Economic Status Comparison Of South Korea And North Korea

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Total Pages : 47 pages
Book Rating : 4.:/5 (11 download)

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Download or read book Two Koreas written by and published by . This book was released on 2017 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: Both South Korea and North Korea’s GDP per capita was approximately $3000 in 1973. In 2008, South Korea’s GDP reached $948,906 million and $20,454 of per capita GDP, whereas North Korea’s was $25,310 million and $1,122, respectively. North and South Korea shared culture, identity, geography, and the history until 1945 when Korea was divided into the North and the South. Despite the fact that North and the South shared such characteristics, why is it that the South succeeded in economic development and become one of the richest countries in the world, whereas North continues to remains as one of the poorest? This thesis attempts to answer the question. This thesis argues that the difference in North and South Korea’s state autonomy under different regime types—predatory and developmental—and the presence or absence of property rights provides the best explanations for their economic success and failure. As an intermediate of developmental and predatory state model, South Korea under Park Chung-Hee had the autonomy to build and maintain friendly relationship with the private corporate actors for the efficiency of its developmental policy. At the same time, the state had a capacity to be insulated from the society and particularistic pressures that originates from the private actors when the social and private interests are inconsistence with its developmental policies for economic development. On the other hand, North Korea under Kim Il-Sung was capable to be insulated from the society as in predatory state model, but the state lacked a capacity to form a tie with private actors to maximize the efficiency of its developmental plan. It is agreed among many scholars as Darren Acemoglu and James Robinson, and Douglass North and Barry Weingast that the private property and property rights as an institution is a key for nation’s economic success. After the independence from Japanese colonial ruling, North and South Korea independently carried out land reforms that were different from one another. In South Korea, the land reform was carried out based on the rule that the government confiscates the land with compensation and distributes at a cost. In the North, the land reform was carried out as a part of socialist reform based on the free confiscation and free distribution rule. Under the land reform law of 1946, the post-distribution activities were prohibited for owners and the lands as property was practically owned by the government in the North. In contrast, in the South, the post-distribution activities were allowed and established the private property as an institution. In addition, the compensation of confiscated lands created capitalist class. The land reforms in North and South Korea respectively contributed to establishment of socialist and capitalist market economy of two Koreas, and influenced their plans for economic development. In short, different state autonomy under different regime type, and the property rights engaged and played out with one another and contributed to economic disparity of two Koreas.