Korean Economy: Miracle on the Hangang

Khushi Vaid, New Delhi

Economic growth in South Korea has accelerated at a never-before-seen rate. As the majority of the nation’s industrial facilities were destroyed during the three-year Korean War and the country was deprived of capital and natural resources, observers dubbed what the country has accomplished as the “Miracle on the Hangang.”

The nation pushed on with export-focused economic development goals at the start of the 1960s. The majority of the nation’s initial exports were either raw materials or light industrial products made in modest enterprises. The nation made investments in heavy chemical plants in the 1970s, laying the groundwork for the export of heavy industrial goods. The shipbuilding, iron/steel, and chemical industries are just a few of the current domestic industries with strong worldwide competitiveness. Around that period, the basis for such intense competition was laid.

The nation gained impetus to enter the group of semi-advanced nations after hosting the 1988 Seoul Olympic Games. Along with Taiwan, Singapore, and Hong Kong, the nation was referred to as one of the four Asian tigers by the world press. The nation joined the OECD in December 1996, becoming its 29th member to do so. The organisation is primarily made up of developed nations.

Picture Credits: Wikipedia

As a developing nation with limited money and resources, South Korea eventually developed a large-business centred export-oriented economic structure. Industry started to be dominated by conglomerates, and the economy of the nation grew very dependent on exports and imports, making it vulnerable to outside factors.

A currency crisis in November 1997 forced the nation to turn to the IMF for assistance. After several years of incredibly fast economic expansion, it was the first adversity the nation had to face. The nation adopted the severe measure of eliminating underperforming companies from the market before moving on with industrial restructuring. The nation regained its prior growth rate, price levels, and current account balance surplus in under two years. Around 3.5 million people participated in the drive to collect gold to aid the government in paying back the money it borrowed from the IMF during this time. 227 tonnes of gold were gathered in total.

Picture Credits: Yale Global

The Korean people’s voluntary engagement and their tenacious endeavour to pay off their national obligations were admired by people all around the world. The nation benefited from certain incidental impacts, such as the adoption of the worldwide economic and financial system, while making determined attempts to escape the foreign exchange problems. But there were also negative aspects to the reorganization process. The fiscal burden on the government grew, and the income gap widened.

South Korea’s economy continued to grow strongly after emerging from the economic crises. With the exception of the time of the global economic crises, nominal GDP doubled from US$504.6 billion in 2001 to US$1,049.3 billion in 2007, registering a strong growth rate of 4-5% annually. In fact, the nation experienced an incredible 6.3% economic growth rate from 2008 to 2010, despite the fact that the majority of the world was suffering from a severe financial crisis. The achievement of the nation was described as a “textbook recovery” by the major mass media outlets throughout the world.

Picture Credits: The Korea Herald

The constitution of South Korea stipulates that “the right of property shall be guaranteed for every citizen.” In short, the country has adopted the market economy system, respects individuals’ and businesses’ right to conduct free economic activities, and guarantees the profits and properties made and accumulated by them. However, the Constitution does not guarantee the limitless, unfettered pursuit of capitalistic free economy. According to the Constitution, an unfair situation must be corrected if it is discovered that the misuse of capital as a tool designed to advance the free market economy is harming people.

Picture Credits: Wikipedia

The GDP of South Korea is currently the 10th largest in the world and the 4th largest in Asia. It belongs to both the G-20 and the OECD. It is one of the Next Eleven nations because it has the potential to control the world economy by the middle of the twenty-first century.

17 Comments Add yours

  1. Thankyou for this insightful article about Korean economy. Got to know more about Korean economy through this article.

  2. The article was such a good read. I love how you started with investments in 1960s and then move on to 1988 Seoul Olympics following with 1997 currency crisis. Also i never knew that South Korea economy growth was named as “textbook recovery”. Truly, the economy of South Korea is a highly developed mixed economy. 

  3. This is such a well researched article!👏 Very insightful and informative💛 Loved reading it!

  4. mondalmoumita031 says:

    So so informative.i got to know so much about S.K’s economy.Thanks to the hallyuism team for always giving us a detailed view of everything ❤

  5. This article is very insightful to read, thankyou for writing this. I came across a lot of helpful information🤍

  6. Sonali Singh says:

    Such an informative article

  7. Anonymous says:

    Thank you for this very informative article

  8. Tirna says:

    The article is informative and tells a lot about the economic strengths of Korea. Thanks for writing the article. ❤️

  9. Jubby Kumar says:

    Wow such an insightful article ☺️👏🏻
    I learnt a lot 🇰🇷🇰🇷🇰🇷

  10. This was really insightful. Parts where it mentioned about the laying off of underperforming companies and the gold drive reminded me of ‘Twenty five twenty one’.

  11. DJ says:

    Thank you for informative article

  12. Sunanda ghosh says:

    I didn’t have much idea about koreans economy…. But thanks to thz I got to know about it….

  13. AYUSHI VERMA says:

    Thankyou for such informative article ✨🦋

  14. Mamoni says:

    I love this kind of article because of the different facts about Korea❤️

  15. Deepshikha Sinha says:

    Got to know a lot about korean economy.. Thank you for this informative article ~😊

  16. ThatMoleGirl says:

    Very well written and insightful article

  17. anishanath says:

    This article is the one of the most insightful article about South Korea I have ever read, Thank you for writing this article and letting us know about the economic condition of South Korea.

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