The Escape from Oppression and Poverty: A Developmental History of Korea
Myung Soo Cha
This book argues that the South Korean democracy and growth miracles are contingent and interdependent developments driven by geopolitical shocks. The imposition of colonial rule in 1910 provided a necessary condition for the occurrence of the twin miracles, which required the de-colonization in 1945 as a sufficient condition. Replacing the rule of power with the rule of law, Japanese rulers established market institutions, which were augmented with democracy brought to South Korea by the U.S. to counter the Soviet-backed North Korean regime. Democracy grew on the economic and social ground flattened by the post-colonial land redistribution to dismantle the financial repression, which had been introduced to achieve import substitution or to promote exports by diverting returns to capital from savers to targeted firms. Rising deposit interest rates led households to replace child quantity with physical capital to provide for old age, causing the savings ratio to rise consistently and rapidly. The financial de-regulation also triggered the shift from child quantity to quality speeding up technological progress. The passage from labor to capital abundance and faster productivity growth caused incomes to grow rapidly expanding the demand for civil liberty and political freedom and finalizing the transition from limited to open access order.
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