Korea Politics & Economy after 1945. Outline 1945 End of Japan Rule Brief Political History The 38 th Parallel & The Korean War Rhee: Government Led Development.

KoreaPolitics & Economy after 1945

Outline

1945 End of Japan Rule

Brief Political History

The 38th Parallel & The Korean War

Rhee: Government Led Development

Park: The Five Year Plans

Korea Today

Chaebols

Korea up to 1945

1905 – Russo-Japanese war ended, Korea protectorate of Japan

1910 – Japan-Korea Annexation treaty Colonial Mercantilism – Japan provided modern

infrastructure, ports, factories, hospitals, schools, rail, mines, etc

Land seizure, cultural repression & little opportunity for Koreans to obtain higher education

1945 – End of 35 year colonial Japanese Rule

The 38th Parallel

1896 - first suggested as a dividing line for Korea by Russia

1945 (Aug) - US State-War Navy Coordinating Committee establishes 38th Parallel

1948 - became the boundary between the newly independent countries of North and South Korea

1953 - demarcation line established through the middle of the DMZ

The Korean War (1950 – 1953)

Japan settled as fort to prevent soviet influence

Japan is the region’s stabilized government &

economy

US heavily invested in Japan’s economic development

Special procurements amounted to 27% of Japan’s total export trade

Cooperation of manufacturers, suppliers, distributors and banks is

what led to the keiretsu and enterprise unions

Brief Political History

Kim II Sung

Syngman Rhee (1945-1960)

Park Chung Hee (1961-1979)

Chun Doo Hwan (1981-1988) Roh Tae Woo

(1988-1993)

1945

Kim Young-sam (1993-1998)

1994

Korea’s Economic Development

Government Led Development

Land Reform June 1949 – 1 million share croppers became land owners Dissolved landlord class

Shift to entrepreneurial opportunities for past landlords Accelerated urbanization of Korea

11.6 % in 1940 24.4 % in 1955 28.3 % in 1960

Education opportunities extensively expanded after WWII Empowered Koreans with opportunity for upward mobility Primary education universal for both boys & girls by 1960 75% Universities established by private foundations

Under Rhee:

Investment in Human Capital

Government Led Development

Under Park: “Miracle on the Han”

Government led initiatives in economic development.Main Goals: Establish self reliant industrial economy Nationalize bank to facilitate direct control all over business community Create hybrid approach between import substitution and export driven growth

Korea’s Economic Development

Five Year PlansTransition from import substitution industrialization to export driven growth

First Five-Year Economic Development Plan (1962-66) Self Sufficient Structure

The Second Five-Year Economic Development Plan (1967- 71) Modernizing the industrial structure building import substitution industries

The Third Five-Year Economic Development Plan (1972-76) “Big Push”(1992-96) Development of export-oriented structure

Under Park:

Korea’s Economic Development

The Fourth Five-Year Economic Development Plan (1977-81) Development of industries to compete effectively with

world’s industrial export markets The Fifth Five-Year Economic and Social

Development Plan (1982-86) Shifting industry focus to Technology-intensive industries

The Sixth Five-Year Economic and Social Development Plan (1987-91) Phasing out of direct assistance from government, refocus

to training workforce to meet the needs of all industries. The Seventh Five-Year Economic and Social

Development Plan (1992-96) Development of high-technology fields

Latter Five Year Plans

Korea’s Economic Development

Chaebols 'octopus with many tentacles'

Massive conglomerates

Comparative to Japan’s keiretsu and zaibatsu

Spawned from leftover Japanese assets

Majority controlled by families

Government provided support to aid growth

Key part of Korea’s fast development

Korea’s Economic Development

Chaebols

Korea’s Economic Development

Chaebols down arrows

Stagnates innovation

Prevents foreign investment

Hides losses within the unit

Daewoo bankruptcy—$80B in losses

Corruption is prevalent

Samsung—tax evasion, Hyundai—stealing funds, SK—fraud

Too reliant on the government’s protection

Asian Financial crisis

Conclusion

History played a significant role during Japanese rule over Korea as it propelled Koreans into full economic development

Using a model similar to Japan’s Meiji era, Korea’s government and industry were able to institute policies that allowed for rapid growth

Chaebols were crucial for Korea’s development but are not necessarily beneficial in today’s environment

Takeaways

Questions ?

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