South Korea’s Economic Miracle

By Hunter Wallace

Here’s an excerpt from the introduction to Ha-Joon Chang’s “Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism”:

“Mozambique may or may not succeed in living up to my fantasy. But what would your reaction have been, had you been told in 1961, a century before the Mozambican dream, that South Korea would, in 40 years’ time, be one of the world’s leading exporters of mobile phones, a strictly science-fiction product at that time? Hydrogen fuel cells do at least exist today.

In 1961, eight years after the end of its fratricidal war with North Korea, South Korea’s yearly income stood at $82 per person. The average Korean earned less than half the average Ghanaian citizen ($179). The Korean War – which, incidentally, started on June 25, Mozambique’s independence day – was one of the bloodiest in human history, claiming four million lives in just over three years (1950-3). Half of South Korea’s manufacturing base and more than 75% of its railways were destroyed in the conflict. The country had shown some organizational ability by managing to raise its literacy ratio to 71% by 1961 from the paltry 22% level it had inherited in 1945 from its Japanese colonial masters, who had ruled Korea since 1910. But it was widely considered a basket case of developmental failure. A 1950s internal report from USAID – the main US governmental aid agency then, as now – called Korea a ‘bottomless pit’. At the time, the country’s main exports were tungsten, fish and other primary commodities.

As for Samsung, now one of the world’s leading exporters of mobile phones, semiconductors and computers, the company started out as an exporter of fish, vegetable and fruit in 1938, seven years before Korea’s independence from Japanese colonial rule. Until the 1970s, its main lines of business were sugar refining and textiles that it had set up in the mid-1950s. When it moved into the semiconductor industry by acquiring a 50% stake in Korea Semiconductor in 1974, no one took it seriously. After all, Samsung did not even manufacture colour TV sets until 1977. When it declared its intention , in 1983, to take on the big boys of the seminconductor industry from the US and Japan by desigining its own chips, few were convinced.

Korea, one of the poorest places in the world, was the sorry country I was born into on October 7 1963. Today I am a citizen of one of the wealthier, if not wealthiest, countries in the world. During my lifetime, per capita income in Korea has grown something like 14 times, in purchasing power terms. It took the UK over two centuries (between the late 18th century and today) and the US around one and half centuries (the 1860s to the present day) to achieve the same result. The material progress I have seen in my 40-odd years is as though I had started life as a British pensioner born when George III was on the throne or as an American grandfather born while Abraham Lincoln was president …”