In 1950, five years after independence, Korea plunged into a three-year civil war that divided the country into North and South Korea. The war killed more than 2.5 million people and caused an 80% decline in gross domestic product. However, in 1961, an event changed the course of South Korea: a coup led by Park Chung Hee. After seizing power and serving four terms as president, Park played a key role in transforming South Korea into an economic powerhouse through controversial but effective policies. Rather than focusing on developing state-owned enterprises like many other countries, Park supported multinational conglomerates known as “Chaebols,” with the goal of building a free and independent economic empire. President Park recognized that South Korea, with limited natural resources and a major military threat on its borders, needed industrialization to ensure its future. To achieve this vision, Park implemented a five-year economic plan that focused on self-sufficiency in production, reducing imports and increasing exports.
In 1965, President Park Chung Hee restored diplomatic relations with Japan and managed to obtain a loan of 800 million USD from Japan, equivalent to 20% of South Korea’s GDP at that time. As a result, between 1962 and 1982, South Korea’s foreign debt increased more than 400 times, from 89 million USD to more than 37 billion USD. However, as the debt increased, South Korea’s GDP also soared, from 80 USD to 1,600 USD.
Currently, Chaebol plays a major role in the South Korean economy and has a very significant influence. According to CEO Score 2017 data, the 10 largest Chaebols in South Korea contribute up to 44% of the country’s GDP.
