Project Research Theme 0: Data, Measurement, and Conceptual Framing, Research Theme 1: Firms, Frictions and Spillovers, and Industrial Policy, Research Theme 3: Agricultural Productivity and Sectoral Gaps, Research Theme 4: Trade and Spatial Frictions, Cross-Cutting Issue 3: Inequality and Inclusion

Deciphering the Miracle on the Han: How South Korea Escaped Poverty and Transformed its Economy

This project has been retired

Years active

  • to

Funding category

  • Small Research Grants

South Korea’s economic transformation is unprecedented. Poorer than Kenya, Niger, and Pakistan in 1950, South Korea is today richer than Spain, Portugal, and Italy, an astounding thirtyfold increase in income per capita. Yet the ‘miracle on the Han River’, as South Korea’s growth experience is famously called, is not merely about how one country escaped poverty. The miracle is how it did so in such a dramatic, condensed timeline. How can an entire country change the structure of its economy and escape poverty in mere decades? Can this growth happen without generating extreme spatial inequality (rural versus urban)? Are these changes a result of fate (fortunate fundamentals) or foresight (direct results of policies and other interventions)? Is there evidence for multiple equilibria at the macro level? Studying South Korea is an exciting prospect because it represents not merely individuals escaping poverty, but an entire country escaping poverty: a ‘Goldilocks’ setting that permits examination of how micro-level changes led to macro-level transformations.

The project creates a comprehensive historical database tracking all facets of South Korea’s structural transformation from the mid- to late-20th century. The research team then utilise newly digitised historical micro data on production (manufacturing and agriculture), businesses, employment, migration, urbanisation, and the expansion of infrastructure to study the policies and channels through which the country achieved its remarkable transformation. This large-scale data assembly exercise, involving the digitisation of maps and other archival resources, makes possible a nuanced look at the dynamics at play during this remarkable period of South Korea’s history.

Understanding the success of South Korea in transforming its economy from being agrarian to export-led light-manufacturing and then to export-led heavy-manufacturing powerhouse comes at a pivotal time for the future growth of Sub-Saharan Africa. Recall that South Korea, with an income per capita of around $1,200 at the time of take-off in the 1950s, was as poor if not poorer than today’s developing countries. Although Sub-Saharan Africa has been said to be characterised by “premature deindustrialization” (Rodrik, 2016) with a falling share of manufacturing employment and value added since the 1980s, manufacturing as a share of employment has been on the rise in the recent decade. Applying the lessons from Korea’s economic transformation path and the role of the Korean government in accelerating it will be of critical interest to policymakers in Sub-Saharan Africa and across the developing world.

Small Research Grants

Closed • Deadline

Research Team

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