The Miracle on the Han River
Economic growth in Asia has altered the way economists see the world. The export performance of East Asian economies has been a big part of this success. Perhaps the most remarkable story is that of South Korea (henceforth Korea)—a good example of how a low-income country can change its economic future through export-led growth. In just 50 years, Korea went from being one of the poorest in the world (conflict-ridden in 1953, and with a GDP per capita of US$1,110 in
1960) to a high-income, industrialized economy (with a per capita GDP of US$15,444 in 2009). When it joined the OECD Development Assistance Committee in 2009, Korea was the first former recipient of international development aid to become a donor.
- World Bank
To foster the six industries – steel, nonferrous metals, shipbuilding, machinery, electronics, and chemicals – the government planned to invest a total of 2.98 trillion won, constituting 22.1% of total investment and 63.9% of investment allocated to the manufacturing sector, from 1973 to 1981. In an attempt to nurture the heavy chemical industry, the government reorganized institutional bodies, improved social overhead capital, and provided tax and financial incentives (Kim, 2000).
Thanks to emphasis on the development of chemical and heavy industries, in 1977 the merchandise exports hit the $10 billion mark. It took Japan, one of the strongest economies in the world, sixteen years to increase its merchandise exports from $1 billion to $10 billion, and Germany eleven years. Korea achieved that target, after starting heavy chemical industries, in the relatively short span of seven years.
Thanks to emphasis on the development of chemical and heavy industries, in 1977 the merchandise exports hit the $10 billion mark. It took Japan, one of the strongest economies in the world, sixteen years to increase its merchandise exports from $1 billion to $10 billion, and Germany eleven years. Korea achieved that target, after starting heavy chemical industries, in the relatively short span of seven years.
Development Infrastructure
Seoul-Busan Expressway and Pohang Steel Factory
“Expressways and steel mills are essential if industrialization is to be a success” |
“I will be responsible for Gyeongbu(Seoul-Busan) Expressway. You take the steel mills. Running a steel mill is no mean feat for an average man. But you can do it”
- Park Chung-hee