This was achieved by various policies, which encouraged exports. These included offering loans and credit more readily to companies which exported more and reduction of taxes for companies who increased their exports[9]. A change of mindset in the Park administration also aided export increases. The government tried to create a mindset where all agencies and organisations would be judged by their contributions in exporting goods. Increasing exports was the last major