Myung Soo Cha
mscha@ynu.ac.kr
Continuously updated
The narrative in one flowchart
This project elucidates the divergent development of two Koreas as a contingent event that was precipitated by geopolitical shocks. The imposition of Japanese rule in 1910 introduced the rule of law and legalized property rights to Korea, creating a civil society and reversing Malthusian deterioration. With the 1945 decolonization, in North Korea, the Soviet occupation supplanted the nascent open access order with a dictatorial command system, eventually reviving a monarchy, which resulted in mounting misallocations and falling standards of living. In the U.S.-occupied South, the pre-1945 market system was retained and enhanced with the introduction of democracy and state interventionism. Industrial targeting, which involved the exchange of financial privileges and political donations, led to misallocation of resources and invited political backlash and U.S. intervention. The resistance against rent seeking and sharing weakened authoritarianism and enhanced political freedom, at the same time triggering financial and trade liberalization thereby improving allocative efficiency. As financial repression receded, returns to savings improved, prompting households to rebalance portfolios away from child quantity to financial assets and to child quality, accelerating the accumulation of human and physical capital. The rising labor quality helped innovation, which grew in importance as a source of productivity advancement, eclipsing the improvement in allocative efficiency. The Korean prosperity flourished due to the growing liberty, which, in turn, was dependent on rising prosperity.
Keywords: geopolitics; democracy; economic growth; allocative efficiency; financial liberalization; education; innovation
1. Introduction
2. Incomes, Inequality, and Population
8. Democracy
9. North Korea
Sources of Statistical Data
Outline by chapter is here.
The book in theoretical perspective.
Myung Soo Cha 