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Summary of Chapter Three: The Historical Foundation of Modern Economic Growth from The
Economic and Social Modernization of the Republic of Korea [Mason et al. (1980)]

Historical Background of Modern Korean Economics

Mason praises the economic growth of South Korea based on his observations of the country
until 1980. Koreas economic development in the 20 th century was particularly significant considering
that other developing countries prospered under the influence and control of colonial powers, while
Koreas economic breakthrough was a feat achieved by a single unified country. Mason describes the
three major factors that shaped Koreas economy and also, affects todays economic condition. The
structure of traditional Korea, the occupation of Japan, and the division of two Koreas led South
Koreas economic growth and modernization, as well as shaped the current economic status.

South Korea experienced economic progress through the consistent augmentation in per capita
income during the era of Yi dynasty. According to Mason, the rise in per capita income was one of the
essential factors of economic development. Moreover, Koreas neighboring countries such as China
and Japan flourished with a higher national per capita income. South Korea was no exception. Various
factors led to the economic growth of Korea. The improvement of urbanization level, commercial
strength, education standards and agricultural productivity were the main factors that stimulated
increase in per capita income. This was possible as the economic and social structure of the Yi
dynasty functioned as rudiments of economic development.

Changes in social structure incited the transformation of national economy. New social trends
appeared during the latter half of Yi dynasty, and contributed to the economic growth of Korea. These
societal changes precipitated urbanization, and the development of commercial markets. Population
growth was one of the major features that spurred urbanization. Population increased slowly but
constantly during the reign of Yi family. In 1910, the population of Korea multiplied more than seven
times since the fourteenth century. (Mason, 1980: 66) Even though there were a few attacks from
Japan, Yi dynasty was a peaceful era compared to other periods of Korean History. Besides the surge
in population, more and more slaves were freed towards the end of Yi dynasty. Lands which once
belonged to the government became privatized and were held in the hands of landlords from
prosperous families. The government lost its power over financial control, and aristocrats proliferated
their wealth. Inequality in wealth distribution was intensified and eventually wealth was concentrated in
certain cities, which later became the urban centers of Korea.

Moreover, improvement of education standards and agricultural productivity helped Koreas

economic development. Due to the influence of Confucianism, Koreans were eager to get education.
Korea had a higher level of literacy than their neighboring countries China and Japan. In year 1921,
500,000 Korean students went to school and received education. (Mason, 1980: 66) Not only
aristocrats or yangbans were educated, but commoners were also literate. Even peasants knew how to
read document written in classical Chinese, which was the language of written communication before
the invention of the Korean alphabet, Hangul. Education was especially important because it was only
the highly educated elites, who were able to study abroad and learn the operation of modern industry
Furthermore, despite the shortage of arable lands, Korea maintained agricultural productivity with
sophisticated agricultural technology. The double-cropping of rice and the development of irrigation.
The high level of literacy and agricultural productivity eventually made commercial transactions easier,
and assisted the Koreas economic growth. The progress seen in Yi dynasty in fact worked as a
foundation of Koreas economic development during the period of Japanese Occupation.

Mason highlights that Japanese Colonialism had a profound impact on Koreas economy.
Mason perceives that Japanese colonial rule accelerated Koreas economic development, but has also
brought negative consequences as well. With Japan administering the whole Korean economy, Korea
took a step towards modernization. Korean factory labor force expanded and later after its
independence Korea had a large pool of skilled workers. Population in cities increased and modern
educational system developed. Throughout the era of colonial rule the number of common schools
surged more than eight times since the beginning, from 306 schools in 1911 to 2600 by 1937.
(Mason: 1970: 81) Additionally, Japan adopted the modern monetary system, built rail roads and
provided high-quality extension services in rural areas of Korea.

Many evidence display that Japanese Occupation had a positive impact on Koreas economy,
and it is statistically true that Korea experienced substantial economic growth from 1911 to 1945.
Nevertheless, the economic progress of Korea was intended to fulfill the needs of Japan, and did not
benefit Korea as much as their effort invested to development. Thus, it is imperative to point out the
economic and politic clout of Japan, which damaged Korea. In reality, the economic growth of Korea
was artificial. As soon as Korea found independence, the Korean manufacturing industry suffered from
the withdrawal of Japanese technicians and managers and as well lost Japanese markets. Korea were
not able to develop manufactured exports until the 1960s as Japan designed Korea to be a major
exporter of rice. In other words, Japan formed Korea as a supplier of cheap rice. The land survey
conducted by Japan during the occupation of the Korea Peninsula incited the problem of income
equality. While population in cities increased rural population plummeted. In terms of politics, Korea
went through political instability until the military coup of the 1960s as the nation did not have the
chance to manage their own country under Japanese rule. In addition, as Korea were deprived of all
diplomatic rights, the country was naturally isolated from the international society. These historical
facts are the major proofs of the strained Korean-Japanese relationship that the public observe today.

Soon after the end of Japanese colonial rule, Korea underwent another big historical event
which dramatically transformed the economic status of the country. In 1945, the peninsula was
divided into two Koreas: North Korea and South Korea. The division of the nation at the 38th parallel
implied that the whole Korean economy broke up into two separate economies. Directly after the
division, the manufacturing industry was severely damaged and the amount of agriculture harvest
dropped significantly. However, the immediate impacts of the division does not have great significance
compared to the long-term implications of the Korean War. Lives were lost. Properties were destroyed.
As the Korean War is not over but only in a temporary pause, the atmosphere of anxiety still rests in
the peninsula. The uncomfortable relationship between the two countries are obviously inciting the
surge of military budgets. Even today, the hostility between the two Koreas are deepening and there
always exist a constant threat of another confrontation. The division of the peninsula which occurred
seven decades ago is still affecting the countrys economy and society today.
Mason indicates that many parts to the Korean historical heritage (Mason, 1980: 89) has
had an impact on the formation and the development of modern Korean economy. To sum up Masons
statements throughout chapter III, the Korean economic growth could be defined as a result of the
economic and social structure during the Yi dynasty, Japanese Occupation and the Korean Civil War.
These historical backgrounds have long influenced the economic structure of Korea and will always
affect the future of Korean economy.