The Miracle on the Han River: South Korean Economic Development

Abstract

This study aims to examine the long-term macroeconomic performance of South Korea during the period 1963–2015 by using certain macroeconomic variables. In the 1960s, South Korea was a typical developing country with poor natural resources, low production, and a small domestic market. By following an outward-looking development strategy and other policies, South Korea has transformed itself from an agriculture-intensive economy into one of the world’s most dynamic industrial economies within 40 years.The study concludes that the combination of an outward-looking development strategy, a well-educated and well-disciplined labor force, and technological innovation is mainly responsible for Korea’s long-term growth success. In addition, the country’s close ties with Japan and the US have contributed to its high growth performance due to substantial foreign aid obtained from these developed countries.