Divided into democracy and dictatorship after a catastrophic war. Separated by a militarized border. And home to vastly different economic models. Sound familiar? Yes, there are more than just symbolic similarities between post-Second World War Germany and the post-war Korean Peninsula.
After 1945, West Germany slowly recovered from the Second World War and — with Allied guidance — developed into a highly successful democracy, with its famous social-market economy. Likewise, after the end of the Korean War, in 1953, South Korea embraced capitalism and democracy, with enormous growth rates.
But the paths diverge in one major respect: following a peaceful revolution, communist East Germany and the capitalist West were reunified. There is little sign of this happening on the Korean Peninsula. Far from being part of a unified single state, or even one of two separate prosperous entities, the North is characterized by dictatorial rule and a desperately poor population.
Political involvement
While much hope across the globe has been invested innegotiations between US president Donald Trump and North Korea’s leader, Kim Jong-un, few South Koreans seem to expect that meaningful progress will be made. After all, for decades, they’ve seen countless headlines come and go about rapprochement.
Still, Ramon Pacheco Pardo, a senior lecturer in international relations at King’s College London, believes there are some promising signs. In particular, he says, the election of South Korea’s president Moon Jae-in in 2017 has invigorated relations between North and South. Throughout the election campaign, says Pardo, Moon “made it very clear that engagement with North Korea was going to be his way of dealing with Pyongyang and Kim Jong-un”. Meetings between Moon and Kim Jong-un helped pave the way for the 12 June talks between Kim Jong-un and Trump.
The reality for now, however, is that the North remains blighted by a poor economy, a dysfunctional political culture, executions and labour camps. Pardo explains that North Koreans “know what is going on outside the country — and they know the North is not a paradise”. And we know “from defectors”, he adds, that “they don’t believe [the propaganda] that the North is more developed economically than the South”.
While the North is the poorest country in north-east Asia, the South enjoys impressive economic growth — and this in a country that, up until the 1980s, saw years of authoritarian rule, martial law and military takeovers. Indeed, it held its first truly democratic elections in 1988, the same year its capital, Seoul, hosted the Olympics.
The importance of education
Fast-forward two decades and South Korea is among the most tech-advanced countries on the planet, going from mass illiteracy to being an economic powerhouse in two generations. Education has played a major role, reflected in high achievements in the international PISA tests, though this presents its own problems. The number of hours that kids spend in school and in after-school programmes can seem relentless. A typical day for many children is to start school at 8 a.m., finish at 4 p.m., head home for a quick dinner and then go on to further lessons at one of the thousands of hagwons (private cram schools) until 9 p.m.
In 2014, The Economist reported that parents spent around $15 billion (€13 billion) on private tuition. And a 2017 study revealed that 83 per cent of five-year-olds and 36 per cent of two-year-olds receive private education. The pressure from this overwhelming focus on education and success at work is cited as a reason why South Korea has the highest suicide rate of all industrialized OECD countries. For young South Koreans, connections made during school and university are extremely important. Anne Ladouceur, Canadian-born owner of the website Korea4Expats.com, explains that they become part of a network of friends and associates during their education and it is through these connections that a whole world of opportunities opens up. “These connections help them through their life,” Ladouceur explains. They can determine whether or not they get into “a good university, get a good job and good wages”.
Leading in technology
By the time Kim Young Sam became the country’s first freely elected president, in 1993, South Korea had long started to turn its economy towards the high-tech and IT sectors. This has paid dividends in a big way. According to the OECD Science, Technology and Industry Scoreboard 2017, between 2012 and 2015, China, Chinese Taipei, Korea, Japan and the US developed between 70 and 100 per cent of the “top 20 cutting-edge ICT [information and communication technology] technologies”.
Japan and Korea were highlighted as having innovated across the whole spectrum of ICT technologies. Over the same period, Japan, Korea and the US filed 62 per cent of the 18,000 artificial intelligence (AI) patents worldwide. South Korea is also a world leader in robotics; the International Federation of Robotics reported that, in 2016, South Korea had 631 robot workers for every 10,000 human workers in its manufacturing industry and 2,145 for every 10,000 in the automobile industry. In the same year, South Korea sold around 41,000 robots worldwide, second only to China, with around 87,000 robots sold.
The country’s highly skilled, productive workforce and its long-term strategy of focusing on high technology means it is now a market leader in memory chip and LCD technology, for example. And it has world-class firms across various sectors, such as Samsung (electronics), Hyundai and Daewoo (both cars), SK Hynix (semiconductors), POSCO (steel) and LG Chem (chemicals).
Financial crisis
Still, it hasn’t all been plain sailing. In 1997, the Asian financial crisis forced South Korea to take $58 billion from the IMF to save the country from possible bankruptcy. As a result, South Koreans famously donated gold items (including countless wedding rings, sports medals and traditional “luck keys”) to be melted down and sold on the international markets. In just two months, gold worth $2.2 billion, weighing 226 metric tons, was handed in to help pay off the IMF loan.
Today, South Korea is a highly developed, tech-focused economy, though one within a rigid hierarchical society. It has major challenges in the area of gender equality, and huge corporate corruption scandals have regularly made headlines. In April 2018, former president Park Geun-hye was sentenced to 24 years in prison for corruption and coercion. And on top of a very low birth rate, South Korea has the worst income inequality of 22 Asia–Pacific countries. While life expectancy (of women) might reach an average of 90 by 2030 (the world’s highest), OECD data shows that 48.6 per cent of people over 65 live in “relative poverty”.
Pardo, who is also the Korea Chair of the Brussels Institute for European Studies and Korea Foundation, says that a challenge for South Korea “is that it is now a mature economy”. This means that it needs to find “new engines of growth”, particularly among small to medium-sized businesses.
Export-driven growth
Like Germany, South Korea is highly dependent on exports to the rest of the world, particularly China, Japan, the US and the EU. The country ratified a free-trade agreement with the EU in 2015 and is now the EU’s ninth-largest export destination for goods. Meanwhile, the EU is South Korea’s third-largest export market and South Korea’s largest foreign direct investor.
Near neighbours Japan and China, plus the US, are important economic partners, and all three play a major role geopolitically. Japan’s colonial occupation of Korea continues to present a challenge to their relationship, while trade disputes between a Trump-led US and various trading partners don’t augur well for a South Korea reliant on smooth world trade.
In addition, worries about the reliability of South Korea’s biggest trading partner, China, crystallized in 2016. The installation in South Korea of the US anti-missile system THAAD led to a major dispute. China responded with an unofficial boycott, ranging from governmental meetings to tourism, which cost South Korea billions of dollars. The dispute was resolved in early 2017, though not before public trust in China was seriously damaged.
Tourism is another economic mainstay. Visitors are attracted by the country’s history and culture, shaped by Confucianism, as well as by its royal palaces, mountains, traditional architecture and food. After a drop in 2017, tourist numbers are rising again. Before the THAAD dispute, around half of all tourists came from China. In addition to winning them back, officials are making major efforts to lure visitors from a wider range of countries.
Rapprochement as the best hope
For further well-being and prosperity, as well as good relations with Japan and China, South Korea requires a healthy world trading system. Given this, global consumers will continue to buy the country’s products. But just as South Korea’s trade is heavily dependent on external economic factors, the question about whether the country can find some form of rapprochement with the North is also externally dependent: on the North itself, but also on the US. And while a German-style 1989 border collapse seems highly unrealistic, President Moon Jae-in’s policy of rapprochement with the North is the best hope for long-term peace and stability on the Korean Peninsula.