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South Korea's Meteoric Monetary Recovery

South Korea's Meteoric Monetary Recovery

By Emily Cadei

People (motion blurred) crossing the street at the busy Gangnam shopping and business area of Seoul. The Gangnam District is the wealthiest neighborhood of Seoul and features in the worldwide hit 'Gangnam Style' by rapper, Psy.


Because making it off the bench takes a little bit more than hope to get you back in the game.

By Emily Cadei

Though more than 60 years have passed, Kongdan “Katy” Oh still holds vivid memories of her childhood during the dark days of postwar South Korea.

For example: attending grammar school classes in the 1950s, crammed under a makeshift tent with her classmates and hoping to be one of the lucky few chosen to sit in a chair, a privilege determined by a lottery system. Pull the wrong number and you were stuck sitting on the cold floor. Lunch was “dried milk and corn cakes provided by the Americans,” Oh recalls.

Change the faces and the geographic backdrop and it could very easily be an image one might see today in Afghanistan, she notes.

BW image of woman and child sleeping on floor

A South Korean mother and her child sleeping on the floor of a schoolroom in Taejon. 

It sounds like a ridiculous comparison, given where the two countries sit in 2014 — one, the hyper-modern home of Samsung and “Gangnam Style”; the other, an international backwater mired in war and corruption. But in fact, Afghanistan and South Korea weren’t so far apart in terms of economic indicators in the years after the Korean War ended in 1953, leaving large swaths of the Korean Peninsula devastated. Even as late as 1970, South Korea’s per capita GDP was a mere $284, not far from Afghanistan’s $159, according to data from the United Nations.

Since then, however, South Korea’s economic progress has been nothing short of eye-watering, with skyrocketing development driving per capita GDP up to $23,000 as of 2012, a more than 80-fold increase in just over 40 years. Afghanistan, meanwhile, has since been buffeted by its own decades-long conflicts. Per capita GDP has inched up to just under $700.

Its ascent has proved to be unbelievably hard to replicate.

When Oh, now an expert on East Asian security at the Brookings Institution and the Institute for Defense Analyses in the United States, returns to Busan, the southern port city where she spent much of her childhood, she says it’s like “a sea change.” Gone are the muddy roads and malnourished children in tattered clothes, replaced by high rises, sports cars and other signs of urban affluence. 

South Korea’s rapid rise from an impoverished, largely agrarian society to an urbanized first-world dynamo — its economy was ranked 15th largest in the world last year — has made it a darling of the international development community, an unparalleled success story that is often touted by the United States and others in the West as evidence that countries can go from aid recipient to aid donor in the span of a generation or two. 

2 men high fiving with confetti on the trading floor

Employees celebrate the close of trading for the year at the Korea Exchange (KRX) in Seoul, South Korea, on Dec. 30, 2013.

But there is a reason South Korea’s ascent up the global economic ranks is often dubbed “a miracle” — it’s proved to be unbelievably hard to replicate. Oh and other experts say the tens of billions of dollars in foreign assistance the United States poured into the country in the 30 years after the Korean War were critical in keeping people from starving and the country afloat. But that aid, on its own, is not enough to explain just how quickly South Korea made the leap from the third world to the first.

Even after three years of civil war, South Korea got a boost from several cultural and political legacies that remained intact. It had a highly educated population (in 1967, the literacy rate was at 88 percent); a homogenous society, which minimized internal conflicts; a tradition of centralized, bureaucratic government; and a Confucian culture that prioritized social stability and frowned on corruption.

And though miliary dictatorships have plenty of downsides, the generals who ran South Korea from 1960s through the ’80s do deserve credit for the liberal economic policies and efforts to open up Korean markets to the world, which ultimately helped make the country the exporting powerhouse it is today.

Despite those caveats, plenty of people around the world still take heart from South Korea’s trajectory and hope that their country could be next.

During recent research trips to sub-Saharan Africa, Oh says she was barraged by locals who want to talk with her about her native country, telling her “Korea is our model.”

South Korea’s poverty level in the 1950s, history of colonization (by Japan) and post-conflict scars all make it look to them “like an Asian version of a previous Africa,” she says. Perhaps if some of these countries at the bottom of the economic barrel — places like the Democratic Republic of Congo, Niger and Sudan (not to mention the donors aiding them) — heed some of Korea’s lessons, they could turn that on formulation on its head and emerge, down the road, as “the African version of modern South Korea.” 

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