Deciphering the Miracle on the Han: Lessons for the World on How South Korea Escaped Poverty and Transformed its Economy
Lead Research Organisation:
London School of Economics and Political Science
Department Name: STICERD
Abstract
Starting in the 18th century a wave of technological innovations transformed the British economy. This marked the turning point in Britain becoming the rich country as we know it today. Much like Britain, South Korea witnessed a dramatic change in circumstances in the 20th century. South Korea began as a poor country before joining the ranks of the rich several decades later. The speed at which South Korea transformed is unprecedented, with the term 'the miracle on the Han River' being coined to describe this moment in history.
Our goal is to decipher how this miracle took place. Despite South Korea's success, this period remains remarkably understudied in the mainstream English-language economics literature. Likely reasons include challenges in accessing data, language barriers, and a lack of understanding of the historical context. Our hope is that through the ESRC AHRC connections grant we can overcome these barriers to gain new insights on this fascinating period. Deciphering the miracle on the Han will help answer a fundamental question facing economics: why do some areas become rich, but not others? And, more importantly, is there anything governments can do to help this process?
Our main objectives are to:
1. Link renowned economists in economic growth and poverty alleviation from the London School of Economics (LSE) with leading economic historians of South Korea's economic transformation.
2. Bring together scholars from Europe, North America, and South Korea to present the latest research on South Korea's historical economic development to determine what, so far, we know and do not know about South Korea's growth story. Workshops in both South Korea, hosted by Sogang University, and the UK, hosted by LSE, are planned.
3. Fund early-career researcher exchanges to harness recently digitised and previously unavailable historical survey and administrative data to create an unprecedented dataset capturing all aspects of South Korea's economic transformation. This opens opportunities to develop collaborative projects within economics and across other fields.
4. Develop new relationships with other important local agencies such as the Korean Statistical Information Service (KOSIS), the Korea Development Institute (KDI), and the Korean Electric Power Corporation (KEPCO).
5. Feed results from research generated through these connections into global thinking on what effective development policy should look like, of which the UK and increasingly South Korea are key players. Extra emphasis will be on using existing links with FCDO to impact the UK's Integrated Review of Security, Defence, Development and Foreign Policy.
Our goal is to decipher how this miracle took place. Despite South Korea's success, this period remains remarkably understudied in the mainstream English-language economics literature. Likely reasons include challenges in accessing data, language barriers, and a lack of understanding of the historical context. Our hope is that through the ESRC AHRC connections grant we can overcome these barriers to gain new insights on this fascinating period. Deciphering the miracle on the Han will help answer a fundamental question facing economics: why do some areas become rich, but not others? And, more importantly, is there anything governments can do to help this process?
Our main objectives are to:
1. Link renowned economists in economic growth and poverty alleviation from the London School of Economics (LSE) with leading economic historians of South Korea's economic transformation.
2. Bring together scholars from Europe, North America, and South Korea to present the latest research on South Korea's historical economic development to determine what, so far, we know and do not know about South Korea's growth story. Workshops in both South Korea, hosted by Sogang University, and the UK, hosted by LSE, are planned.
3. Fund early-career researcher exchanges to harness recently digitised and previously unavailable historical survey and administrative data to create an unprecedented dataset capturing all aspects of South Korea's economic transformation. This opens opportunities to develop collaborative projects within economics and across other fields.
4. Develop new relationships with other important local agencies such as the Korean Statistical Information Service (KOSIS), the Korea Development Institute (KDI), and the Korean Electric Power Corporation (KEPCO).
5. Feed results from research generated through these connections into global thinking on what effective development policy should look like, of which the UK and increasingly South Korea are key players. Extra emphasis will be on using existing links with FCDO to impact the UK's Integrated Review of Security, Defence, Development and Foreign Policy.
| Description | The lessons from our research will be applicable for the rest of the developing world. Recall that South Korea, with an income per capita of around $1,200 at the time of takeoff in the 1950s, was as poor if not poorer than today's developing countries. The interventions and policies put in place during the late 20th century in South Korea were successful in bringing an entire country up the income ladder. Thus, we have a unique setting where we can study the impact of policies at scale to determine how they engineered rapid occupational change and sustained income growth. Understanding the success of South Korea in transforming its economy from agrarian to export-led light-manufacturing and then to export-led heavy-manufacturing comes at a pivotal time for the future growth of Sub-Saharan Africa. Although Sub-Saharan Africa been said to be characterized by "premature deindustrialization" (Rodrik, 2016) with a falling share of manufacturing employment and value added since the 1980s, manufacturing as a share of employment has actually been on the rise since 2000 for Burkina Faso, Ethiopia, Cameroon, Kenya, Lesotho, Senegal, Rwanda, Tanzania, and Zambia, and since 2010 for Nigeria and Ghana (GGDC/UNU-WIDER Economic Transformation Database, 2021). However, the manufacturing share of value added has largely been stagnant or falling, indicating a fall in manufacturing productivity (GGDC/UNU-WIDER Economic Transformation Database, 2021). This had led to great policy interest in developing a high-productivity export-based manufacturing in Sub-Saharan Africa. For example, Ethiopia started an ambitious industrial parks development program in 2019 to incentivize the migration of manufacturing jobs away from China, where wages are rising (Altenburg, 2019). Rwanda has also welcomed the opening plants and factories of major global corporations such as Volkswagen in 2018 (The Economist, 2018). The top manufactures exports from SSA are reminiscent of those of South Korea in the 1960s and 1970s, including leather goods from Ethiopia, Nigeria and Uganda, textiles and clothing from Kenya and Ethiopia, and construction materials, chemical and machinery in Ghana, Mozambique, Nigeria, Uganda and Zambia (Balchin et al, 2016). Applying the lessons from Korea's economic transformation path and the role of the Korean government in accelerating it will be of critical interest to policymakers in Sub-Saharan Africa. |
| First Year Of Impact | 2022 |
| Sector | Communities and Social Services/Policy,Government, Democracy and Justice |
| Impact Types | Policy & public services |
| Description | presentation at Sogang University |
| Form Of Engagement Activity | A talk or presentation |
| Part Of Official Scheme? | No |
| Geographic Reach | International |
| Primary Audience | Policymakers/politicians |
| Results and Impact | many students, professors, and policy makers attend this presentation |
| Year(s) Of Engagement Activity | 2022 |