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Economic Development from 1948 to 1961. At its creation in 1948, South Korea ranked as one of the world’s poorest states. Twelve years later, in 1960, it remained so with a per capita income about the same as Haiti. A number of factors contributed to that poverty.
The economy of South Korea is a highly developed mixed economy. By nominal GDP, the economy was worth ₩2.24 quadrillion (US$1.72 trillion). It has the 4th largest economy in Asia and the 14th largest in the world as of 2024.
- Overview
- Economic and social developments
In the 1950s South Korea had an underdeveloped, agrarian economy that depended heavily on foreign aid. The military leadership that emerged in the early 1960s and led the country for a quarter century may have been autocratic and, at times, repressive, but its pragmatic and flexible commitment to economic development resulted in what became known as the “miracle on the Han River.” During the next three decades, the South Korean economy grew at an average annual rate of nearly 9 percent, and per capita income increased more than a hundredfold. South Korea was transformed into an industrial powerhouse with a highly skilled labour force. In the late 20th century, however, economic growth slowed, and in 1997 South Korea was forced to accept a $57 billion bailout from the International Monetary Fund (IMF)—then the largest such rescue in IMF history. The country also wrestled with reforming the chaebŏl and liberalizing its economy. Nevertheless, its economy enjoyed a recovery in subsequent years, and the country entered the 21st century on a relatively firm economic footing.
South Korean society underwent an equally rapid transformation after the Korean War. The population more than doubled between the end of the war and the turn of the 21st century. Simultaneously, modern education developed rapidly, again with considerable government involvement but also because of the resurgence of the Korean people’s traditional zeal for education after decades of repression during the Japanese occupation period (1910–45). The growth of educational institutions and of commercial and industrial enterprises in and around South Korea’s major cities attracted an increasing number of rural people to urban areas. Seoul, in particular, grew some 10-fold to about 10 million people between the end of World War II and the early 21st century. There was a corresponding growth in communications media, especially newspaper and magazine publishing. An ambitious program was also undertaken to expand and modernize the country’s transportation infrastructure.
The most conspicuous social change in South Korea, however, was the emergence of a middle class. Land reform carried out in the early 1950s, together with the spread of modern education and the expansion of the economy, caused the disappearance of the once-privileged yangban (landholding) class, and a new elite emerged from the ranks of the former commoners. Another significant social change was the decline of the extended-family system: rural-to-urban migration broke traditional family living arrangements, as urban dwellers tended to live in apartments as nuclear families and, through family planning, to have fewer children. In addition, women strenuously campaigned for complete legal equality and won enhanced property ownership rights. Women also won the right to register as a head of family in a new family register system (hojŏk) that took effect in 2008. Under the old system only men could register as family heads; thus, children were legally part of the father’s family register, not the mother’s. The new system increased women’s legal standing in, among other things, divorce and child-custody cases. This system also granted adopted and stepchildren rights that were equal to those of biological children—for example, in matters of inheritance.
Rapid urbanization, the nuclear family system, the increase in women’s active participation in the economy, and lengthening life expectancies meant that by the early 21st century South Korea had decreasing birth rates and an aging population. The overall population was expected to decrease over the next decades as well. The government was concerned that fewer children and an aging society would slow economic growth and destabilize the social security system in the future.
In the 1950s South Korea had an underdeveloped, agrarian economy that depended heavily on foreign aid. The military leadership that emerged in the early 1960s and led the country for a quarter century may have been autocratic and, at times, repressive, but its pragmatic and flexible commitment to economic development resulted in what became known as the “miracle on the Han River.” During the next three decades, the South Korean economy grew at an average annual rate of nearly 9 percent, and per capita income increased more than a hundredfold. South Korea was transformed into an industrial powerhouse with a highly skilled labour force. In the late 20th century, however, economic growth slowed, and in 1997 South Korea was forced to accept a $57 billion bailout from the International Monetary Fund (IMF)—then the largest such rescue in IMF history. The country also wrestled with reforming the chaebŏl and liberalizing its economy. Nevertheless, its economy enjoyed a recovery in subsequent years, and the country entered the 21st century on a relatively firm economic footing.
South Korean society underwent an equally rapid transformation after the Korean War. The population more than doubled between the end of the war and the turn of the 21st century. Simultaneously, modern education developed rapidly, again with considerable government involvement but also because of the resurgence of the Korean people’s traditional zeal for education after decades of repression during the Japanese occupation period (1910–45). The growth of educational institutions and of commercial and industrial enterprises in and around South Korea’s major cities attracted an increasing number of rural people to urban areas. Seoul, in particular, grew some 10-fold to about 10 million people between the end of World War II and the early 21st century. There was a corresponding growth in communications media, especially newspaper and magazine publishing. An ambitious program was also undertaken to expand and modernize the country’s transportation infrastructure.
The most conspicuous social change in South Korea, however, was the emergence of a middle class. Land reform carried out in the early 1950s, together with the spread of modern education and the expansion of the economy, caused the disappearance of the once-privileged yangban (landholding) class, and a new elite emerged from the ranks of the former commoners. Another significant social change was the decline of the extended-family system: rural-to-urban migration broke traditional family living arrangements, as urban dwellers tended to live in apartments as nuclear families and, through family planning, to have fewer children. In addition, women strenuously campaigned for complete legal equality and won enhanced property ownership rights. Women also won the right to register as a head of family in a new family register system (hojŏk) that took effect in 2008. Under the old system only men could register as family heads; thus, children were legally part of the father’s family register, not the mother’s. The new system increased women’s legal standing in, among other things, divorce and child-custody cases. This system also granted adopted and stepchildren rights that were equal to those of biological children—for example, in matters of inheritance.
Rapid urbanization, the nuclear family system, the increase in women’s active participation in the economy, and lengthening life expectancies meant that by the early 21st century South Korea had decreasing birth rates and an aging population. The overall population was expected to decrease over the next decades as well. The government was concerned that fewer children and an aging society would slow economic growth and destabilize the social security system in the future.
Three Periods. Two regime shifts divide the economic history of Korea during the past six centuries into three distinct periods: 1) the period of Malthusian stagnation up to 1910, when Japan annexed Korea; 2) the colonial period from 1910-45, when the country embarked upon modern economic growth; and 3) the post colonial decades, when living ...
Mar 20, 2018 · March 20, 2018. By Ana Maria Santacreu , Heting Zhu. South Korea has experienced one of the largest economic transformations of the past 60 years. It started as an agriculture-based economy in the 1960s, 1 and it became the 11th largest economy in the world in terms of gross domestic product (GDP) in 2016. 2 How did the industrialization ...
History of South Korea. The following is a treatment of South Korea since the Korean War. For a discussion of the earlier history of the peninsula, see Korea. South Korea to 1961. The First Republic, established in August 1948, adopted a presidential system, and Syngman Rhee was subsequently elected its first president.
10. Economic Development of Korea. Science and Technology (KIST) in 1966 to foster local technological capability building. Although the development policy in the 1960s was very successful in terms of exports and growth, inflation and balance of payments problems continued to plague the Korean economy.
