From Hermit Kingdom to Miracle on the Han: Policy Decisions That Transformed South Korea Into an Export Powerhouse

38 Pages Posted: 13 Sep 2021 Last revised: 12 Oct 2022

See all articles by Douglas A. Irwin

Douglas A. Irwin

Dartmouth College - Department of Economics; Peterson Institute for International Economics

Date Written: September 9, 2021

Abstract

In 1960, South Korea’s exports were about 1 percent of GDP, and the country’s ability to import depended almost entirely on US aid. After changing its foreign exchange and trade policies in the mid-1960s, Korea saw a surge in exports to more than 10 percent of GDP by the end of the decade. What factors account for the shift in policy that enabled this dramatic export growth to occur? The United States helped initiate the process by withholding financial assistance, pressuring Korea to devalue its currency and reform its foreign exchange regime. Initially, the Korean government resisted taking these steps, but in 1964 it became firmly committed to an export promotion strategy to boost foreign exchange earnings and end its dependence on American aid.

Keywords: export promotion, export orientation, devaluation, foreign exchange reform

JEL Classification: F13, F31, N75

Suggested Citation

Irwin, Douglas A., From Hermit Kingdom to Miracle on the Han: Policy Decisions That Transformed South Korea Into an Export Powerhouse (September 9, 2021). Peterson Institute for International Economics Working Paper No. 21-14, Available at SSRN: https://ssrn.com/abstract=3920480 or http://dx.doi.org/10.2139/ssrn.3920480

Douglas A. Irwin (Contact Author)

Dartmouth College - Department of Economics ( email )

Hanover, NH 03755
United States

Peterson Institute for International Economics ( email )

1750 Massachusetts Avenue, NW
Washington, DC 20036
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
271
Abstract Views
877
Rank
206,862
PlumX Metrics