Policy and Economic Performance in Divided Korea During the Cold War Era

Nicholas Eberstadt

Description

The Korean peninsula during the Cold War provided a cruel but historically unparalleled real-world “experiment” in the relationship between polity and material advance: an ethnically and culturally homogenous nation was, in 1945, suddenly divided by an arbitrary boundary line and then subjected to two radically different and adversarial political economies for successive decades on end. Assessing the competition between the North and South Korean economies from partition to the end of the Soviet era, Nicholas Eberstadt argues that the storyline is not quite as simple as the now-prevailing narrative suggests (that centrally-planned economies are doomed to fail against market-oriented alternatives). Rather, he suggests, the race for material progress was just that: a race, the results of which were far from preordained at the outset. In Policy and Economic Performance in Divided Korea during the Cold War Era: 1945–91, Eberstadt presents an impressive compilation of hard-to-find comparative data on economic performance for the Democratic People's Republic of Korea (DPRK, or North Korea) and the Republic of Korea (ROK, or South Korea) over two critical generations. By a number of indicators, Eberstadt argues, Kim Il Sung's North Korea actually outperformed South Korea for much of this period—not only in the years immediately following partition, but perhaps also into the 1970s. To explain these surprising results, Eberstadt details the impact of government policies on the course of growth of both economies and offers some unorthodox observations about material performance under these two contending polities. He finds that prevailing economic development theory on such issues as planned-versus- market economies, military burden, and the relationship between material advance and poverty, may require reexamination in light of the experience of the two Koreas between partition and the end of the Cold War.

Sujets

• Histoire
• Cold War
• South Korea
• North Korea
• Korea
• History
• Asia
• Guerre froide
• Corée du Nord

Informations

• Publié par: AEI Press
• Date de parution: 16 mars 2010
• Nombre de lectures: 0
• EAN13: 9781461732266
• Langue: English
• Poids de l'ouvrage: 2 Mo

Extrait

Policy and Economic Performance in Divided Korea during the Cold War Era: 1945-91
Policy and Economic Performance in Divided Korea during the Cold War Era: 1945-91
Nicholas Eberstadt
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Library of Congress Cataloging-in-Publication Data
Eberstadt, Nick, 1955-
Policy and economic performance in divided Korea during the Cold War era : 1945-91 / Nicholas Eberstadt.
p. cm.
Includes bibliographical references.
ISBN-13: 978-0-8447-4274-8
ISBN-10: 0-8447-4274-0
1. Korea (South)-Economic conditions-1948-1960. 2. Korea (South)-Economic conditions-1960-1988. 3. Korea (South)-Economic conditions-1988- 4. Korea (North)-Economic conditions. I. Title.
HC467.9.E34 2008
330.9519 04-dc22
200804047712
14 13 12 11 10
1 2 3 4 5
2010 by the American Enterprise Institute for Public Policy Research, Washington, D.C. All rights reserved. No part of this publication may be used or reproduced in any manner whatsoever without permission in writing from the American Enterprise Institute except in the case of brief quotations embodied in news articles, critical articles, or reviews. The views expressed in the publications of the American Enterprise Institute are those of the authors and do not necessarily reflect the views of the staff, advisory panels, officers, or trustees of AEI.
Printed in the United States of America
Contents
L IST OF T ABLES
A CKNOWLEDGMENT
I NTRODUCTION : T HE E XPERIMENT
Limits of Observation
Organization of the Study
1. C OMPARATIVE P ERFORMANCE OF THE T WO K OREAN E CONOMIES : 1945-91
A Survey of the Available Estimates for Korea
Some Indicators of Comparative Performance
Indices of Physical Output
Labor Force Trends
Urbanization Trends
The Official Budget of the DPRK
National Income
Commercial Energy Consumption
Official GNP Estimates
Alternative Endpoints and Their Implications
Conclusion
2. P OLICY AND E CONOMIC P ERFORMANCE IN THE DPRK: 1945-91
Partition, War, Recovery
The 1960s
The 1970s and 1980s
Quantitative and Structural Aspects of North Korean Economic Development during the Cold War Era
North Korean Economy Before and After Liberation
North Korean Economy and Noncommunist Low-Income Economies
North Korea s Economic Structure in Communist Perspective
Quantitative Trends in the North Korean Economy, 1960-1990
The North Korean Economy s Mounting Problems
Limits to Growth
Limits to Reform
The Soviet Bloc Collapse
Conclusions
3. P OLICY AND E CONOMIC P ERFORMANCE IN S OUTH K OREA : 1945-91
South Korea s Economic Successes: Conflicting Claims to Patrimony
The Years 1945-1960: The Interlude between Hard States
General Park and the Return to Economic Development
Foreign Aid and Economic Takeoff
Desiderata of Development: South Korean Exceptions
Microeconomic Issues: Transaction Costs and Uncertainty
Macroeconomic Issues: Market Structure, Allocative Efficiency, and Technical Efficiency
Development Policy: Some Mistakes Matter More Than Others
Induced Dirigiste Distortions: Agriculture, Heavy Industry, and Finance
Agriculture
Heavy Industry: The HCI Drive
Finance
Accounting for South Korea s Rapid Economic Growth: Factor Mobilization versus Factor Productivity
The Contrarian Reassessment of East Asian Growth
Caveats of Growth Accounting
Total Factor Productivity in South Korea: Indications and Calculations
The Enigma of South Korean Growth: How Much Can We Explain?
Reconciling Paradigms
4. S UMMATION AND C ONCLUDING O BSERVATIONS
Review of Findings
Observations, Speculations, and Issues for Further Research
N OTES
R EFERENCES
I NDEX
A BOUT THE A UTHOR
Tables
1-1 Comparing Estimates of Comparative Economic Performance: North Korea vs. South Korea, 1970-1985
1-2 Internally Inconsistent Estimates: UN Figures on Real Economic Growth Rates, North and South Korea, 1970-1985
1-3 Unstable Estimates: ACDA s Ratio of South Korean to North Korean GNP, 1961-1992
1-4 Unstable Estimates: ACDA Numbers on North Korean Military Burden, 1961-1992
1-5 Official U.S. and ROK Estimates for Physical Production of Selected Commodities: North Korea vs. South Korea, 1960-1985
1-6 Distribution of Civilian Labor Force: North and South Korea, c. 1960-1987
1-7 Urbanization in North and South Korea, 1960-1985
1-8 Pattern of Changes in Annual DPRK Budget Revenues and Expenditures, 1960-1988
1-9 UN Estimates of Per Capita Consumption of Commercial Energy: Korea and Germany, 1989
1-10 UN Estimates of Per Capita Consumption of Commercial Energy: North and South Korea, 1970-1989
1-11 Implications of Alternative Hypothetical Per Capita Output Ratios for North and South Korea, 1960 and 1988
2-1 Retrospective Estimates of Per Capita GNP in North and South Korea for the Early Post-Korean War Period
2-2 North Korean Agriculture in Communist Perspective: FAO Estimates of Per-Capita Cereal Production for the DPRK and Selected Marxist-Leninist States, 1961
2-3 Distribution of Labor Force by Sector: DPRK and Selected Marxist-Leninist Countries, c. 1987
2-4 Per Capita Output and Its Composition: Northern and Southern Korea, 1939-1940
2-5 Per Capita Output and Composition of Manufactured Commodities: Northern and Southern Korea, 1939-1940
2-6 Estimated Size of Military Forces: DPRK, 1975-1987
2-7 Trends and Structure in the North Korean Economy Before and After Liberation, 1940-1963
2-8 Distribution of Labor Force across Sectors: Selected Noncommunist Countries in the Early Postwar Period vs. Northern Korea, 1940-1960
2-9 North Korean Economy in Communist Perspective: Estimates of End-Use GDP Distribution, c. 1960
2-10 Targets and Results for Key Economic Indicators: DPRK, 1978-1989
2-11 Trigubenko s Estimates of Output for Selected Products in the DPRK, 1988-1990
2-12 Estimates and Indicators of Economic Performance for the DPRK, 1963-1987
2-13 Estimated Labor Force Participation Rates for North Korea and Selected Other Countries
3-1 Selected Macroeconomic Indicators: South Korea, 1953-1993
3-2 Foreign Direct Investment as a Percentage of Capital Inflows: South Korea vs. the Developing Countries, 1962-1990
3-3 Estimated Stocks and Flows of Foreign Direct Investment: South Korea and Selected Other Countries
3-4 Loans through Government-Controlled Banks and Funds: South Korea, 1980-1992
3-5 Relative Domestic Price Levels: Local Deviations from International Price Structure Implied by International Comparison Program (IPC) Purchasing Power Parity Estimates, 1980
3-6 Farm Protection in South Korea, Japan, and the European Community: Selected Indicators, 1979-1990
3-7 Structure of Production in South Korea, 1953-1993
3-8 Estimated Household Savings Rates: Japan, Taiwan, and South Korea, 1960-1989
3-9 Real Interest Rates in the Regulated Financial Sector: Japan, Taiwan, and South Korea, 1960-1990
3-10 Estimated Annual Rates of Change in Total Factor Productivity for the Manufacturing Sector: South Korea, 1967-1989
3-11 Pilat s Estimates of Sources of Growth in the South Korean Economy, 1963-1990
3-12 Kim and Park s Estimates of Sources of Growth in the South Korean Economy, 1963-1982
3-13 Estimated Sources of Growth by Denison-Style Growth Accounting Methods: South Korea and Selected OECD Countries, Selected Years
3-14 Estimated Sources of Growth: Selected Latin American Countries, 1960-1985
3-15 Estimates of Per Capita GDP and GDP Per Hours Worked: South Korea and Selected OECD Countries, c. 1989
4-1 Continuities in Long-Term Development: Per Capita Output in Japan, Taiwan, and Korea, 1938 vs. 1988
4-2 Continuities in Long-Term Development: Output Structure in Japan, Taiwan, and Korea, 1938 vs. 1988
4-3 The Workweek in the Japanese Empire, 1939: Distribution of Average Daily Hours Worked by Factory Hands, Korea vs. Japan
4-4 Composition of Manufacturing in Japan, Taiwan, and Korea, 1938 vs. 1988
4-5 Legacies of Colonialism: Industrial Structure in Northern Korea and the DPRK, 1939-1982: Composition of Industrial Output
4-6 Estimated Expectation of Life at Birth for North Korea, South Korea, and Prepartition Korea, 1940-1985
Acknowledgment
The author would like to express his special thanks and appreciation to the Korea Foundation for the generous support it has granted toward the publication of this book.
Introduction: The Experiment
On its face, Korea during the Cold War would seem to offer the student of political economy virtually unparalleled opportunities for examining the relationship between polity and material development. In its fundamentals, in fact, the outlines of modern Korean history sound almost as if they had been specified by a meticulous (if chillingly callous) social scientist who had carefully devised a research experiment involving tens of millions of human beings.
Consider the initial conditions:
After many centuries of rather isolated and perhaps somewhat uneventful self-rule, 1 the populace of a kingdom in northeast Asia comes under the thrall of a nearby colonizing power. The colonizers establish control over an unwilling territory by methodically subverting the political authority and social arrangements of the old order and direct a program of purposeful economic change 2 (heretofore, a notion utterly alien to the peninsula).
After three or four decades of externally enforced social and economic transformation, the populace is liberated from its colonizing power, but divided in two by an almost utterly arbitrary boundary line drawn by the liberators. 3 Though regional characteristics and other distinctions would doubtless be evident to a population long isolated from others and sensitive to indigenous differences, the newly divided