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Nowadays, it's obvious that South Korea is richer than North Korea.

Yet, wikipedia and a pictoral essay at 9gag claim that until 1970 North Korea had the same size economy as South Korea.

Why the dramatic divergence since 1970?

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As a note, the pictoral essay you link here seems to include undoubtfully false allegations. For example, executions by mortairs, the idea about literacy control, that radio cannot be turned off (possibly borrowed from Orwell's "1984") and others. –  Anixx Feb 14 at 19:43
    
@Anixx I can't rule out that group executions using mortars are carried out, can you (the picture with it however is ludicrous, as it shows RPG rounds and a few heavily rusted WW2 era mortar bombs, possibly relics from the Korean war)? Doesn't mean it is common of course. As to radios that can't be turned off, I've heard that one before about North Korea, may or may not be true. –  jwenting Feb 17 at 7:51

2 Answers 2

You make the mistake of thinking the South Korean economy was as strong as it is today before around 1970. It wasn't. Effectively the country was still an agricultural economy no different from what it had been under Japanese occupation.
In the 1960s the South Korean government started massive industrialisation projects, building factories, shipyards, airports, etc. etc. which caused the economy to boom. North Korea meanwhile was stagnant, as it had been since the end of the Korean war.
To quote Wikipedia :

Since the 1960s, the South Korean economy has grown enormously and the economic structure was radically transformed. In 1957 South Korea had a lower per capita GDP than Ghana,[49] and by 2008 it was 17 times as high as Ghana's.[a]

This was the legacy of president Park, who succeeded president Rhee in 1960.

So it wasn't North Korea falling down after success but South Korea taking off and leaving the north behind.

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The main reason was the proper balance between planned and free. South Korea, despite maintaining a free market, pursued a hardcore, aggressive and intelligent interventionist policy, which basically meant targeting several strategic industries, encouraging them through massive state subsidies, high industrial tariffs and acquisition of foreign technologies and imposing upon the whole population a Spartan treatment in order to better achieve these economic goals. For instance, people were actively encouraged to spy and report on neighbors and friends if any of them smoked foreign cigarettes, because foreign exchange reserves were so important for buying hardware and know-how from abroad. Samsung was not, as most people think, a free-market miracle, it was a state-assisted company, as was, for example, Toyota in Japan. North Korea limited so drastically it's economic relations that it took upon itself both tasks of industry and research. South Korea mainly focused on industry, using the fruits of industry to acquire Western research, which is a much more flexible economic approach. This, in the long-term, meant stagnation for the North and development for the South.

(As @jwenting pointed out, the South Korean economy was at a colonial level back in the 60s - it's main exports were fish and tungsten).

Resource: Ha-Joon Chang - "Bad Samaritans"

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Can you show any resources to back up these assertions? –  Mark C. Wallace Feb 13 at 14:12
    
during the Park presidency, there was large scale domestic espionage and oppression of opponents in the South as well. Of course there was also economic freedom, but your assertion that the fact that the North had/s a repressive regime is the sole reason for their economic failure is countered by that. It's also countered by the fact that prior to Park North and South were both backwards, despite the South not being communist. –  jwenting Feb 13 at 14:29
    
I think you've messed up my point. Both countries had repression, I explicitly gave information in that regard, but there was a difference in the way in which repression was used. The South used it's comparative advantage to become more competitive, and it used repression in order to enforce that goal. The North sought to become more competitive by itself, by technologies researched domestically or traded with the Soviet block. It also sought to trade only with it's ideological kin. It used repression with this mind. The South succeeded, the North failed. –  Andrei Albu Feb 13 at 16:38

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