Stipulated by the provisional “Organic Law of Village Committees” promulgated in 1987, village elections are an institutional practice by which, every three years, villagers elect or reelect members of the village committee – the governing body of their village. Both in form and in practice, village elections are an institution associated with a set of clearly specified rules, procedures, and expectations regarding both the election process and the functioning of the elected village committee. During the two decades between the 1990s and 2000s, village elections evolved through intensive interactions among multiple actors, involving state policies, local governments, and villagers. There have been a large number of studies on this topic (He 2007, Manion 2006, O’Brien and Li 2000, O’Brien and Han 2009, Perry and Goldman 2007, Shi 1999). The emergence of village elections in rural China presents a fascinating case for understanding how different institutions work and change in relation to one another, especially how over time state policies and the evolving role of local governments interact with villagers in the process of rural governance.

Previous chapters empirically established the fact that Korea’s development state had been notoriously hostile to labour unions while disciplining chaebols, by suppressing labour movements forcibly and punishing chaebol families who failed to comply to the state’s preferences. This chapter revisits that important topic in more depth, by focusing on the violent suppression of the labour movement from the 1970s to 2018. Some of the years covered in the chapter overlap with the initial phase of democratization and the legal recognition of labour unions. The chapter explains why such state violence was needed for economic growth, while we also analyze why it is related to economic inequality and wage structures in Korea in the 2000s. Furthermore, as we will explain, during both the democratization and post-democratization periods, state-sourced violence and repression of the labour movement and other niche markets shifted towards privately supplied violence specialists, which acted, and continue to act, implicitly, and at times explicitly as proxies for state power.

THE LABOUR FORCE IN THE ECONOMIC MIRACLE

The issue of labour has long attracted the attention of social scientists from a variety of backgrounds, disciplines and approaches. The case of labour issues in Korea is no exception and especially so regarding scholarship focused on explaining Korea’s rapid economic miracle. When Park Chung Hee assumed power following the 1961 coup d’état, as already explained throughout the preceding chapters, he did so under the pledge to instil economic growth and order. Moving away from the import-substitution approach that had been adopted, much to the detriment of the economy by the Rhee Syngman regime, Park first focused on the development and promotion of labour-intensive EOI, mostly from 1961–72 (Haggard & Moon 1993: 54). This move towards EOI was rewarded with remarkable growth until the end of the decade when the GDP began to decline, coupled with rising inflation and wages among other worrisome economic conditions. In conjunction with an economy in decline, and thus with Park’s reduced legitimacy, politically the regime was increasingly being challenged by opposition seeking to capitalize on the weak economic performance.

This chapter is concerned with explaining the basis and structure, in other words, the genesis, of what has frequently been coined “Korea Inc.”. Although the focus of our analysis is certainly on the postcolonial period, we would be remiss to not acknowledge the roughly 40-year period of near complete dominance of the peninsula by Japan. This discussion, even after more than 75 years after the end of Japanese colonialism, continues to be undeniably controversial, with the majority of those engaging the Korean miracle typically avoiding altogether this uncomfortable, potentially anti-nationalist narrative. This section, while brief, discusses some of the key arguments about this period, while acknowledging the methodological difficulty of robustly linking the colonial period to the economic take-off in the 1960s.

COLONIAL AND CULTURAL LEGACIES DEBATED

As noted earlier in this text, scholars of Korean history typically trace this country’s roots back to ancient Joseon (Gojoseon) (c. 2333–108 BCE). Despite the much earlier origins of what would become Korea, most scholars point to the Goryeo dynasty (918–1392) as the key point in Korea’s modern emergence as a rationalized state. The Goryeo period was then replaced by the Joseon dynasty (1392–1910), which governed the peninsula until it began to slowly erode as principally a result of corruption and inefficiency (see Cumings 1997). The Joseon dynasty’s descent coincided with Japan’s emergence as a major regional power, thus setting the stage for the colonial period in which Japan replaced Korean-domestic rule by fully annexing it in 1910 and then governing the entirety of the peninsula until its defeat at the end of the Second World War in 1945.

By the time Korea had been annexed, Japan itself was immersed in its own decades-long efforts against its potential colonization by foreign powers, which had in large part precipitated the end of the Tokugawa period (1603–1868) and advent of the Meiji era (1868–1912), in which its traditional government and economy was replaced by a more modern, Western-influenced one, with the goal and ultimate realization of rapid industrialization.

Globalization has progressed in the twenty-first century to the extent that no Korean chaebol is free from international pressures of institutional and legal reforms that can meet the global standards of business. This process entails that chaebol ownership and governance structures must also change to accommodate the demands of foreign shareholders. The core of the entire problem associated with globalization is protecting the chaebol within the purview of state control, an idea that is anathema to global players. Furthermore, the South Korean state must accommodate the demands of global investors who want to protect their property rights in South Korea after making substantial investment commitments. This chapter outlines the process of globalization of the Korean economy, focusing on how it has maintained international competitiveness, while struggling with reform priorities. In addition to the repertoires of reform and their outcomes, the future of the Korean economy will also be evaluated, based on the identified strength of competitiveness as well as the structural weakness of the economic system.

PURSUIT OF GLOBAL STANDARDS

The term globalization, in the name of segyehwa, began to haunt Korea in the early 1990s when the newly established Kim Young-sam administration, the so-called “civilian government” (munmin jeongbu), launched a series of political and economic reforms upon the rapid changes of the international economic system. Kim, who managed to win the presidential election with less than 40 per cent of the popular vote, attempted to pass through political opposition, both from the established authoritarian force and the challenges from the progressives he barely defeated in the election, by initiating a massive reform programme dubbed as “reform all the way down” (Kihl 2005: 103). For justification, he ordered the prosecution of the politicians of the previous ruling circle, including the military junta and the two former military general-turned-presidents, who were prosecuted with the charge of illegal wealth accumulation through collusion with chaebols. The ugly truth of state– business collusion was revealed and served as the grounds for a reform drive. Many business leaders were also prosecuted for bribery and illegal political funding.

The Republic of Korea (South Korea or Korea hereafter) is a relatively new state, having been born out of colonialism under Japanese imperial rule (1910–45) and all-out civil war (1950–53) between the southern and northern halves of the peninsula. While the origins of the Korean nation are linked to antiquity (Gojoseon, c.2333–108 BCE), it is the modern period that this book is concerned with. Notwithstanding the tremendously influential pre-modern history, which should not be overlooked for a most robust understanding of what Korea as a whole is today, what makes South Korea so interesting and important from a comparative perspective is that it developed, both economically and politically, with such rapidity as to eclipse the pace set by other late developers such as Japan and Germany. South Korea, thus, despite its relative size and recent ascent into the league of industrial powerhouses and leading exporters, has generated a tremendous amount of scholarly coverage and continued fascination.

In addition to providing a concise descriptive overview, the main questions this book seeks to help answer are: What are the causes of South Korea’s political and economic miracle and the consequences thereof? Can the twin economic and political achievements be sustained, despite all the challenges in the wake of the Covid-19 pandemic, continued threat emanating from the Democratic People’s Republic of Korea in the north and an increasingly aggressive foreign policy from China? Lastly, setting aside challenges, both domestic and international in origin, what can the case of South Korea tell us more generally? Most critically, can the success of development and democracy be replicated in the context of other countries?

THE PUZZLE OF THE ECONOMIC MIRACLE

While the term “miracle” is frequently utilized for the unexplainable, we employ it in the spirit of something that is truly wonderful, which begs the question as to what is so wonderful or miraculous about the Korean economy? As of 2022, South Korea is one of only two East Asian members of the Organisation for Economic Co-operation and Development (OECD), the Development Assistance Committee (DAC) and the 20–50 Club, which includes the seven countries in the world with more than 50 million in population and more than 20,000 per capita USD ($ hereafter) annual gross domestic product (GDP), and as of 2018 surpassed Japan in this measure.

In this chapter, major economic indicators for the Korean economy, such as GDP, per capita GDP, competitiveness, productivity, financial indicators and employment rates, will be presented with short descriptions and analysis. The first section deals with GDP prices and productivity, followed by South Korea’s foreign sector. The government sector, including revenue and debt, is then examined, along with societal welfare and spending. The final section discusses key population statistics and trajectories.

GDP PRICES AND PRODUCTIVITY

Shortly following Park Chung Hee’s ascension to power in 1961, with the subtraction of various periods of political and economic instability, both domestic and international in origin, South Korea witnessed a high-growth era until 1997, with annual average growth rates upwards of 7–9 per cent. Following the financial crisis, after stability had been restored in 2001, growth rates returned to the positive with a 4.6 per cent average, only to be destabilized again between 2008 to 2010 with the global liquidity crisis. Following the most recent global crisis, rates have hovered just below or slightly above the 3 per cent range up until the most recent 2019 period.

While South Korea’s most recent annual GDP growth rates are significantly lower than in the high-growth era, comparatively speaking they have been above and/or at least in line with other major countries within the OECD. Most recently China has dominated the high-growth discussion but this economy, similar to South Korea’s, has tapered off too following, among other things, the development of a more mature economy (see Figure 5.1). In terms of overall ranking, South Korea emerged from one of the least developed polities to the top 20 in the 1990s and now remains in the top echelon as the 10th largest economy in the world (see Table 5.1).

In terms of GDP per capita in PPP terms, South Korea overtook Japan as of 2019, which few could have imagined or predicted. The more than tripled growth from 1997 ($14,213) to 2020 ($44,621) was more than dramatic considering the two global-scale economic downturns; that is, the subprime mortgage crisis of 2007–2008 and the Covid-19 pandemic since 2000.

In this chapter, I examine another salient phenomenon associated with local government behavior; that is, local governments engage in extensive extractions of resources from below – firms, subordinate agencies, or residents within their jurisdictions – in order to obtain extra-budgetary resources. Such extra-budgetary resource-seeking activities often take the form of imposing various taxes and fees or using political pressures or incentives to induce local firms to sponsor government-initiated projects. This type of behavior is especially salient at, and associated with, lower-level government administrations (e.g., governments at the township or county levels), where resources are scarce and where governments come into direct contact with ordinary citizens and all kinds of enterprises. Over the years, such behavior that seeks extra-budgetary resources from below has been remarkably persistent, extensive, and widespread, despite the central government’s repeated efforts to curb it.