# NIS 41B, South Korea, Country Profile/Material Modernization: The Miracle on the Han

​Material Modernization: The "Miracle on the Han" (u/ou)
During the period of Japanese administration, the Korean economy was developed essentially as a complement to the Japanese economy. A substantial industrial complex developed in the northern part of the country based largely on local raw materials and power, but the southern part remained heavily agrarian in character and developed only a thin veneer of small-scale industry. The material benefits from such development, however, were largely monopolized by the Japanese. In manufacturing, for example, 90% of the capital and 80% of the skilled labor were Japanese; very few Koreans acquired any technical or managerial skills. With Japan's defeat in 1945, the Korean economy virtually collapsed, having already been drained to a very low level in the course of Japan's long and increasingly desperate war effort; production fell 75% and 60% of the industrial labor force was unemployed. The division of the peninsula at the 38th parallel in 1945 was another great blow because the South found itself left with the best agricultural land, a surplus of unskilled labor, but little else. At the birth of the Republic in 1948, the standard of living in the country was actually lower than it had been in prewar days.
Less than 2 years later came the holocaust: all-out fratricidal war launched across the 38th parallel by the North Korean Communists, supported with Soviet material and, shortly thereafter, by massive Chinese intervention. During the war, nearly 1 million civilians were killed or wounded, and more than 5 ​million—about one-quarter of the population—were displaced. Property damage was estimated at between $2 and $3 billion. Following the war, the need to maintain one of the world's largest armies was far beyond the economy's capacity. As a result, through the 1950's the vicious cycle of poverty, inflation, and overwhelming dependence on U.S. and other foreign aid continued. Nevertheless, in several ways, the war and its results paved the way for solutions to South Korea's economic and social, if not its political, problems. Much of the old order was swept away, in some measure simplifying the social system. The traditional order was undermined by the weakening of the hold of the family on its members in the wartime chaos, by the influence of foreign troops and technicians, and by war-born urbanization.
Modernization was primarily the result of the creation of a modern and effective military force and extensive U.S. aid. The almost overnight build-up of South Korea's army during the Korean war brought with it a rapid mobilization of the population. Thousands of farm boys were enlisted and exposed for the first time to modern organization and technology. Far beyond this, however, was the appearance of a huge subsociety—the military organization—something quite foreign to Korean tradition and general experience.
Prior to liberation in 1945, a small nucleus of Korean officers had been trained by the Japanese in Japan or Manchuria. A few others were trained in China or Russia and were engaged largely in guerilla-type operations against the Japanese in Korea. During 1946-48, the U.S. forces in South Korea organized and trained a small constabulary from a variety of such elements. Its leaders were mostly bitter rivals because of the factionalism generated by their diverse backgrounds and experience. Following the establishment of the republic, the constabulary was converted with U.S. assistance into an army that had reached nearly 100,000 men by the outbreak of the Korean war. During the war, the army was expanded almost seven fold; the ROK Army today has over 500,000 men and is the fifth largest in the world.
U.S. military assistance has helped to make the ROK military forces by far the most modern entity in South Korea, possessed of technological and managerial skills still scarce in the society at large. The army replaced President Syngman Rhee's ubiquitous police as the dominant force in the land. It possesses a very different outlook and morale, having been exposed to concepts of national ideals and goals far above the limited royalties of the police. Training in the United States, particularly of some of the senior officers of the postwar crop, has helped develop Korea's economy.
The cutting edge of this new force in Korean society is the officer class, both commissioned and noncommissioned. This class had come to constitute a social group rivaling in numbers the traditionally prestigious teaching profession, which has maintained its wonted precedence by also expanding rapidly, having presided over the educational explosion that has occurred since 1945. Both groups have their followers: the officers with their men; the teachers and intellectuals with great hordes of students, concentrated primarily in the capital where so many new educational institutions have sprung up. Both groups are far more modern in their outlook—though in different ways—than the society around them, and both became increasingly impatient with the stagnation and corruption during the 1950's under the Rhee regime. In sequence, they engineered a major generational change that brought Rhee's regime down and subsequently established a very different order.
Determined young officers saw economic development as a way both to end Korea's crushing poverty and its humiliating dependence upon the United States. A military coup was briefly forestalled by the student revolution, whose democratic leaders appeared to share the young officers' ideals, though not their authoritarian methods. When delay and indecision on the part of the hitherto untried and little understood democracy was established by Prime Minister Chang Myon seemed to offer little hope for the economic reforms that the young military officers wanted at once, they seized power in May 1961 and set up the ​Supreme Council for National Reconstruction (SCNR), which thereupon undertook a military-led modernization of the whole country.
General Pak Chong-hui, one of the few older officers associated with the 1961 coup, headed the SCNR. He was elected President in 1963, when the government was "civilianized" under a revised constitution that returned government to the strong presidential type of Rhee's time. The constitution was further amended in 1969 and 1972 to give Pak even greater leeway. President Pak is a peasant's son whose military career was boosted by the prestigious prewar officer training he had undergone in Japan. His twin goals for Korea reflect his background as a peasant and as an officer: agricultural improvement and technological advancement. He is a good example of the modern, scientifically trained officer who nevertheless retains a deep bias against urban life and politicians. Democratic political values have been subordinated to economic considerations under Pak, as under the Japanese. In fact, in many ways Pak's Korea is reminiscent of the bureaucratic, economy-oriented, militarily efficient, depoliticized, and rigidly anti-communist regime under Japan. The great difference of course is that it is a strongly nationalistic government of, by, and for Koreans.
In any case, the Pak regime has reaped remarkable economic results. Under a series of 5-year plans, natural resources and manpower had been mobilized to achieve economic modernization. Although the Pak government has resorted to centralized planning, governmental direction and support, and even outright public ownership and operation, it has eschewed any reference to socialism and describes the country as a "capitalist showcase." By and large, the government has not been coercive and has carried out its economic plans pragmatically and with deft flexibility. The South Koreans like to look to West Germany as an example of the successful survival of a divided country; they point with pride to their own "Miracle on the Han." (The Han River is the "Korean Rhine" and the nation's main inland waterway.)
South Korea achieved an economic breakthrough in the mid-1960's which has basically altered the economy. Sparked by an expansion of manufacturing, which about doubled its contribution to the gross national product (GNP) between 1961 and 1971, the GNP grew at the extraordinarily high average rate of about 10% annually. During the decade, per capita GNP rose from $100 to over $250. The government has already set a goal to achieve a per capita GNP of $1,000 by 1980; even half that in real terms would be a great jump. During the 1960's living standards improved, particularly in the cities. In the process, South Korea is becoming more urban than some of the industrialized countries of Europe; it is moving out of the less-developed category and may be considered a semideveloped country. In late 1972 the Director of the Economic Planning Board foresaw South Korea achieving a self-supporting economy in the 1980's.
In the meantime, however, South Korea remains heavily dependent on its ability to continue to reduce imports and expand exports, and on continued infusions of foreign capital, including aids, as well as investment. In these respects, Seoul depends heavily on economic relations with the United States and Japan. These two countries account for about 70% of ROK exports, 67% of its imports, 90% of foreign private investment, and the bulk of official economic aid.
The most immediate economic problems facing the Pak regime include inflation, a lagging agricultural sector, in adequate housing and other largely urban ills, and the growing inequality of incomes making for large, depressed sectors of the population. Basic services are still unavailable to many, particularly in the urban slums. Poor sanitation, industrial pollution, and a high incidence of disease and delinquency plague many Korean poor and detract from the success of industrial progress. The Pak government, concerned with a population growth rate of nearly 3% between 1955 and 1965, has succeeded in cutting it down to about 2%, primarily through birth-control measures. Abortion has recently been legalized and the government's goal is to reduce the rate of growth to 1% by 1981. Social welfare is still largely in private hands, though the regime has talked about moving in a comprehensive way to meet the crying need for action in this field.