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Export-led industrialization documentary

0. Prologue: The results of 50 years of economic development

Just fifty years ago, South Korea’s economy was no different from that of poor African countries.
What was going on with the Korean economy for the past 50 years?
Time to look back over the history of Korea’s economic rise.

15th August 1948
the government of the Republic of Korea was established.

Unlike other newly independent states,
South Korea chose the free market, liberal democratic system.
Thus, it was able to enjoy the benefits
of easy access to advanced Western
civilization and technology.

Through division and war, South Kora had been reliant on foreign aid.
The governments of Syngman Rhee and Jang Myeon both formulated
economic plans to achieve economic self-sufficiency.

The emergence of the Park Chung-hee government

Park Chung-hee’s first inaugural address
“Our enemies are poverty, corruption and communism. I believe these to be our three common enemies.”

In 1962, the new military government sets out an economic plan.

The plan envisaged an annual growth rate of 7.1%.
Given the lack of investment funds,
this high investment-high growth plan was unrealistic.

But there was another way.

From 1962, exports of industrial goods, principally tinned iron, plywood and apparel,
began to rise.

The business world had taken the lead,
and in 1964, the government promote exports
as a national priority.

Export-led industrialization was strategy without precedent
in the industrialization of other undeveloped countries.

Amid rapid global economic growth,
South Korea’s decision
to adopt a export-led growth model in the mid-1960s
turned out to be the right one.
Exports rose rapidly every year
at a staggering rate of 40% on average.
In 1970, apparel formed 40% of total exports, the no. 1
export product.

Plywood was the no. 2 export product.

Wigs were the third largest export.

Thus, to start with, South Korean exports
were not all that impressive.
But beginning with simple, light industrial goods,
and gradually moving up the value chain
proved to be the right way to industrialize.

The export of light industrial products
was possible thanks to cheap and abundant labour.

However, poor labour conditions
were to become a big social issue. In 1970,
a young worker burnt himself to death,
in protest at the lack of enforcement of the Labour Standards Act.

However, with industrialization, wages were
rapidly rising.
From here on, Korea’s assent
out of poverty became more rapid.

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1) Chemical Fibre industry

The expansion of export of light industrial goods brought
development in other related industries.

With increasing apparel exports,
chemical fibre industry in the form of
nylon, polyester and acrylic, developed.
With young female labour, the electronics industry
centred on spare parts assembly, also developed.

From the 1970s,
South Korea’s main export were
‘heavy and chemical industrial products’.

Electronics, iron and steel, and ships
became major exports

Then cars and petrochemicals followed.
In such a way, South Korean exports
became increasingly high value-added. Additionally, in the 1970s,
Korean construction companies began entering the
foreign construction market.
With Oil Shock of late 1973,
the massive Middle East construction market opened up,
and many construction companies began winning contracts to
build roads, ports and industrial facilities.

The hard work and sweat of Korean workers
and businessmen in the hot, sandy winds of
the Arabian Desert, became a powerful
motive force in the rise of the Korean economy
in the 1970s.

With the rise in exports,
the Korean economy achieved external balance.
With three lows: low dollar exchange rates,
low interest rates and low oil prices,
in the late 1980s, Korean heavy and chemical
industrial exports rose rapidly.
Thus began what became known as
the ‘Boom of the Three Lows’.
South Korea ended its chronic trade deficit,
becoming economically self-reliant.

Epilogue: the significance of export-led industrialization

The Republic of Korea
had nothing to offer but people.

In the early stages, the country
developed expertise in producing simple, processed goods.
Later, it was able to make goods
that required more skilled labour and sophisticated technology.

A virtuous circle of rising exports,
investment and consumption
resulted in the fastest economic growth rates
in the world at the time.

The Export-led industrialization strategy resulted in
South Korea becoming part of the global economic system.

Korean business, by continuing to improve
the quality of their operations,
can continue to modernize the Korean economy.

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