May 13, 2021

AFTER THE FASCIST INTERLUDE:

The brutal beginnings of South Korea's rise: A coup 60 years ago marked the start of one nation's economic transformation. (TOM BAILEY, 14th May 2021, spiked)

The impact of what is now known as the May 16 coup, and Park's subsequent 20 years of rule, was significant. During this period, Park not only launched another coup in 1972 (known as the October Yushin or October Restoration) and made himself president for life; he also oversaw the economic transformation of South Korea.

In 1961, South Korea was one of the poorest places in the world. Its yearly income per person stood at just $82. That was less than half the yearly income per person in Ghana. The US, South Korea's chief benefactor, was not optimistic about South Korea's future. The United States Agency for International Development labelled South Korea, then largely dependent on US handouts, a 'bottomless pit'. A New York Times op-ed from 1961 concluded that 'the poorer half of one of the poorest countries in the world is trying to exist as a nation with too many people and too few resources'. Many Western observers felt its Communist neighbour in the north had better economic prospects.

They could not have been more wrong. South Koreans today are among the wealthiest people in the world. South Korean GDP is roughly on a par with Italy on a per capita basis. Its economy is home to some of the world's leading technology companies and some of the most advanced manufacturers. So swift and rapid has this transformation been that it has been called the 'miracle on the Han River.' And this miracle is inseparable from Park and the coup of 1961.

As Ha Joon-chang's Bad Samaritans (2007) and Joe Studwell's How Asia Works (2013) show, it is no secret how South Korea transformed its economy. Under Park, the state drove South Korea's economic development forward, in the shape of several ambitious 'five-year plans'.

Park sought to protect 'infant industries', using cheap loans and subsidies to manufacturers. However, unlike other similar attempts at 'catch-up industrialisation', his government placed a major emphasis on the eventual ability of these firms to compete on the world market. The state was prepared to back businesses, but only those that would be able to export their output.

Park also backed South Korea's large conglomerates, known as chaebols. Many, such as Samsung, LG and Hyundai, are household names today. As Ha notes: 'The secret of [Park's policy's] success lay in a judicious mix of protection and open trade, with the areas of protection constantly changing as new infant industries were developed and old infant industries became internationally competitive.'

Park was particularly focused on moving Korean manufacturing up the global value chain. When Park came to power, South Korea primarily exported low-value primary commodities such as seafood. Park shifted the focus of South Korea's economy on to high-value commodity production: electronics, machinery, chemicals and other advanced industries. Samsung, for instance, was focused on sugar refining and textiles in the 1950s. Today, of course, it is a global tech leader.

Posted by at May 13, 2021 8:06 PM

  

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