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From hermit kingdom to miracle on the Han

Author

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  • Douglas A. Irwin

    (Peterson Institute for International Economics)

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.

Suggested Citation

  • Douglas A. Irwin, 2021. "From hermit kingdom to miracle on the Han," Working Paper Series WP21-14, Peterson Institute for International Economics.
    • Handle: RePEc:iie:wpaper:wp21-14
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    More about this item

    Keywords

    export promotion; export orientation; devaluation; foreign exchange reform;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • N75 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - Asia including Middle East

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