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What caused the widening income gap between two Koreas?

Posted March. 18, 2014 06:19,   

Updated January. 01, 1970 09:00


Most industrial facilities were located in the north of the Korean Peninsula under the Japanese colonial rule. Good examples are Heungnam Fertilizer Factory, Soopoong Hydroelectric Power Generator, and Cheongjin Steelworks. When North Korea cut the supply of fertilizers and electricity to the South after Korea was liberated from Japan, South Korea turned into chaos. According to the analysis by Statistics Korea in 1999, South Korea’s per capita income (83 U.S. dollars) was one third of North Korea’s (280 dollars) in 1960.

Hyundai Research Institute estimated that North Korea’s nominal per capital income was 854 dollars, which was only around 3.6 percent of South Korea’s (23,838 dollars). South Korea is 28 times richer than North Korea. North Korea’s per capita income was even less than that of Laos, Myanmar, and Bangladesh. Kim Chun-gu, a senior analyst at Hyundai Research Institute, said, “North Korea’s per capita income ranks 162nd out of 187 countries. In actual terms, it is around the level of South Korea in the late 1960s.”

South Korea surpassed North Korea in the mid-1970s, and the gap between the two Koreas has widened. The dramatic turnaround is often a subject of research among renowned scholars around the world. North Koreans are as competent as South Koreans in economic activities. In the past, the financial talent of those in Kaesong, Pyongyang, and Wonsan was better than that of those in Seoul, Daegu, and Jeonju. The different choice of a regime – free democracy with a market economy for South Korea and extreme totalitarianism with a planned economy for North Korea – changed history.

The leaders’ capacity and leadership were key factors as well. South Korea’s founding fathers who helped the Republic of Korea to join a free democracy, including the first President Rhee Syng-man, and former President Park Chung-hee who lifted South Korea out of poverty, were great contributors. Former President Kim Young-sam and Kim Dae-jung, who placed the country on the path to political democratization following industrialization, greatly contributed to South Korea’s advancement, although they made mistakes like former Presidents Rhee and Park. Meanwhile, North Korea’s three generations of the Kim family – Kim Il Sung, Kim Jong Il, and Kim Jong Un – made a history of failure and collapse, driving most North Korean residents except for a few privileged people into hell. While South Korea will mark the 70th anniversary of liberation next year, it is saddening that some people who are still obsessed with the anachronistic illusion stand firm on their idea despite the clear outcome in Korean history.

Editorial Writer Kwon Soon-hwal (shkwon@donga.com)