History

Korea's written history, stretching back over 4,000 years, has been influenced by Buddhism and Confucianism. Its "closed door" policy towards the Western world was abandoned in 1867 under pressure from Japan and other countries. Korea was now obliged to allow access to Western trade and technology. Further, starting in 1910, Korea was occupied by Japan for 35 years.

Japanese rule significantly influenced Korea She suffered the consequential misfortunes of economic dependence and cultural repression, although the customs and structure of society were not deeply affected. Japanese influence was most evident in the administrative and legal fields. During this period, a substantial inflow of Japanese capital and administrators changed Korea's economic structure, particularly through the introduction of new agricultural practices and the development of a fairly significant industrial base. However, the potential impact of the Japanese was limited by the restrictions placed on Korean participation in economic and political planning and management.

Korea regained her independence in 1945, but was partitioned into two states along the 38th Parallel. This had far-reaching consequences. The division destroyed an interdependent economy, giving the South less than half the land, about three-fifths of the population, most of the agriculture, and very little of the industrial capacity of undivided Korea.

With the establishment of the Republic of Korea in 1948 in the South, some economic progress was made in the first two years of the new republic. The most significant development was the land reform programme, which redistributed about three-fourths of the cultivatable land and benefited over half the rural households.

Soon afterwards, the Korean War (1950-1953) devastated almost the entire country: large sections of the economy were destroyed and a quarter of the population became refugees. War deaths alone were estimated at over 3 million for both sides.

With financial assistance, largely from the US and the UN, the process of reconstruction of the ruined economy was undertaken after the war, and the foundations of the industrial sector were laid. During the next few decades, the economy notched a respectable rate of growth, mainly by the expansion of industry.