Policy and Economic Performance in Divided Korea During the Cold War Era: 1945-91

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  • Format: Paperback
  • Copyright: 2010-03-30
  • Publisher: Aei Pr
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The Korean peninsula during the Cold War provided a cruel but historically unparalleled real-world experiment in the relationship between polity and material advance: an ethnically and culturally homogenous nation was, in 1945, suddenly divided by an arbitrary boundary line and then subjected to two radically different and adversarial political economies for successive decades on end. Assessing the competition between the North and South Korean economies from partition to the end of the Soviet era, Nicholas Eberstadt argues that the storyline is not quite as simple as the now-prevailing narrative suggests (that centrally-planned economies are doomed to fail against market-oriented alternatives). Rather, he suggests, the race for material progress was just that: a race, the results of which were far from preordained at the outset. In Policy and Economic Performance in Divided Korea during the Cold War Era: 1945-91, Eberstadt presents an impressive compilation of hard-to-find comparative data on economic performance for the Democratic People's Republic of Korea (DPRK, or North Korea) and the Republic of Korea (ROK, or South Korea) over two critical generations. By a number of indicators, Eberstadt argues, Kim Il Sung's North Korea actually outperformed South Korea for much of this period-not only in the years immediately following partition, but perhaps also into the 1970s. To explain these surprising results, Eberstadt details the impact of government policies on the course of growth of both economies and offers some unorthodox observations about material performance under these two contending polities. He finds that prevailing economic development theory on such issues as planned-versus- market economies, military burden, and the relationship between material advance and poverty, may require reexamination in light of the experience of the two Koreas between partition and the end of the Cold War.

Author Biography

Nicholas Eberstadt is the Henry Wendt Scholar in Political Economy at the American Enterprise Institute.

Table of Contents

List of Tablesp. ix
Acknowledgmentp. xiii
Introduction: The Experimentp. 1
Limits of Observationp. 3
Organization of the Studyp. 7
Comparative Performance of the Two Korean Economies: 1945-91p. 9
A Survey of the Available Estimates for Koreap. 11
Some Indicators of Comparative Performancep. 15
Indices of Physical Outputp. 18
Labor Force Trendsp. 20
Urbanization Trendsp. 23
The Official Budget of the DPRKp. 25
"National Income"p. 27
Commercial Energy Consumptionp. 27
Official "GNP" Estimatesp. 30
Alternative Endpoints and Their Implicationsp. 31
Conclusionp. 33
Policy and Economic Performance in the DPRK: 1945-91p. 34
Partition, War, Recoveryp. 40
The 1960sp. 43
The 1970s and 1980sp. 45
Quantitative and Structural Aspects of North Korean Economic Development during the Cold War Erap. 56
North Korean Economy Before and After "Liberation"p. 60
North Korean Economy and Noncommunist Low-Income Economiesp. 68
North Korea's Economic Structure in Communist Perspectivep. 72
Quantitative Trends in the North Korean Economy, 1960-1990p. 75
The North Korean Economy's Mounting Problemsp. 84
Limits to Growthp. 84
Limits to Reformp. 89
The Soviet Bloc Collapsep. 90
Conclusionsp. 92
Policy and Economic Performance in South Korea: 1945-91p. 94
South Korea's Economic Successes: Conflicting Claims to Patrimonyp. 95
The Years 1945-1960: The Interlude between "Hard States"p. 98
General Park and the Return to Economic Developmentp. 100
Foreign Aid and Economic "Takeoff"p. 103
Desiderata of Development: South Korean Exceptionsp. 108
Microeconomic Issues: Transaction Costs and Uncertaintyp. 109
Macroeconomic Issues: Market Structure, Allocative Efficiency, and Technical Efficiencyp. 116
Development Policy: Some Mistakes Matter More Than Othersp. 127
Induced Dirigiste Distortions: Agriculture, Heavy Industry, and Financep. 129
Agriculturep. 129
Heavy Industry: The HCI Drivep. 136
Financep. 141
Accounting for South Korea's Rapid Economic Growth: Factor Mobilization versus Factor Productivityp. 146
The "Contrarian" Reassessment of East Asian Growthp. 147
Caveats of "Growth Accounting"p. 148
Total Factor Productivity in South Korea: Indications and Calculationsp. 150
The Enigma of South Korean Growth: How Much Can We Explain?p. 162
Reconciling Paradigmsp. 169
Summation and Concluding Observationsp. 172
Review of Findingsp. 172
Observations, Speculations, and Issues for Further Researchp. 181
Notesp. 193
Referencesp. 271
Indexp. 299
About the Authorp. 315
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