South Korea

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Full Report: South Korea


1910-1918: Under Japanese control since 1905, Korea is officially annexed in 1910, governed by a series of military governor generals. Korean-language newspapers are closed, books on Korean history are burned, and thousands of Korean politicians are arrested. Resistance erupts, but it is poorly financed and soon collapses. Schools are closed, and more than 90 percent of school-age children go uneducated.

1919-1920: The March First Movement holds massive street protests throughout the country against Japanese rule. The Japanese respond with a brutal campaign of repression, using the military to disrupt the demonstrations, killing 7,500 and wounding 16,000. Pro-independence activity is banned. The Provisional Government of Korea in Exile, led by Syngman Rhee, is established in Vladivostok, Shanghai, and Seoul.

1921-1934: The prohibition on Korean newspapers and political groups is lifted, though both are strictly censored. Korean farmers are forced from their land, and almost 12 million people in 2.3 million farm households live on the edge of starvation. In the cities, almost 80 percent of the population lives in poverty, a result of Korean workers earning less than half of what their Japanese counterparts earn.

1935-1944: Japan's empire-wide military preparations see large-scale industrial development -- steel mills, auto plants, oil refineries, and hydroelectric plants -- and a modern transportation infrastructure. Koreans are to be assimilated into Japanese society; by 1940, 84 percent of all Korean families have adopted Japanese names. Korean youth are drafted into or forced to "volunteer" for the Japanese army.

1945-1947: Japan surrenders to the Allies. Russian and American forces occupy and divide the Korean peninsula at the 38th parallel. Despite Korean calls for independence, the Allies propose a five-year trusteeship over the country. A U.S.-Soviet committee fails to organize an interim provisional government. An Interim People's Committee, headed by Kim Il Sung, becomes North Korea's first central government.

1948-1949: Despite UN attempts to secure a compromise and proclaim a unified independent Korea, two separate states are established: the Republic of Korea in the South and the communist Democratic People's Republic of Korea in the North. Fighting between forces on opposite sides of the 38th parallel becomes more frequent. Soviet and U.S. forces withdraw.

1950-1952: North Korea launches a surprise attack on the South, overwhelming an undermanned and underequipped South Korean army. A United Nations force led by U.S. Gen. Douglas MacArthur fights to defend the South. The battle seesaws as China intervenes with troops and materials, and Seoul changes hands four times. When the front stabilizes at the UN-sanctioned 38th parallel, truce negotiations begin.

1953-1959: A cease-fire ends hostilities and sets the officially recognized border between North and South at the 38th parallel. President Syngman Rhee twice amends the constitution so he can remain in power. Economic policies focus on increased industrial production, but the country is on the verge of bankruptcy due to the inefficiencies of the Rhee administration and the embezzlement of aid and resources.

1960: Violence erupts over a fraudulent presidential election, and President Rhee resigns. The transitional government creates a bicameral legislature, and although the opposition Democratic Party (DP) is elected to power, it cannot consolidate its gains. Rhee loyalists control the military and police, and the DP cannot satisfy growing student demands for social and economic reforms.

1961-1970: Maj. Gen. Park Chung Hee leads a coup and declares martial law. He assumes the presidency and cements power in successive elections. He rules free of legislative oversight and institutes economic planning and controls geared to achieve industrialization and exports. The economy achieves stellar growth.

1971-1978: Park wins the presidential election, but re-imposes martial law. The economy turns to heavy and chemical industries, partly to aid in national defense. North and South hold discussions on political and military issues, including reunification. As growth slows, inflation reaches double digits. Dependence on foreign oil pushes the country into a recession during the second global oil crisis.

1979-1980: High inflation continues, and crowded cities experience housing, sanitation, transportation, and pollution problems. Students stage violent demonstrations against political repression. Park is assassinated by the head of the Korean CIA, throwing the country into a state of crisis. In response to continuing student protests following the assassination, Gen. Chun Doo Hwan stages a coup.

1981-1986: The collaboration between government and business delivers strong growth. The country shifts its economic focus from heavy industries to consumer goods, and import restrictions are reduced. Active political life resumes as martial law is lifted, but an extremist student protest movement continues violent protest actions. Chun survives several North Korean assassination attempts.

1987: Gen. Roh Tae Woo, a protégé of President Chun, agrees to implement democratic reforms, including direct election of the president in coming elections. Opposition political parties participate in political reform. Divided opposition, however, allows Roh to be elected president.

1988-1991: Seoul hosts the 1988 Summer Olympics. The South Korean economy steers away from its reliance on exports to meet the demands of a growing domestic market. Student protests against U.S. interventionist policies take the form of widespread arson and firebombing. By the end of the decade, Korea's economic growth slows, and inflation increases. In 1991 the UN admits South Korea as a member.

1992-1996: Kim Young Sam (Democratic Liberal Party) is the first elected civilian president since the 1961 coup. He launches a far-reaching anticorruption campaign and institutes immediate economic reform. North and South Korea sign the Joint Declaration of Denuclearization, a treaty broken almost immediately as North Korea attempts to procure nuclear weapons.

1997-1999: The regional financial crisis hits hard. The value of the Korean won falls more than 50 percent against the U.S. dollar, and GDP growth plummets from 5 percent in 1997 to -5.8 percent in 1998. An IMF bailout of US$58 billion opens Korea to foreign investment. The South's "Sunshine Policy" actively engages the North for peace while endorsing a "zero-tolerance" policy toward aggression.

2000-2001: A breakthrough in North-South relations takes place, with the first-ever summit between North Korea's leader Kim Jong Il and South Korea's president Kim Dae-jung. In 2000 North and South agree to reconnect the Seoul-Sinuiju railway line, severed since the nation was divided in 1945, bridging the Demilitarized Zone to facilitate inter-Korean trade.

2002-2003: South Korea successfully co-hosts the 2002 World Cup, boosting its image and confidence. Kim Dae-jung bows out with the 2002 elections. Despite corruption scandals, the country appears on a vibrant social and cultural path. The economy is on a solid course back to growth. But the global slowdown and a gathering political crisis with the North are increasingly causes for worry.

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1945-1947: Korea achieves independence after 35 years of Japanese rule, but is divided by Russian and American forces. The Allies propose a five-year trusteeship to prepare for a unified Korea, but the Korean people object. A U.S.-Soviet commission is formed to help organize a "provisional Korean democratic government," making Korean independence a playing piece in the new U.S.-Soviet conflict.

1948-1949: Two separate states are proclaimed. UN-sponsored elections (boycotted by the right, which seeks a unified state) create the Republic of Korea in the South; Syngman Rhee is president. In the North, the Democratic People's Republic of Korea is led by Soviet-supported Premier Kim Il Sung. Fighting flares across the 38th parallel. The South Korean army is weakened after a revolt by Communist elements.

1950-1953: During the Korean War, President Rhee's four-year term expires. With no hope of reelection by the National Assembly, he forces a constitutional amendment to elect the president by popular vote, and in 1951 he is reelected. The 1953 cease-fire sets the officially recognized border between North and South at the 38th parallel.

1954-1959: The constitution allows only two terms in office. Rhee again amends the constitution, this time so he may be reelected indefinitely. He wins the election, but the next four years see his Liberal Party maneuvering to keep him in office. Fearing for Rhee's health, subordinates withhold information that may upset their 88-year-old leader, making him a prisoner of his own political party.

1960: Rhee resigns after students protesting fraudulent presidential elections are massacred. A day later the vice president and his family kill themselves. Constitutional reform creates a parliamentary government with a bicameral legislature. The opposition Democratic Party takes control of the Assembly, but soon splits into two groups and is unable to satisfy demands for social and economic reforms.

1961-1962: A military coup led by Gen. Park Chung Hee dissolves the government. Park institutes martial law and becomes acting president. He clears the government of corrupt and unqualified individuals and replaces civilian officials with military officers. Military leaders establish the Democratic Republican Party. The junta proposes a constitution calling for a president elected by popular vote.

1963-1971: Park resigns from the military and runs for president as the DRP candidate in the 1963 election, barely defeating his opponent. In the 1963 National Assembly elections, the DRP wins an impressive majority, consolidating power under the majority party. Park wins the presidential election again in 1967, and in 1969 he amends the constitution so he will be able to succeed himself a third time.

1972-1974: Park assumes virtual dictatorial control, dissolving the Assembly and suspending all political activities. A new constitution allows him to remain in control indefinitely and provides him with discretionary use of emergency powers. The president is "elected" by a council of hand-picked party deputies, and one-third of the National Assembly is nominated by Park.

1975-1978: Park cracks down on increasingly vocal opposition with Emergency Measure Number Nine, which criminalizes criticism of the new constitution. The U.S. agrees to keep military forces on the Korean peninsula only if Korea improves its human rights record. Opposition leader Kim Young Sam is dismissed for voicing political discontent in the National Assembly; opposition politicians respond by resigning.

1979-1980: After Park is assassinated, Gen. Chun Doo Hwan takes control. Chun's forces brutally slaughter hundreds of students and civilians protesting the coup in Kwangju. Political opponents are removed through trumped-up legal charges and compulsory "political purification." Existing political parties are dissolved and banned, and a Chun-appointed security council assumes control.

1981-1986: Korea's "Nordpolitik," or Northern policy, pursues ties with China and the Soviet Union and its European satellites. Chun survives several assassination attempts and is reelected by the electoral college. Political parties are again allowed to organize, and banned political figures return to political life as martial law is lifted. Opposition parties capture a majority in the National Assembly.

1987: Gen. Roh Tae Woo, Chun's protégé, agrees to democratic reforms, such as a return to direct presidential elections. The constitution is drastically revised, with the first input from opposition parties since 1960. The president's emergency powers are eliminated, and the Assembly can investigate state affairs. Divided opposition allows Roh to win the presidency with just 36 percent of the vote.

1988: A new constitution is ratified, calling for a president, who appoints and heads a state council, and for a National Assembly of 299 members. In the elections for the Assembly, the ruling party loses the majority for the first time in Korean history, paving the way for exercise of the new constitution's separation of powers. The opposition promptly rejects Roh's first nominee for chief justice.

1989-1990: Roh secretly negotiates with two of three opposition parties to gain control over the National Assembly. The combined Democratic Liberal Party now has a two-thirds majority. The government admits to misappropriating US$14 million from the 1987 budget to finance Roh's presidential campaign. Diplomatic relations are formally established with the Soviet Union.

1991-1996: Kim Young Sam (DLP) wins the presidential election, the first publicly elected civilian president since Park's 1961 coup. North and South Korea sign the Joint Declaration of Denuclearization, which is broken almost immediately as North Korea attempts to procure nuclear weapons. In 1995 direct elections for local officials, including mayors and governors, are held for the first time in 30 years.

1997-1999: President Kim Dae-jung (National Congress for New Politics) is elected by popular vote to a single five-year term. His inauguration is the first peaceful democratic transition from a ruling to an opposition party in Korea's history. Kim pursues a "Sunshine Policy," actively engaging the North for peace and reconciliation. At the same time he maintains a strong stand on security.

2000-2001: A historic summit between North Korea's Kim Jong Il and South Korea's president Kim Dae-jung yields the North-South Joint Declaration, which leads to joint efforts toward solving humanitarian problems and increasing economic cooperation. President Kim wins the Nobel Peace Prize for his work on democracy and human rights.

2002-2003: In elections in late 2002, the governing Millennium Development Party retains power; Roh Moo-hyun, who favors extending the "sunshine policy" toward the North, becomes president in February 2003. The government weathers several scandals. Relations with the North fluctuate, then grow tense over the North's nuclear stance and standoff with the United States.

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1945-1951: Following the peninsula's division, the South is primarily agricultural; Japanese-built heavy industry is located in the North. South Korea is dependent upon the North for 91 percent of its electricity. As Japanese managers and technicians leave, industries slow and shut down, causing severe material shortages. Unemployment is 50 percent by 1947, compounded by food shortages and rampant inflation.

1952-1953: A cease-fire concludes hostilities. The war kills an estimated five million people and destroys 43 percent of South Korea's industrial base. Postwar reconstruction begins almost as soon as the Korean front stabilizes near the 38th parallel. President Syngman Rhee uses an infusion of foreign aid to rebuild Korea's infrastructure, investing in schools, roads, and communications.

1954-1960: Foreign aid comprises almost half the national budget. Economic policies focus on increased industrial output, and the average annual rise in the GNP is 5.5 percent. Shortages from the war and the costs of supporting a large standing army cause high inflation, but prices stabilize by 1958.

1961-1962: Korea focuses on exports to transform from an agrarian society to a modern industrial nation. An Economic Planning Board directs the country's economic plans; Park's goal is to build an economy that will break free of dependence on U.S. aid. To do this, he nurtures companies that are already proven successes. The export program boosts Korea's annual production growth rate to 25 percent.

1963-1970: Under Park's guidance, the chaebol -- groups of companies with interrelated management -- develop. Various financial incentives, such as tax breaks, low-interest loans, and direct government subsidies, foster the growth of successful companies into giant conglomerates. Park normalizes relations with Japan, obtaining loans and compensation for wrongs committed during Japanese colonial rule.

1971-1979: The Economic Planning Board launches the Heavy and Chemical Industries Initiative. This "big push" targets steel, shipbuilding, auto manufacturing, and chemical industries as key to survival in the face North Korea's military might. Companies either succeed internationally or lose favorable government support. Growth declines as Korea is hard hit by the second oil crisis and double-digit inflation.

1980-1982: Unfavorable global conditions prove damaging to the export-intensive economy. Seeing the increasing inefficiencies of the chaebol, Economic Minister Kim Jae-Ik turns the economy from heavy industry to consumer goods, and the country moves from a negative growth rate (its first since 1962) to growth of 8.3 percent. Trade with China, the Soviet Union, and its Eastern European satellites flourishes.

1983-1988: The Fifth Five-Year Plan calls for steady growth of exports, low inflation, and a 7.5 percent growth in GNP. The GNP rises more than 12 percent from 1986 to 1988. Financial and import policies are liberalized. Though intervention is downplayed, success is still achieved through government sponsorship of specific industries. The government encourages savings and investment over consumption.

1989-1992: Responding to market demand, the Economic Planning Board shifts away from export items to meet the demands of a growing domestic market, which has developed a capacity for luxury spending thanks to burgeoning personal savings and annual double-digit wage increases since 1987. In 1989 economic growth slows, although it still maintains a respectable rate of 6.5 percent, and inflation increases.

1993-1996: Newly elected president Kim Young Sam quickly releases his "100-Day Plan for the New Economy" for immediate economic reform, intended to decrease inflation and eliminate corporate corruption. This is followed shortly by a new Five-Year Plan that encourages foreign investment. The Korean rice market opens to foreign imports. Per capita GNP exceeds US$10,000.

1997-1998: South Korea suffers in the regional financial crisis, with troubles stemming from weak financial institutions and debt-ridden chaebol. Investor confidence plummets, and GDP growth declines from 5 percent in 1997 to -5.8 percent in 1998, in part caused by massive foreign borrowing and overproduction coupled with a decrease in demand. South Korea receives a US$58 billion bailout from the IMF.

1999: As one term of the IMF loan program, the government removes restrictions on foreign investment in the South Korean stock market, and non-citizens are allowed to buy land for commercial and personal purposes. The growth of the GDP recovers. The government encourages the chaebol to restructure and reduce its size and supports the growth of small and medium-sized businesses.

2000-2003: Korea continues to move from dramatic state intervention to a market-driven economy complete with open trade and financial markets. The government privatizes major state-run enterprises or reduces its presence across a wide range of sectors, including heavy industry and construction, electric power, telecoms, and banking. The economy rebounds with annual growth around 6 percent.

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1945-1952: At the start of the American occupation, close to 700,000 Japanese return home, including the skilled managers and technicians who run Japanese-owned industries. A population explosion occurs as millions of refugees return from Japan, China, Manchuria, and North Korea; most flock to urban centers, where high unemployment is compounded by food shortages and rampant inflation.

1953-1959: Before the truce, the Korean War kills an estimated five million people and destroys 43 percent of the South's industry and 33 percent of its housing. Colleges and universities are rebuilt, but better employment and career advancement opportunities do not follow. The newly educated (and now discontented) populace grows increasingly critical of the government.

1960: After the 1960 presidential elections, student demonstrations over fraudulent election practices bring the country to the brink of civil war. Riot police in Seoul kill 142 demonstrators as they march on the presidential palace, and President Syngman Rhee's government collapses. Even after the formation of a transitional government, student protests demanding social and economic reforms continue.

1961-1964: Korea's transformation from an agrarian society to a modern industrial nation begins under the reign of Gen. Park. He sees this shift as a means to improve the quality of life for Koreans while at the same time providing a strong defense against the North. Family-planning policies are implemented to control population growth.

1965-1971: Students demonstrate throughout the country to protest normalization of relations with Japan and the decision to send troops to Vietnam. As industrialization proceeds, the annual agricultural growth rate lags (a mere 2.5 percent), and farm income is half that earned by urban workers. The Saemaul Undong (New Community) Movement aims to improve farm life while increasing efficiency and income.

1972-1976: Park declares martial law and assumes virtual dictatorial control over the country. Universities are closed, and the press is censored and controlled. In rural villages, living conditions improve dramatically, bringing plumbing, electricity, telephones, and televisions into most homes. Emergency Measure Number Nine, enacted in 1975, criminalizes student protests.

1977-1979: Consumer prices rise as much as 30 percent as the nation suffers double-digit inflation. Korea has become an urban country: 54.9 percent of the population lives in cities. This exacerbates existing housing, sanitation, transportation, and pollution problems. In a year filled with violent protest, 1979 sees striking workers massacred at Kwangju and students battling police in Pusan and Masan.

1980-1986: Widespread student demonstrations demanding the end of martial law shut down the country. Gen. Chun's proposal to double university enrollments is seen by some as a ploy to deflect student protest into white-collar aspirations. Political life resumes when martial law is lifted, but violent student protests continue. Chun maintains power through security forces and tight control of the media.

1987-1988: Student protests occur almost daily, reaching a peak with reports of the torture and death of a student activist by police. Students engage in arson and firebombing against government offices, businesses, the police, and U.S. interests. A National Pension System, covering age pensions, disability, and survivors pensions, is introduced, as is an unemployment insurance program.

1989-1997: South Koreans develop a capacity for luxury spending thanks to burgeoning personal savings and annual double-digit wage increases since 1987. In the mid-1990s, television choice and viewership expand as local commercial television stations begin broadcasting in eight major cities. Cable TV also makes its debut.

1998-2001: As part of expanded economic relations between the two Koreas, the first South Korean tourists visit North Korea on a cruise and tour. Following the North-South Joint Declaration in 2000, 100 people from families that were separated by Korea's partition from both sides of the border travel to each other's capitals for family reunions.

2002-2003: The year 2002 brings a great boost to consumer confidence and social enthusiasm in the form of the soccer World Cup, which Korea co-hosts with Japan and in which the national team performs exceptionally well. A rebounding Korea, "wired" with high technology, is becoming the region's cultural magnet and trendsetter. But tension renews with the North as well as with U.S. troops.

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1945-1970: The primary national goals for this period are economic development and growth, and as a consequence there is little to no discussion of environmental concerns.

1971-1979: Wood has been a major source of heating fuel, resulting in widespread deforestation. The Ten-Year Afforestation Plan restores forests and improves their overall quality. Environmental education is included as a basic component of school curricula. The transition to heavy and chemical industries exacts a high environmental price, and in 1977 Korea passes the Environmental Preservation Act.

1980-1983: The public expresses concerns about the environment, and the Environmental Administration is established. The new constitution includes environmental principles as a way of ensuring basic human rights. The government implements strict environmental controls, measures the impact of industry on the environment, and bills the costs of environmental cleanup to companies responsible for pollution.

1984-1989: Following the success of the first plan, the second Ten-Year Afforestation Plan increases the quality of commercial forests to generate increased sustainable lumber yields. In response to concerns about air pollution, unleaded gasoline is introduced. A nationwide education plan places environmental topics in eight major areas of study at all levels of education.

1990-2003: The Environmental Administration becomes the Ministry of Environment. The Environmental Preservation Act of 1977 is rewritten as four separate acts, covering air quality, water quality, noise, and toxic chemical control. Two new acts are added, one to guide general environmental policy and the other to provide a framework for resolving environmental disputes.

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Rule of Law

1945-1950: A U.S. military government administers the Southern half of the Korean peninsula, and an Interim Legislative Assembly drafts laws for the future. Following the establishment of South Korea, Communist elements in the new South Korean army stage a revolt. After putting this rebellion down, the army cleans house and removes divisive elements, which leaves the military significantly weakened.

1951-1960: President Rhee twice amends the constitution to extend his political career. The first change, following the imposition of martial law, calls for the election of the president by popular vote, and Rhee is reelected with 72 percent of the vote. The second amendment allows him to succeed himself indefinitely.

1961: A military coup led by Maj. Gen. Park Chung Hee overthrows the prime minister and dissolves the National Assembly. Martial law is instituted, and Park purges the military and government of corrupt or unqualified individuals, replacing civilian officials with military officers. He creates the Korean CIA, which has broad powers to arrest anyone with views not in line with the ruling party.

1962-1970: The junta proposes a new constitution, calling for a president elected by popular vote. New powers are granted the presidency, including the ability to act without legislative consent. Park plans a national referendum to determine if the military junta should remain in power for four more years, but cancels it in the face of U.S. and domestic opposition.

1971-1973: Upon his election as president in 1971, Park declares a national emergency and grants himself sweeping powers. In 1972 he declares martial law, implementing a new constitution that allows him to remain in control indefinitely with discretionary emergency powers. The KCIA jails student protestors and outspoken opposition politicians, going so far as to abduct an anti-Park politician from Japan.

1974-1978: Facing a popular campaign demanding a repeal of the 1972 constitution, Park bans this and all similar political campaigns. He enacts Emergency Measure Number Nine, making criticism of the constitution, student protests, and press coverage of such acts a crime punishable by imprisonment. Park defends the measure, calling it essential for national unity against a potential North Korean attack.

1979: Kim Young Sam, leader of the opposition New Democratic Party, voices his discontent over the domestic situation in a speech to the National Assembly. He is dismissed from the Assembly; other opposition politicians respond by resigning. Prime Minister Choi Kyu-hah, acting president after Park's assassination, repeals Emergency Measure Number Nine and releases hundreds of political prisoners.

1980: Gen. Chun Doo Hwan stages a coup, imposing martial law and neutralizing opposition politicians through trumped-up legal charges. A student and civilian protest against the coup ends in a bloody massacre at the hands of the military. A new constitution calls for sweeping democratic reforms, but must be ratified by the Assembly. In the meantime, a Chun-appointed security council rules the country.

1981-1986: Political parties are again allowed to organize, and active political life resumes as martial law is lifted. Chun, reelected president through electoral college voting, ensures his power through the courts, internal security forces, and tight control of the media. Banned political figures slowly begin to return to political life.

1987-1992: The Korean constitution is revised, dramatically altering the power relationships between executive, legislative, and judiciary branches, eliminating presidential emergency powers, and enabling the National Assembly to investigate state affairs. Roh Tae Woo is elected president with a minority of the popular vote. Opposition politicians allege election fraud, but no evidence is offered.

1993-1999: In the early 1990s, President Kim Young Sam begins his tenure in office by launching a far-reaching anticorruption campaign, indicting former presidents Chun and Roh for their roles in the 1979 coup and in the 1980 massacre of pro-democracy demonstrators.

2000-2003: A series of high-profile corruption scandals tarnish successive governments. In 2001 a deputy justice minister resigns over bribery allegations. In 2002 two sons of President Kim son are jailed for corruption. The president later apologizes to the nation for a large cash transfer that the conglomerate Hyundai is revealed to have made to North Korea at the time of a diplomatic summit.

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Trade Policy

1945-1951: Foreign trade immediately following the U.S. occupation of the southern part of Korea is nonexistent as the country struggles to cope with internal material shortages. A damaging drought in 1948 requires that large amounts of food grain be imported. Due to persistent political turmoil, the U.S. cancels its plans to provide $500 million in investment for development.

1952-1961: Foreign aid comprises almost half the national budget through 1960. At the end of the decade, the focus is on increased industrial production. Materials essential for reconstruction, such as cement and steel, are made domestically to reduce dependence on imports. A dramatic drop in foreign aid hits import-dependent industries by cutting the supply of raw materials, sparking an economic downturn.

1962-1970: Industrialization based on exports begins. Financial incentives such as tax-free imports of raw materials encourage the production of export goods, stimulating growth in the textile, electrical machine, and small appliance industries. The Economic Planning Board switches from a positive list system of import controls to a negative list. Large-scale imports of major grains are allowed.

1971-1977: The Third Five-Year Plan focuses on heavy and chemical industries, solidifying the export-driven economy. Chaebol that miss government-imposed export quotas lose their favored status. Auto exports take off, and imported cars virtually disappear from the market. The manufacture of domestic consumer goods decreases due to stringent price controls. Exports increase an estimated 45 percent a year.

1978-1979: Korea suffers greatly from the jump in oil prices, and the cost of its oil imports nearly doubles in 12 months. The economic crisis that follows is caused in part by the emphasis on exports at the expense of domestic consumer goods, the demand for which has risen thanks to increased wages and a higher standard of living. A reduction in price controls aims to stimulate production of these goods.

1980-1985: After early success in heavy industry exports, topping US$17.5 billion in 1980, unfavorable global conditions hit Korea's export-intensive economy. Foreign investment policies are relaxed in response to a decrease in domestic investment. Restrictions on imports are removed. Korea's "Nordpolitik" increases trade with China and the Soviet Union and its European satellites.

1986-1988: The Sixth Five-Year Plan continues the trend away from heavy industry toward export-oriented consumer products, including electronics and high tech. The government removes restrictions to create a friendlier import environment, but a variety of non-tariff barriers continue to complicate trade. In 1986 Korea achieves a favorable trade balance for the first time, a trade surplus of US$4.2 billion.

1989-1995: Growing domestic consumption of luxury items, including high-tech and electronics products, reduces exports. In 1995 Korea becomes a founding member of the World Trade Organization and, per WTO agreements, reduces tariff rates and import restrictions on autos, high-tech products, and financial services. To avoid U.S. sanctions over unfair trade practices, Korea opens its rice market to imports.

1996-1998: The 1997 IMF loan program requires Korea to remove restrictions on foreign investment in its stock market, and non-citizens can now make commercial and personal land purchases.

1999-2003: Korea's rebound from the 1997 crisis bolsters global confidence, and a surge of foreign investment results. Fewer items are subject to tariffs in a continued loosening of import restrictions. Korea liberalizes foreign investment regulations for all sectors except national security or cultural industries. The global slowdown of 2001-02 causes fears, as does increased tension with North Korea.

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1945-1951: After American occupation, the scarcity of consumer goods and an excess of newly printed money causes runaway inflation. The Bank of Korea is established in 1951 as the national bank, responsible for producing and issuing all currency and overseeing private banks. Five commercial banks are privately owned.

1952-1960: Foreign aid comprises almost half the national budget. In 1954 the Bank of Korea begins to regulate the country's commercial banks. Inflation is high as a result of shortages from the war and the costs of supporting a large standing army, but prices stabilize by 1958. The inefficiencies of the Rhee administration, among them unfair taxation, have led the country to the brink of bankruptcy.

1961-1971: Domestic savings hovers around 2 percent of the GNP. Park nationalizes commercial banks; the government takes control of credit allocation to businesses. A high-interest "curb market" emerges, providing fast cash for smaller companies unable to obtain financing otherwise. The won is devalued to help drive business growth. Savings rises to 10 percent, boosted by interest rates of 20 percent.

1972-1979: The growth rate begins to decline, and a burgeoning money supply causes double-digit inflation. Consumer prices rise as much as 30 percent. The cost of living rises 26.3 percent, yet the average income rises just 12 percent. A stabilization plan does just the opposite, and the recession it causes results in widespread bankruptcies and unemployment. The savings rate rises to 28 percent.

1980-1987: Reducing the growth of the money supply and liberalizing import and foreign investment policies controls rampant inflation. The government relinquishes control of the commercial banks and encourages the establishment of more commercial banks. The Korean Stock Exchange flourishes. Thanks to a consistent rise in income, savings in 1987 reaches 36.3 percent of the GNP, up from 20.8 percent in 1980.

1988-1989: A national pension system covering age pensions, disability, and survivors' pensions is introduced, as is unemployment insurance. Luxury spending increases as consumers enjoy growing personal savings and annual double-digit wage increases since 1987. The country's economic growth slows, but it still maintains a respectable rate of 6.5 percent. Inflation increases along with wages.

1990-1998: The Bank of Korea reduces the money supply to hold down inflation. Chaebol take on staggering internal debt, upward of US$350 billion. When the 1997 financial crisis wracks the region, South Korea suffers. Record numbers of small companies go bankrupt, as do several chaebol. The value of the Korean won falls more than 50 percent against the U.S. dollar, and the stock market falls to a 10-year low.

1999-2003: In an effort to help bolster the economy, private citizens collect gold to increase foreign exchange reserves, amassing 227 tons worth roughly US$2.2 billion. Income tax cuts of as much as 30 percent relieve the burden on low- and middle-income families; further policies are implemented to enable and encourage savings among this group. The won strengthens in 2002 amid overall economic recovery.

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Categories: Overview | Political | Economic | Social | Environmental | Rule of Law | Trade Policy | Money
Graphs: Growth | Income | Inflation | Unemployment | Well-being | Trade Volume | Trade (CAB) | Debt | Spending

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