Explaining Korea’s Economic Miracle

To the American advisors stationed in Seoul in the late 1950s, the South Korea that limped out of the Korean War was strategically vital and otherwise hopeless. That South Korea was shattered and poor, its workforce reputedly lazy and its leadership corrupt. Development was an afterthought, content as it was to slurp from the turgid flows of American dollars that sloshed through the upper ranks of Syngman Rhee’s government. But today, the neon lights of Seoul advertise a different reality. Korean-made technology is renowned across the globe—things given shape by Korean steel, infused with Korean microprocessors, and delivered to market on Korean ships.

Korea is becoming a rich country. Its approximately $31,000 USD per capita GDP is about equal to that of Spain or Italy.[1] In the span of 50 years, Korea has gone from one of the world’s dimmest to one of the its shining stars. Its purchasing power parity of $280 USD in 1960 grew to $28,384 in 2010, riding a 50-year average GDP per capita growth rate of 9.52 percent.[2] In 1960, foreign trade amounted to $377 million; in 2013, it was $1,068 trillion, making little Korea the 11th largest trading nation in the world.[3] How can we explain that tremendous development? And might it have lessons for other developing countries mired in poverty and corruption as South Korea itself once was?

Maybe … and probably not. The set of policies pursued by South Korea from 1962 through the early 1980s first set up Korea for its developmental run and then enabled that growth. Those policies might be carefully replicated by developing nations hoping to follow in the footsteps of the Asian tiger. But blazing those policy paths required a set of unique circumstances both internally and externally that created the conditions for Korean growth and, often, supported it. Those circumstances owe their existence to Korea’s particular niche in the history of the 20th century.

So how did Korea get rich? The centerpiece of its developmental model was a concerted effort to create an export-driven economy under military junta Park Chung-Hee, who wrested control of Korea from the notoriously corrupt Rhee government in a nearly bloodless military coup in May of 1961. Park immediately got to work weening South Korea from American developmental aid. In the first decade of Park’s rule, South Korea prioritized light industry with an eye toward foreign exports.[4] The Park government shifted the Korean economy away from the import substitution model that bogged down in Latin American countries and toward an export-based structure. Under a system of five-year plans, the first of which called for a transformation from aid-dependent to independent, a central economic planning board unified national budgeting, planning, and review and directed money into diversified manufacturing industries.[5] By the middle of the 1960s, Korea was exporting everything from radios and batteries to steel products and textiles to rice and fish.[6] The value of Korea’s manufacturing exports grew from $41 million to $81 million from 1961 to 1963 alone, and it multiplied 24 times between 1961 and 1975, from $41 million dollars to $2 billion.[7] The emphasis on exports was accompanied by financial sector reforms, including nimble monetary policy to counteract  the inflation endemic during the Rhee days, as well as deregulation of investment and import restrictions. In this reformist environment, savings grew from 2 percent of GDP in 1961 to 14 percent in the 1970s.[8]

Park’s mercantilist government did not let the market decide where those savings went. By offering negative interest rates on loans guaranteed by the government, the bureaucracy monopolized investment decisions and directed those savings out of the informal banking sector and into certain productive channels—not for short term returns on investment but to serve long-term national goals.[9] Park’s government directed investment first into those light industries and later into steel, chemicals, and electronics, especially during Park’s Heavy-Chemical Industry Drive (HCI) in the early 1970s, which emphasized heavy industries such as steel, ship building and especially chemical production, a counter to its scarce natural resources.[10] These industries, many of which did not even exist at the beginning of the drive, fed off each other in interlocking supply chains, the steel industry feeding the machine tools industry feeding the shipping industry as Korea climbed up the value chain, defying American economic advisors and the International Monetary Fund.[11] Park’s government told those industries what to produce, and it built the infrastructure for those industries, provided them property and preferential treatment, and secured buyers in foreign countries, especially the United States.[12] These industries congealed into Korea’s famed and giant chaebol conglomerates. And slowly, under government-directed development, Korea got rich.

Salient internal realities made these policies possible. Park himself deserves much of the credit for the transformation of the Korean economy. Park learned many lessons as an officer in the Japanese Imperial Army. Key among them was its strategy of forced industrialization in Manchuria. Park, who admired what Japan had done during the Meiji Restoration and after, borrowed much from Japan’s own development, including its economic structure, corporate culture, and five-year plans.[13] That experience gelled with Park’s personal proclivities and fed his hopes for a different kind of Korean nation. Another lesson Park learned was the utility of political repression. Park ruthlessly quashed worker and social resistance to his economic program and his regime.[14] Park was a man with a vision and an iron fist. He kept that fist gripped on the tiller, despite resistance from his American backers and international financial authorities. Park believed that “steel is national power.” He dragged his country toward that particular brand of hard power by instilling a “can do” spirt among Korea’s people, as well as by building national infrastructure, much of which at the time seemed imprudent.[15] It is difficult to believe Korea’s astounding development would have happened as it did without that kind of leadership. Despite his dictatorial excesses, Park remains South Korea’s most popular leader.[16]

Park was aided by other characteristics inherent to Korean social culture. As a model Confucian polity for thousands of years, meritocratic, scholar-official leadership was not alien to the Korea people. Park drew on Confucian ideals of filial piety, obedience, and loyalty to secure his technocratic government’s position, and he deployed Confucian reverence for education to develop an educated, trainable, and still-cheap labor force. Drawing on the Confucian belief in the “perfectibility” of people, Rhee and Park’s South Korea implemented a stringent compulsory education requirement.[17] Literacy rates shot up from 20 percent to 80 percent in 20 years,[18] achieving a level above 90 percent by 1964.[19] The educated workforce provided the basis of the economic growth. Korea had a homegrown, abundant supply of educated workers—workers that were 2.5 times as productive as American workers at 1/10th of the cost.[20] The Korean people, working in concert with Park’s leadership, were a critical piece of its economic miracle.[21]

Those internal factors—strong leadership for government-directed growth and an emphasis on abundant, educated labor—could (and should) be replicated by developing countries today. The external factors that were also critical to Korea’s success, however, are more difficult to replicate. Korea, like Japan, began its industrial rise from a nearly blank slate; the Korean War had wiped out existing infrastructure and leveled social hierarchies.[22] During wartime, this meant opportunities for a new class of entrepreneur who seeded businesses that served the omnipresent American military.[23] Those individuals and businesses were then “fertilized by the inconceivable amounts of American cash that flowed into the country.”[24]  After the war, the destruction of existing infrastructure also allowed state planners to build power and industry infrastructure that served the goals of the development plans rather than having to work with existing inefficiencies.

The United States continued to be a critical piece of Korean success. Aside from providing for the defense that kept South Korea in existence—no small thing—the USA poured aid dollars into South Korea in the years after the Korean War. Although these aid dollars—which reached $12 billion between 1945 and 1975, according to official sources that exclude private American expenditures and black-market transactions—created in Korea a dependent and deficient state under Rhee, they also helped pay for the infrastructure that would prove critical for Korean industrial development.[25]

Finally, the international situation in 1965 proved momentous for Korea. In May 1965, Korea got help from its old enemy Japan. Under pressure from Washington and facilitated by the American involvement in both countries, the normalization of relations between Korea and Japan in the spring 1965 injected $800 million into the Korean economy (a mix of loans, grants, and credit) at a time when Korean exports amounted to only $200 million.[26] That financing provided the basis for significant sectors of industrial development, including Korea’s indigenous steel industry.[27] Korean manufactures energized by that “Japanese Marshall Plan” quickly found an outlet for their products, too: another American war in Asia. By the middle of the 1960s, increasing American involvement in Vietnam required equivalent investment. Korea provided it in both people and stuff. In exchange for what would amount to more than 300,000 South Korean combat troops, the United States paid more than $1 billion in foreign exchange to Park’s government by 1970, close to 10 percent of its total GDP.[28] That foreign exchange facilitated purchases of the raw materials needed for Korea’s fledgling industry to pump out products. Those products then returned to the American effort in Vietnam. As much as 94 percent of Korean steel production and 52 percent of its transportation equipment exports went to Vietnam during the war.[29] These flows of foreign capital into domestic industry provided the energy behind Park’s HCI in the early 1970s and launched Korea on the trajectory to developed nation. In the background to all of this, American and Japanese light industries were declining just as Korean manufacturing began to take off.

There are lessons to be taken from the Korean economic model. Through a combination of leadership and culture, Korea embarked on a successful, long-term, state-led project of export-driven development. That, at least, is a path other developing nations could try to follow. Korean development did not happen in a domestic vacuum, however, and significant external factors contributed to the environment in which Korea succeeded. Most notably was its connection to the United States, which not only supplied Korea with money and markets but also facilitated its rapprochement with Japan as well as its lucrative involvement in the Vietnam War. Korea’s unique historical position, then, makes the Korean economic miracle a difficult one to fully replicate.

[1] International Monetary Fund data (imf.org, accessed December 11, 2019).
[2] Hayam Kim and Uk Heo, “Comparative Analysis of Economic Development in South Korea and Taiwan,” Asian Perspective (Volume 41, Number 1, January-March 2017).
[3] Ibid.
[4] Princeton Lyman, “Economic Development in South Korea: A Retrospective view of the 1960s,” in Edward Reynolds, ed., Korean Politics in Transition (Seattle: University of Washington Press, 1975), 244.
[5] Kim and Heo, “Comparative Analysis of Economic Development in South Korea and Taiwan.”
[6] Lyman, “Economic Development in South Korea,” 248.
[7] Ibid, 246-248.
[8]Ibid, 247-248
[9] Cumings, Korea’s Place in the Sun: A Modern History (New York: WW Norton, 1997), 314-331.
[10] Ibid, 320-324.
[11] Ibid, 320-324.
[12] Ibid, 314.
[13] Sung-Yoon Lee, “Korea Under Park Chung Hee” (lecture at The Fletcher School at Tufts University, October 28, 2019).
[14] Cumings, Korea’s Place in the Sun, 314.
[15] The RoK’s Seoul to Busan highway, built before many Koreas even owned cars, is one example. Sung-Yoon Lee, “Korea Under Park Chung Hee” (lecture at The Fletcher School at Tufts University, October 28, 2019).
[16] Ibid.
[17] Cumings, Korea’s Place in the Sun, 300.
[18] Lyman, 255
[19] Kim and Heo, “Comparative Analysis of Economic Development in South Korea and Taiwan.”
[20] Cumings, Korea’s Place in the Sun, 313.
[21] Lyman, 247.
[22] Cumings, Korea’s Place in the Sun, 300.
[23] The Chairman of Hyundai is one such individual who began his business career moving supplies for American military bases, according to Cumings, Korea’s Place in the Sun.
[24] Cumings, Korea’s Place in the Sun, 306.
[25] Cumings, Korea’s place in the Sun, 301.
[26] Lee, “Korea Under Park Chung Hee.”
[27] Cumings, Korea’s Place in the Sun, 320-322.
[28] Lee, “Korea Under Park Chung Hee.”
[29] Cumings, Korea’s Place in the Sun, 320-321.

Review: The Global Interior

“Interior.” It is a moniker, argues Megan Black, that both describes and belies the historic purposes of the branch of the American government best known today for its management of the National Parks. But conservation has been only one part of a contradictory and hidden mission that has sent the Interior Department plunging into the world’s geologic interior even while it helped extend the American imperial project into the nation’s geographic exteriors.

In her perspective-bending The Global Interior: Mineral Frontiers and American Power, Black argues that Interior’s mission, in truth, has been nothing less than both the extension and obscuration of United States power in the world, from the settler colonialism of the 19th century through the end of the Cold War. Interior straddled the line between civilian and military, public and private, to first domesticate the North American continent, then to use the expertise it had gained there to secure mineral resources in ever-widening concentric circles—from American colonies to foreign countries and from the ocean floor to outer space. Even as it did so, it distanced the United States from more traditional forms of imperialism by pushing ideas of universalism, development, and conservation. In these ways, the Department of the Interior acted key, but largely invisible, machinery of American extractive imperialism as it “followed the north star of minerals,” bringing expropriated lands and resources into its fold across the globe and making them ready for settlement and exploitation, especially by white Americans.

Following the Mexican-American War, the United States government found itself encumbered under the administrative weight of the vast tracts of new land and new peoples. In response, the Department of the Interior was created in 1849. The new administration followed the U.S. military into America’s frontiers. Interior’s bureaucrats cut their teeth “surveying, parceling, codifying, and leasing” land and resources not “properly” utilized by native peoples. As the passive, administrative counter to hard military power, Interior worked to transform these lands, taken from indigenous peoples and Mexico, into place suitable for white settlement and private industry, while at the same time, portraying the westward expansion in the “benevolent light of a civilizing mission.”

By 1900, however, the American frontier, geographically at least, had closed. The Department of the Interior came under attack, especially by conservationists. Faced with these threats, Interior morphed, embracing conservationism of resources as its new charge. It accepted critic Gifford Pinchot’s logic that conservation should ensure the “greatest good for the greatest number in the long run,” and over the following decades, applied that logic across the globe under imperial, extractive regimes. Resources, needed to be conserved so they could later be exploited; “conservation was, in a sense, expansion slowed,” Black writes. Conservation also allowed the U.S. government to repurpose its settler-colonial administrations and project them outward. As American dominance over the continent reached its zenith, new frontiers opened up. The same experts who had gained their technical expertise surveying and administering the American West became “footsoldiers for exploration” in new overseas colonies. With the help of Interior’s technicians, the United States could make these once-inscrutable places fathomable, survey their resources, and ready them for investment and exploitation.

But the world was changing in the first half of the 20th century, and Interior would have to change with it. The old model of naked colonial domination that had built the European world order was losing political viability just as America came into its own as a colonial power. So much like it had in the American West, Interior played the soft, passive counter overseas to military power, deflecting charges of imperialism by supporting civilian rule in territorial affairs and building a “technical imperialism” to substitute for the old racial imperialism. By grounding its activities in American colonies in conservation and technocracy, Interior offered to help modernize the “backward” regions of the world, obscuring its imperial purposes. Those purposes increasingly intersected with mineral extraction, especially of what Interior officials dubbed “strategic minerals” necessary for the United States to control during times of crisis or war.  Under this purview, Interior’s scientists spread out across the world, bringing with them the technical knowledge and “neutral” assistance to “develop” nations—and the mineral resources America’s government desired.

The framing of “strategic minerals” gained even greater utility with the rise of Nazi Germany and Imperial Japan. By depicting those rising powers as giant, hungry octopuses, the United States portrayed global mineral resources as under threat. It suggested American expansion as a benevolent alternative to fascist domination, especially in Latin America. Interior acted as the hands a feet of this alternative imperialism, securing mineral investments for private American companies as a way to “protect” them from other external threats. This export of scientific and technical assistance continued in the post-war years under President Harry Truman’s Point Four program (eventually reorganized into USAID) to aid “developing countries.” Ostensibly for the benefit of underdeveloped countries, Interior officials worked to “identify, evaluate, and unearth minerals.” Key to this effort was the department’s recasting of resources as global, utilitarian endowments, aided by Interior’s conservationist pretensions. In doing so, Interior worked to keep new frontiers open by dissolving national boundaries. It exported these “universalist” values through a combination of propaganda films and surveys of national resources, the bills for which were footed by the American taxpayer while private corporations and the national security apparatus reaped the benefits. By the 1970s, however, nationalist sovereignty movements accurately identified these efforts for what they were—a Trojana horse for American strategic and economic interests.

Frontiers were once again closing, so Interior transformed again and redirected its expertise to new places: first the ocean floor, then outer space. In a radical redefinition of national borders, Interior pushed the United States to annex the continental shelf with a view toward oil exploration. Interior applied its hard-won technical expertise to survey the shelf and assisted in leasing drilling rights to oil companies. It also pioneered the Landsat satellite survey project to “point the way to minerals … for the world” and help those “developing countries” better manage their resources. The reality, however, was different, if not surprising: The U.S. government collected global, boundary-erasing data on the mineral resources of the world. Then America sold it, largely to the benefit of pro-American dictators and private companies. Landsat was the culmination of a century of Interior work to open up new frontiers, one that was uniquely prepared to circumvent growing political resistance. And rather than aiding the poor and the world as it purported to do, the project helped extract minerals for the benefit of elites.

Alongside its satellite project, Interior returned to where it began: native lands, where activists and lawyers tried to fend off federal attempts to abrogate treaties and get at the vast mineral and oil wealth beneath reservation lands. The Council of Energy Resource Tribes mimicked Organization of Petroleum Exporting Countries and even consulted with its members, a strategy that brought the contradictions inherent to Interior’s mission into view. CERT at last “melded what had been previously conceived as two starkly different things: America’s settler-colonial legacy and its foreign policy.” Native activists also welcomed Ronald Reagan’s war on government as a chance to free themselves from domination by the state, often with tragic consequences. In the process, the Reagan administration destroyed the Department of the Interior as an arm of U.S. foreign policy. Into the gap stepped the U.S. military.

There is little to criticize in Black’s masterful book. Her decision to examine a an otherwise innocuous-seeming, minor branch of the American federal government is a stroke of brilliance. There is, perhaps, no better lens through which to better see the true nature of America’s unique brand of imperialism. Tracing the ups and downs of Interior by following the projects of its various leaders and backers, Black shows the contradictions in department’s mission for what they were: not bugs but features. She does so by making able use of quotes from her subjects and of carefully selected, supporting data points. She convincingly connects Interior’s well-known conservationism to a long history of racial, gendered, and economic exploitation, and she does it with light and funny prose that is always a pleasure to read. Above all The Global Interior serves as a lively reminder that some of the most enlightening subjects, much like American imperialism, are often hidden in plain sight.

Review: Worldmaking After Empire

The transition from empire to post-colonial nation-state was neither natural nor inevitable but the result of a radical project of world building on the part of anticolonial intellectuals and politicians, one that combined self-determination and internationalism in an attempt to build a world order based on non-domination and equality. Adom Getachew’s fascinating but uneven Worldmaking After Empire: The Rise and Fall of Self-Determination traces the arguments of thinkers and statesmen such as such as Nnamdi Azikiwe, W. E. B. Du Bois, George Padmore, Kwame Nkrumah, Eric Williams, Michael Manley, and Julius Nyerere to argue this ultimately doomed effort spanned multiple generations and evolved through multiple iterations as anticolonial radicals attempted to free their fledgling nations from the hierarchies born of colonial rule. These radicals, she argues, were no mere nation builders but instead believed they could make a more equal and equitable world only by reshaping the international institutions and relationships that had congealed in the waning days of the imperial era. Although those efforts would largely fail, they’d leave enduring legacies for the 21st century even as international hierarchies have endured and continue to enmesh the developing world into our new era of anti-global unilateralism.

Getachew begins her reclamation of these decolonization projects by defining the problem of the anticolonialism in the 20th century, and that problem, in the words of W.E.B. DuBois was “the color line.” Not merely a comment on The United States’ domestic racial politics, DuBois saw international imperial constructs as fundamentally racial, rather than simply statist, and the postcolonial world as one of unequal legal status amounting to an international Jim Crow segregation. This inequality was made explicit with the League of Nations, which refused to endorse racial equality in its charter and rejected self-determination as an international right. Standard accounts of this failure emphasize the initial rejection of self-determination and its slow achievement after World War Two. Getachew, however, argues provocatively that rather than liberating, Woodrow Wilson’s concept of self-determination, from the founding of the League of Nations onward, actually “recast self-determination in the service of empire.” By imbuing self-determination with a set of responsibilities—abolition of slavery, political stability, economic prosperity, and others—that would act as preconditions to the right of self-determination, the international community was able to bind decolonizing states to the “mechanisms of empire” by emphasizing their deficiencies and deviations from new international norms to deprive them of sovereignty. Getachew’s case studies here are Ethiopia and Liberia. Rather than being excluded from the community, the League integrated Ethiopia and Liberia into itself with partial, burdened membership due to the ongoing slave trade in their borders. This ironic partial membership demanded they eliminate the slave trade, something they were incapable of doing, and thus legitimated by their own consent international oversight by white administrators within their borders. This laid the groundwork for Wilson and Jan Smut’s articulation of their concept of “separate development,” which meant different institutions and developmental tracks for different peoples. “In this way, the expansion of international society and the retrenchment of international hierarchy when hand in hand,” Getachew writes. Self-determination was, in practice, only for white Europeans. Getachew argues the hierarchical nature of this version of international society reached its apex with Italy’s invasion of Ethiopia in 1935, which rather than violating of international norms, in fact adhered to them: In a justification that would be perfectly at home in the post-Soviet world, who could fault a state for resorting to force in the face of intransigence and humanitarian crisis? Italy argued that Ethiopia had failed to meet the obligations required for rights of self-determination. Ethiopia was a failed, outlaw state, and so Italy was able to recast its imperial ambitions as a humanitarian project, and the international community tacitly assented to its intervention.

After World War Two, the second iteration of worldmaking began. With the passage of United Nations Resolution 1514, UN member states were granted the legal self-determination necessary for non-domination. But in this new phase, anti-colonialists understood that without freeing states from the political and economic hierarchies left over from the imperialist system, developing or Third World nations could never obtain true equality in the international community. Basing their critiques in Lenin and John Hobson’s theories of imperial economic exploitation, this new generation of anticolonial thinkers and statesmen attempted to gain equality through international organizations. They would also draw on the American post-colonial experience—“the spirit of 1776—to argue federations of states would be the best way to free their fledgling nations from the dependence inherent to the globalized world economy. This would find its expression in the abortive West Indies Federation and Union of African States, neither of which succeeded in addressing the contradictions between state sovereignty and international cooperation nor internal pluralisms left over by colonial boundary drawing.

With the failure of regional federations, the post-colonial worldbuilders turned at last to the United Nations, rallying behind Karl Gunnar Myrdal’s New International Economic Order. In addition to launching criticism of the outsized role granted to top-tier nations by the undemocratic Security Council, this iteration attempted to transform the UN from a peace organization to a democratic welfare organization. Under the NIEO proposals, anti-colonialists sought to mimic internationally the domestic, socialist welfare policies of Europe that had forestalled class warfare and redistributed economic benefits across class divided societies. This “highpoint of anticolonial worldmaking,” Getachew says, imagined that overcoming dependence and dominance was only possible by limiting the role of multinational corporations in the developing world, reinforcing state sovereignty, and flattening the political and economic hierarchies. Imagining the developing world as the “workers and farmers of the world,” however, ignored internal contradictions, much like the short-lived regional federations had, and left domestic distribution to low-capacity states. With the oil shock and economic crises of the 1970s and 80s, these projects ended abruptly under international interventions. With them ended the radical, internationalized, anticolonial projects of the 20th century.

Getachew’s study is a much-needed reassessment of the decolonization efforts of the 20th century. She draws on sources from outside of the established narrative to counter the standard account of self-determination as a progressive and inevitable advancement, and she resituates the project of decolonization as a contested, determined, and yet-unfinished effort that depended on the racialized and radicalized thinking of oft-ignored anti-colonial luminaries. Her book is at its best when delving into the institutional and legal frameworks that constrained and defined the anticolonial projects, especially her provocative sections on Liberia and Ethiopia’s limited membership in the League of Nations, burdened sovereignty, and the imperial underpinnings of humanitarian intervention.

These sections, which are clear and cogent, are unbalanced somewhat by Getachew’s divergences into political philosophy, which too often confuse rather than clarify. These wordy sections would have been greatly aided by short character sketches that give readers a better sense of the background and ambitions of the thinkers and leaders so central to the story of decolonization. The reader would be well-served by an understanding of how these political philosophies fit into their own personal histories and how they influenced specific national and international politics and policy. By portraying these anticolonial efforts as unitary and cumulative, Getachew also makes a similar mistake to those she accuses of misconstruing the history of decolonization. She draws a straight line through the philosophy and projects of Azikiwe to Williams to Nyerere, ignoring decades in the process, and then sidesteps to Myrdal, giving the impression of a singular and ever-advancing decolonization effort rather than the historically contingent, local, and contested projects each represented.

Those are flaws that can be forgiven, however, in a book that treads such new territory and provides a charged rethinking of decolonization. The ideas and efforts that she excavates are well worth reexamining in a post-Cold War era trending away from internationalism and toward interventionism and hierarchy.