Development
under Park Chung
Hee
and in the DPRK
Nov. 13, 2012
Review
• Was Syngman Rhee a democratic leader of
Korea?
• What were Syngman Rhee’s economic
policies?
• Did he have any positive impact on the
ROK?
• Why was he overthrown in 1960?
• Why was democracy cut short in 1961?
Economic Growth under Park
Year
Per-capita income (2006 $)
1965
$1,295
1968
1,615
1971
1,912
1974
2,279
1977
2,933
1980
3,221
Growth of GDP: averaged 8.2%/yr between 1962 and 1980.
New Village Movement and village life
Annual Growth Rates
• 1962. 2.1
• 1963. 9.1
• 1964 9.6
• 1965 5.8
• 1966 12.7
1969 13.8
1976 14.1
1970 7.6
1977
12.7
1971 8.8
1978
9.7
1972 5.7
1979
6.5
1973 14.1
1980
—
5.2
• 1967
• 1968
6.6
1974 7.7
11.2
1975 6.9
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Park’s policies
government encouraged borrowing from international lenders by
Chaebŏl Also controlled domestic lending by controlling the
banks.
government directed investment into areas its economic advisors
suggested: Economic Planning Board
normalized relations with Japan, and earned money from Vietnam
War
export-oriented (to earn foreign exchange) instead of import
substitution.
force used to keep wages low so that Korean goods could be
competitive.
started with labour-intensive industries, but then moved on to
capital-intensive.
New Village movement--designed to make villagers more
Factors which helped Korea
• state intervened to keep prices “wrong,”
made sure that subsidies kept Korean
products competitive in overseas markets
• state imposed performance standards on
•
companies (unlike Rhee)
emphasis on education led to an
abundant supply of engineers, who could
help deal with imported technology (but
that didn’t help India at the same time)
State intervention
• Government control of banking
• control of capital flight
• price controls
• wage controls
• unions were government controlled.
• Economic Planning Board gave
administrative guidance.
Good timing
• World markets were beginning to open
up to goods from other countries
• Japan was moving beyond the first stage
of industrial exports
• there were financial institutions able to
lend money to Korean corporations.
Chaebŏl
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favoured by the government in order to concentrate
capital and expertise.
unlike zaibatusu, did not own banks until recently.
family owned, not publicly-owned
top-down direction, not consensus like in Japan
Tended to have more engineers than managers
Hired the best, by paying better salaries than
smaller industries.
Well-known Chaebŏl
• Hyundai: founded by Chung Juyoung
• Samsung (Lee Byung-chul)
• Daewoo (now defunct) Kim Woo Jung
• Lucky-Gold Star (LG) Koo In-hwoi
• Ssangyong (Kim Sungkon) Ssangyong
Motors was recently purchased by an
Indian company.
Negative and Positive effects
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Negative: uneven development, favouring Seoul and the
southeast over the southwest.
sacrificed democracy for economic growth
created tension in society as the rich grew richer and the
poor grew frustrated (even though, for many of them, their
incomes grew as well
Positive: A middle class began to emerge, which created
pressure for democracy.
Koreans ate better, had better homes, were healthier and
in general begin to have a higher standard of living.
The DPRK
• Economic Decline starting in the 1980s, and
then economic collapse in the 1990s.
• Growing isolation from the rest of the world,
again starting in the 1980s
• A Communist dynasty:
in a row:
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•
the third Kim ruler
Kim Il Sung 1948-1994
Kim Jung Il
1994-2011
Kim Jung Un 2011---
How have the Kims lasted so long?
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Coercion and control of communication
Kim Il Sung held legitimacy according to traditional criteria, and his
son has inherited that legitimacy (paternalistic, nationalistic, and not
corrupt--traditionally, democracy was not necessary for legitimacy)
The state controls the flow of information
Fear of the US keeps North Korean population in line
Juche provides sacred cover for the government. The fervor with
which the North Korean express their belief in Juche resembles the
fervor of extremely religious people.
North Korean economic policies
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The government makes economic policy, and ensures that
its policy dictates are followed.
However, it uses a mixture of ideological and material
incentives to try to get the people to work hard enough to
meet government targets.
1958--Chŏllima movement ---speeded up production
Chŏngsan-ri and Taean policies: policy makers and
managers meet with the masses to get their input before
issuing directives: farms and factories are run by committee
made up of party members and experts.
Reasons for economic decline
• still an import-substitution, heavy-industry
economy
• has spent too much on the military
• loss of trading partners with the fall of
Communism
• has tried to grow rice in soil not suited for rice,
and has bleached the soil and deforested
hillsides
• lacks foreign exchange for fuel
• Can’t change polities drastically without
The DPRK and its
neighbors
• China--is economically dependent on China.
Chinese look down on North Koreans
• Russia--used to be an ally. Now is closer to
South Korea
• Japan
--never an ally but is more hostile
than ever because of the North Korean
kidnapping of Japanese.
Nothing to Envy
• How did North Koreans react to the
news of the death of Kim Il Sung?
• What was life like in North Korea in
the years following Kim Il Sung’s
death?
• How did North Koreans survive the
hard times of the late 1990s?