Unsung heroes paved way for Korean miracle

By Kang Hyun-kyung

In a report released by the Japanese government on July 27, 1961, eight years after the end of the Korean War, Korea was described as a country that had no future.

The report concluded that the chances of Korea learning to stand on its own feet from the ashes of the civil war were dismal. The country’s large population relative to its small territory and scarce natural resources, and the significant expense required to counter security threats from the communist North were identified as factors in the pessimistic outlook on the country.

Observers were also skeptical of the country’s prospects for democracy. During the Korean War, a British journalist wrote that “expecting democracy to bloom in Korea is like hoping for a rose to blossom in a garbage bin.”

The modern history of Korea in the past seven decades after the end of World War II, however, dispels such naysayers’ views.

Korea is now one of the world’s largest economies, with world-class shipbuilding, semiconductor, steel and automobile industries. Its current profile in the global economy stands in stark contrast to what it used to be in the 1960s. Back then, Korea was one of the world’s poorest countries, with a per capita gross national product of merely $87 in 1962. The country’s No. 1 priority at the time was feeding its hungry people.

Its political system also underwent a huge transformation. The country is now one of the most resilient democracies in the world, decades after the popular pro-democracy protests that began in the 1980s.

Some groups of people, in particular foreign humanitarian workers, Korean workers sent to West Germany and troops dispatched to Vietnam during the civil war, played key roles in this dramatic shift in Korea’s socioeconomic and political status.

These unsung heroes are now in the spotlight as the 70th anniversary of the end of World War II on Aug. 15 approaches. Starting this week, The Korea Times will run a series of articles highlighting their roles and sacrifices to help the country rise from the ashes of war.

In the wake of the end of the Korean War in 1953, faith-based groups and missionaries from Western countries flocked to Korea to help save people’s lives, providing the people with free meals, shelter and vocational training. To this end, they fundraised and sold some of their belongings back in their home countries. Decades later, their work inspired the Korean public to do the same for poor countries.

Korean nurses and miners were another group of heroes, having played an important part in saving the aid-dependent country from an impending liquidity crisis in 1963. At that time, the central bank had less than $100 million in its foreign exchange reserve.

Without appropriate measures and the nurses’ and miners’ help, the economy would have gone bankrupt, recalled Oh Won-chul, former senior presidential secretary for economic affairs from 1971 to 1979 during the Park Chung-hee government.

Then President Park embarked on a trip to West Germany in 1964 on the invitation of then President Karl Heinrich Lubke. In a speech prior to departing for the European country, the former military man said he planned to have a firsthand experience of the Miracle on the Rhine to draw some lessons for war-torn Korea.

Remittance-reliant economy

In his book, “How Park Chung-Hee Transformed South Korea into an Economic Power,” Oh recalled that West Germany’s miraculous economic growth in the wake of World War II was not the real purpose of President Park’s state visit.

“In September 1963, Korea’ foreign exchange reserve stood merely at $93 million, which meant that it was almost depleted and the government couldn’t implement economic development initiatives,” he said. “We needed a commercial loan from West Germany to finance the plan to industrialize the economy. This was the key reason behind President Park’s trip to the European country.”

President Park was able to obtain a $13.5-million public loan and a $26.25-million commercial loan from West Germany, on the condition that the wages of Korean nurses and miners in the European country were deposited in a German bank.

More than 10,000 Korean nurses and some 8,000 miners went to the European country as foreign guest workers from 1959 to 1976 and from 1963 to 1977, respectively. At the time, about 20 percent of Korean miners were college graduates who sought work opportunities in West Germany.

The loans from the European country and the remittances sent by the Korean miners and nurses enabled the government to continue the development plan as scheduled.

The nearly 320,000 Korean soldiers dispatched to the Vietnam War between 1964 and 1973 were another key group of contributors to the Miracle on the Han River. The soldiers sent nearly 80 percent of their incomes to their families back home. Experts say the total remittances from these soldiers reached approximately $1 billion.

The war took the lives of more than 5,000 Korean soldiers and injured approximately 12,000 more. The troop dispatched to the war also paved the way for Korean companies to establish a strong presence in Vietnam by enabling them to sell military products there during the war.

“Crises, whether they have political or economic roots, erupted almost every decade since the end of World War II,” said Lee Kwon-hyung, an economist at the state-run Korea Institute for International Economic Policy based in Sejong City.

He mentioned the first liquidity crisis in the early 1960s, the Asian Financial Crisis in the late 1990s and the global financial crisis in 2008 as some of the key challenges that put the Korean economy to the test.

In the 1960s, manufacturing workers produced such labor-intensive commodities as wigs, textiles and toys for export. Manufacturing jobs lured many female workers aged between 15 and 20 from rural areas. After hours of hard work during the day, some of them went to high school at night to train for their future careers.

Abusive labor practices emerged as a key issue in those times. The militant labor union culture was the outcome of workers who organized to demand better working conditions from their employers.

Those blue-collar workers were inspired to fight against their employers by the student activists who had infiltrated their workplaces without revealing their educational backgrounds. At that time, college graduates were not allowed to have manufacturing jobs.

In 1970, South Korea’s exports reached $1 billion, a milestone for the economy. Starvation was no longer an issue, as the per capita GNP tripled that of 1962 and living standards improved.

The government was able to manage the economy without foreign aid.

Although some people still suffered from hunger, the government encouraged the public to consume more barley than rice.

The nation imported crops, and the price of rice more than doubled those of barley and wheat. In 1963, for example, the price of rice per ton was $150, whereas those of barley and wheat were $66 and $74, respectively.

The first oil shock, which began in October 1973, became a stumbling block to the export-led Korean economy, as the crisis erupted when the government was trying to diversify the economy and investing heavily in high value-added products, such as automobiles, ships, steel and semiconductors.

Turning crisis into opportunity

The government paid $350 million for oil imports in 1973 before the oil shock. The figure rose to $1.1 billion in 1974 following oil price hikes as a result of the oil embargo. The oil price hikes, in turn, led to surges in the prices of imported goods and eventually other products. On the upside, however, the oil crisis ended up creating new job opportunities for South Koreans.

Oil-producing nations were awash in liquidity following the oil prices hikes, and they invested their surplus income to build infrastructure. The construction boom in the Middle East created new business opportunities for Korean companies, particularly in the building of roads, ports and skyscrapers. Thus, while the first oil shock hit the global economy hard, it enabled Korea’s double-digit growth.

From the 1980s, the Korean economy roared and became one of the four Asian tigers. The three others are Singapore, Taiwan and Hong Kong. At home, however, the government struggled to deal with the rising public demands in the post-industrialization period.

Protestors took to the streets and called for the direct voting of a president. College students and labor unions led the pro-democracy demonstrations, which later prompted then President Chun Doo-hwan to promise to hold a free presidential election in 1987.

The labor unions gained clout from their victorious experience. The great strike of 1987, which began in July and continued for three months, resulted in a sharp increase of workers’ wages.

But the Korean economy remained unhurt because of the so-called “triple lows” or the simultaneous depreciation of the Korean won against the U.S. dollar, the low interest rates and the oil price plunges. The triple lows grew exports and eased corporate lending, which buffered the negative effect of the wage hikes on the economy.

The Korean economy was hit hard by the Asian Financial Crisis that began in 1997 and entered the International Monetary Fund-led bailout program, a crisis that Koreans called the worst since the Korean War. It exited the bailout program in 2001.