Edited by Anis Chowdhury and Iyanatul Islam
Chapter 2: South Korea
O. Yul Kwon Introduction South Korea’s economic success between 1963 and 1996 is well documented, and stands as proof that a country can lift itself from poverty in one generation. As a result, the South Korean development model had attracted international attention. During three decades of economic expansion, South Korea transformed itself from one of the world’s poorest countries to one of the richest, despite a lack of natural resources, a high population density, severe wartime devastation, and heavy defence expenditures. As shown in Table 2.1, economic growth averaged 8.7 per cent per annum between 1963 and 1996. Per capita GDP, just US$87 in 1962, had increased to US$10 548 by 1996. Nominal GDP increased from US$2.3 billion in 1962 to US$480.4 billion in 1996, establishing the South Korean economy as the eleventh largest in the world. In 1996, Korea became the twenty-ninth member of the OECD. South Korea’s economic miracle came to an abrupt end in November 1997 during the Asian Financial Crisis. Negative growth of 6.7 per cent was recorded in 1998, with unemployment climbing from 2.6 per cent in 1997 to 6.8 per cent in 1998 and the inﬂation rate rising from 4.5 to 7.5 per cent during the same period. The value of the South Korean currency plummeted from 844 won per dollar in 1996 to 1415 won per dollar in 1997. However, unlike other economies aﬀected by the crisis, South Korea recovered quickly, achieving a 10.7 per cent growth...
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