In the last three decades, the Republic of Korea has achieved what is widely acclaimed as " the economic miracle on the Han-gang River." Since Korea embarked on economic development in earnest in 1962, its economy has grown at one of the fastest paces in the world. The country has overcome a series of obstacles and challenges, transforming itself from a subsistence agrarian economy into one of the world's leading newly fast industrializing countries, an achievement all the more impressive considering the extent of devastation by the Korean War. Today, however, the Korean economy faces new challenges. Internally, it must deal with the inevitable turbulence accompanying political democratization and externally, it is confronted by an increasingly complex and tough international trading environment.
Since Korea launched its 1st Five-Year Economic Development Plan in 1962, the country's real GNP has grown by an average of more than 8% per year. The economic structure was radically transformed as a result of the successful development programmes implemented during these years. In around three decades, from 1962 to 1995, Korea's gross national product increased from 2.3 billion $ to 451.7 billion $, with per capita GNP soaring from 87 $ to about 10,076 $ at current price levels. The commodity trade volume reached more than 260.1 billion $ in 1995 in contrast to 477 million $ in 1962. The gross savings ratio rose to 36.2% of GDP from 11.0% during the same period.
Korea's development is even more remarkable in view of its situation until the early 1960s. Korea had been economically backward for most of its long history. There were few significant industries before liberation from Japan's 35-year colonial rule (1910-1945), during which Korea's economic resources were ruthlessly exploited by the Japanese. The Korean economy was further devastated during the Communist-provoked Korean War (1950-1953), the damage from which took a long time to heal. As late as 1961, Korea was still suffering from the many difficulties commonly faced by less developed nations. On top of its extreme poverty, the population was growing by 3% annually. Unemployment prevailed and savings were negligible. The nation had no notable exports, and it depended on imports for both raw materials and important manufactured goods.
Given the limited size of the domestic market, economic planners found it necessary to adopt an export-oriented industrialization strategy. This outward-development strategy was practically well suited to Korea's conditions in the early 1960s. Government initiatives played an important part in development efforts. A more realistic single exchange rate was adopted and short-term export financing was made available. Customs procedures were simplified, enabling exporters to easily import necessary raw materials. Foreign investment was also strongly encouraged.
Several factors are usually cited to explain Korea's remarkable economic development. One is the Government's role in directing the economy. In its Five Year Economic Development Plans, the Government would direct businesses to focus on specific key industries by providing generous incentives in the form of tax breaks, subsides, low interest loans, and manpower training, as well as others. Another interrelated factor was the export-oriented economic strategy, deemed appropriate since Korea lacked natural resources. A third important factor was the abundant availability of cheap, yet highly educated and disciplined labour. The traditional respect for learning combined with the rapid modernization of the Korean education system led to Korea having one of the highest literacy rates in the world. These factors combined with a favourable international economic climate to work what is commonly called the "the economic miracle on the Han-gang River".
Table 1. The key socio-economic indicators in Korea
Year |
1955 |
1960 |
1970 |
1980 |
1990 |
1995 |
GNP (billion $, current) |
1.4 |
1.9 |
8.1 |
60.6 |
251.8 |
451.7 |
Per capita GNP ($) |
65 |
79 |
253 |
1,597 |
5,883 |
10,076 |
GNP growth rate (%) |
4.5 |
1.1 |
7.6 |
-3.9 |
9.6 |
8.7 |
Industrial structure (%) Agri. Forestry & Fisheries Manufacturing Services Population (1,000 people) Annual pop. increase rate (%) Population density (per km2) |
44.5 12.6 42.9 - - - |
36.8 15.9 47.3 25,012 - - |
26.6 22.5 50.9 32,241 2.2 - |
14.7 29.7 55.6 38,124 1.6 385 |
8.7 29.7 27.2 42,869 1.2 432 |
7.0 27.2 66.2 44,851 0.9 451 |
Source: Korea National Bank
During the late 1980s and early 1990s, though, the Korean economy began experiencing slower growth, higher inflation and a deterioration in the balance of payments. This setback was the result of a structural deterioration in competitiveness caused by the growing inefficiency of the government-guided economic system and the disappearance of the once ample supply of low cost, skilled labour, not to mention the increasingly hostile international economic environment.
In 1993, Korea government declared the revitalization of the economy as one of its foremost tasks, and set about to develop a new economic paradigm called the "New Economy" as part of its master plan of creating a "New Korea". Government has also tried to diversify its trade ties. While the Republic has steadfastly tried to strengthen its trade relations with traditional partners such as the U.S. and Japan, the nation has also made great efforts to expand its trade and capital cooperation with the Southeast Asian nations, the former and present socialist countries and Third World nations as well. The Republic has also tried to take a more assertive role in international forums.
In light of the rapidly changing international economic sense, these enlightened policies, in combination with the Republic's growing environmental awareness, will help realize the envisioned "New Economy". It is predicted that Korea could join the ranks of the advanced nations by entering the Organization for Economic Cooperation and Development (OECD) in December of 1996.
Korea has a democratic form of government based on the separation of powers and a system of checks and balances. The Constitution was first adopted in 1948 when the Republic of Korea was established and has been revised nine times as the country struggled to make democracy work effectively. It guaranteed the basic rights and freedoms of the people, including, but not limited to equality before the law, freedom from arbitrary arrest, freedoms of residence, the right to vote and hold public office, the right to privacy and freedom of region, speech, the press and assembly, as well as the right to a clean environment and to seek happiness. It also provides for various economic rights, - as well as the duty - to work, freedom of choice of occupation and the right to collective bargaining to obtain optimum wages and fair compensation.
Because of the recent revision of constitution, the direct election of the President is changed to a single five-year term and also local autonomy system was established for the first time in 30 years. These two provisions are key to the strengthening of democratic institutions in Korea. The revision also reinstated the right of the National Assembly to inspect all aspects of state affairs on a regular basis, as a check on the power of the executive. Finally, it charges the Government to seek to reunify the nation. In 1997, Korean will elect the new President.
The Government consists of three branches: the legislature, in the form of a unicameral National Assembly; the judiciary, consisting of district and appellate courts and a supreme court; and the executive, headed by the President who is the head of state and commander-in-chief of the Armed Forces. The President is assisted by the Prime Minister and the State Council.
After the second World War, Korea was well known as the divided country, which is the product of a Cold War, and one of the poor countries in the world up to 1950s, and also as one of the successfully reforested countries as well as one of the developing countries in 1980s.
Korea, located in Far East Asia, has a temperate climate characterized by summer monsoons and by continental winters with freezing weather. Seasonal changes are gradual but distinctive; spring and autumn are relatively short while summer and winter are rather long. The annual mean temperature extends from 3 to 16 and the annual precipitation ranges from 600 to 1,600 millimetres. Due to its diverse distribution of climatic conditions, Korea exhibits various types of forests, which is divided into sub-tropical, warm-temperate and cool-temperate forest zones. The sub-tropical zone consisted of evergreen hardwood forests in southern part of Korean Peninsular and island, and forest of warm-temperate zone were made of mostly deciduous hardwood species.
Since early 1960s, organized investments have been made in the forestry sector as a part of national economic development plan. In addition, tree planting and forest protection practices of the New Villages Movement (Saemaul Undong) played a major role in rehabilitation of forest land. However, forests are still in premature stage under 30 years old, and they still have very limited economic importance.
Even though the forest is premature in Korea, the forest is important as the living environment for Korean. Five thousand years of established myths of country and culture are based on the mountain and forest. If the history of western countries is related with the stone and desert, then that of Korea is the wood and forest. Therefore if we consider the fact that Korea is a mountainous country, and mountain means the forest, the mountain and forest in Korea are the life of Korea itself. For example, a lot of Koreans have firmly believed that a lot of honourable people born in the noted mountains, and if they establish a ce metrey in good place in mountain according to the theory of configuration of the ground, their descendants will be successful in future.
Table 2. Trend of land use pattern in Korea (Unit: 1,000 ha)
Classification |
1970 |
1975 |
1980 |
1985 |
1990 |
1995 |
Total national land Forest land Cultivated land Other land |
9,848 (100.0%) 6,611 (67.1%) 2,298 (23.3%) 939 |
9,880 (100.0%) 6,635 (67.2%) 2,240 (22.7%) 1,005 |
9,899 (100.0%) 6,568 (66.4%) 2,196 (22.2%) 1,136 |
9,922 (100.0%) 6,531 (65.8%) 2,144 (21.6%) 1,239 |
9,927 (100.0%) 6,476 (65.2%) 2,109 (21.2%) 1,342 |
9,927 (100.0%) 6,452 (64.9%) 1,985 (20.5%) 1,490 |
Source: Forestry Administration
Note: Number may not add to total due to remainder
