Our tour guide in Seoul proudly shared her experiences of traveling to at least 43 countries while expressing her deep love and pride for South Korea. She acknowledged the sacrifices of her ancestors, which played a pivotal role in shaping the country into the prosperous state it is today.
She provided a brief overview of South Korea's history, including the 35 years of Japanese occupation, the transition period under the United States, the birth of the Republic of Korea (ROK) in 1948, the authoritarian rule under six Republics, the three-year Korean War, and the eventual transition to a civilian democracy in 1994.
I was impressed by our guide's strong sense of national pride and her mention of the limited presence of Japanese cars on the roads due to a preference for nationalism in vehicle purchases. This led me to contemplate what we can learn from South Korea's remarkable transformation.
Research shows that South Korea transformed from an agrarian society into an urban-industrial one, achieving an average annual growth rate of about nine percent in real terms since the mid-60s. The country's per capita Gross National Product (GNP) surged from $67 in 1953 to $33,745 in 2023. Furthermore, South Korea boasts a literacy rate exceeding 98 percent, one of the highest in the world, and approximately 50-70 percent of South Korean adults aged 25-34 hold a college degree.
The transformation of South Korea is a testament to its resilience, strategic planning, and social mobilization. It involved a complex mix of historical forces, policies, and global opportunities that enabled South Korea to emerge as one of the world's leading economies.
During Japan's colonization, Korea suffered exploitation and harsh labor conditions, but some of the infrastructure developed during this time, such as railroads, industries, and education systems, laid the foundation for Korea's future industrial advancements.
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Recovery was further delayed by the Korean War, which devastated the country’s infrastructure and economy. The war, fought between the communist North and the capitalist South, ended in an armistice but no formal peace treaty, leaving South Korea in ruins.
The U.S. military and financial support in the post-war years played a crucial role in Korea’s recovery. U.S. aid, in terms of direct financial support and technical assistance, provided the South Korean government the resources to rebuild, stabilize the economy, and prevent communist expansion from the North.
After the war, South Korea was led by President Syngman Rhee, whose administration faced challenges such as slow economic recovery, political repression, and corruption, leading to popular discontent.
Real transformation began under General Park Chung-Hee, who seized power in a military coup in 1961. Park’s government implemented a series of five-year economic plans that rapidly industrialized the country, transforming South Korea from a predominantly agrarian economy to a major industrial power. Park prioritized heavy industries such as steel, shipbuilding, and chemicals, laying the groundwork for South Korea’s future dominance in sectors like electronics and automobiles.
Key to this transformation was the chaebol system (family-owned conglomerates) that received government support in exchange for spearheading industrial expansion. Park’s government heavily directed investment, controlled labor, and provided strategic subsidies, all while fostering a disciplined, export-oriented economy.
Although Park’s regime was authoritarian, suppressing political dissent and restricting democratic freedoms, his economic vision was effective. South Korea’s GDP grew exponentially during his rule, earning the period the title of “miracle on the Han River”.
After Park’s death, General Chun Doo-Hwan seized power, continuing the tradition of military dictatorship. Chun’s regime is infamous for its brutality, including the violent suppression of pro-democracy protests.
The 1980s saw rising civil discontent, labor strikes, and student movements advocating for democracy. By 1987, under intense pressure from civil society and the international community, Chun was forced to concede to democratic reforms, marking the beginning of South Korea’s transition to full democracy.
After democratization, South Korea entered a period of both political stability and continued economic prosperity. The newly formed democratic institutions allowed for greater transparency and political participation, contributing to social cohesion and economic innovation.
During the 1990s, South Korea emerged as a global leader in technology and manufacturing. Its advanced education system, coupled with its strong state-business partnerships, helped to create a knowledge-based economy.
South Korea became an economic powerhouse, particularly in the fields of technology, automobiles, and cultural exports (e.g., K-pop and Korean cinema). The government’s continued investment in education, technology, and infrastructure ensured competition on a global scale.
The foundation of South Korea’s rise from authoritarian rule was largely built on the efforts of a determined civil society. Protests by students, labor unions, and intellectuals demanded greater political freedom and transparency. The emergence of a large middle class demanding accountability created a strong societal foundation.
What impressed this writer most is the prosecution of powerful figures, including former presidents like Chun Doo-Hwan, Roh Tae-woo, Park Geun-hye, and Lee Myung Bak. The impartial application of justice is something we need to aspire to. In sum, three components are key: civil society activism, the rule of law (an independent judiciary), and the free press. Underlying this is the critical role of a better educated and well-informed citizenry.
(Benel Dela Paz Lagua was previously EVP and Chief Development Officer at the Development Bank of the Philippines. He is an active FINEX member and an advocate of risk-based lending for SMEs. Today, he is independent director in progressive banks and in some NGOs. The views expressed herein are his own and does not necessarily reflect the opinion of his office as well as FINEX.)