Post-war South Korea developed along the same lines as Taiwan and Japan during the late 50s and 60s.

The success of Japan, Taiwan and South Korea can be seen in the commonalities of Newly Industrialised Economies (NIEs), planning and encouraging certain industries with the intention of using mass industrial capacity to compete and export on the global market. The return of profits were then reinvested back into the country to allow for further success.

In comparison to both Japan and Taiwan, the Korean model expanded to account for stronger government intervention into industry. Using US and Japanese capital following the Korean War, the South Korean Economic Planning Board (EPB) in 1962 implemented its first five-year economic plan. The purpose was to change the economy from an Import Subsidy Industry (ISI) to an Export Oriented Industrial (EOI) country, closely following the Japanese model of a strong relationship between the bureaucracy, government and private industry. While initially a government led economy under Park Chung-hee, the Korean economy by 1976, had become a close relationship between government and private-sector businesses which were so interconnected that both mutually led economic development.

The East Asian model of state-sponsored capitalism, allowed for massive economic growth between 1949-1976 as each country evolved from ISI to EOI economies. While initially Japanese led, each country’s adaptations to the East Asian model allowed them to rapidly industrialise. Their success allowed them to efficiently manufacture and undercut western industrial powers like the US through cheaper (and often better) cars, appliances and electronics. Strong reinvestment by the Japanese Ministry for Trade and Industry (MITI), private enterprises and the government in Japan, Taiwan and Korea (respectively) maintained momentum encouraging further direct investment, R&D and emphasis on education. While not equal for those who were not favoured by the government or those who disagreed with the countries policies, most citizens saw increases in living-standards and working benefits, especially if they worked hard for their employers.

So in short, the government used a few major companies, who had close ties to government members, to quickly manufacture goods for export back into often Western countries. This indirectly lead to massive corruption but often government and companies were so entwined that both had massive issues if one was facing troubles: like what happened in the 1990s.

Sources Hayam, Kim, Heo, Uk, ‘Comparative Analysis of Economic Development in South Korea and Taiwan: Lessons for Other Developing Countries’, Asian Perspective, suppl. Special Issue: South Korea’s Rise in Comparative Perspective, Seoul, Vol 41, Iss. 1, Jan-March 2017, pp. 17-41.

Wing, Christine B., Economics and security in United States foreign policy: The case of United States policy towards Japan, 1945 - 1951, Princeton University, ProQuest Dissertations Publishing, 1996

Clark, Cal, ‘Economic Development in Taiwan: A Model of a Political Economy’, Journal of Asian and African Studies, USA, Vol 22, No. 1-2, 1987, pp. 1-16.