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Post-war policies, Foreign aid and economic reconstruction

Korean society was marked by chaos and poverty during the Korean War and the post-war reconstruction period. Primary industries dominated the economy, with the agriculture, forestry and fishing accounting for 47 percent of GDP in 1953 and employing an estimated 70 percent of the workforce. Women’s labor participation was mostly in these sectors. According to a 1948 survey conducted by the government, the number of women working in companies with more than five employees was 40,268, which was 18 percent of the total female working-age population of 223,030.

The main welfare policy for women was the provision of public assistance for war widows, who numbered as many as 700,000. The government also focused on providing primary education for women to improve literacy rates and conducted campaigns to encourage the participation of women in the post-war reconstruction of society. Women were granted the right to vote under the 1948 Constitution. The Labor Standards Law included provisions for maternity protection and banned discrimination against women.

These provisions had been adopted from advanced countries, but had little impact on the actual working conditions of women in Korea.

Vocational training focused on low-skill jobs for war widows. The government built state-run homes for single-parent families to provide shelter and encourage economic self-reliance by providing simple vocational training. These institutions were financially supported by foreign aid, including the supply of basic items as well as sewing machines.

There were 62 homes for single-parent families in operation by 1956, but there were still too few of them to meet rising demand for their services. In 1957, the Labor Guidance Institution for Girls was established to provide vocational skills for knitting, sewing, hairdressing and embroidering to older girls who had to leave the orphanages or girls who could not attend primary and middle schools.

Rhee Syngman, the first president of the young republic, strived to rebuild the economy with a series of reconstruction plans. These plans aimed to expand the economic infrastructure, build key industries (cement, steel, etc.) and increase the productive capacity of manufacturing (Sang-oh Choi, 2005, pp.358-359).

Rhee’s desire to construct a self-sufficient Korean economy with these plans was in direct conflict with the American government’s intention to rebuild an East Asian economic block with an industrialized Japan at its center. America urged Korea to liberalize its market, stabilize the value of the Korean currency, and expand cooperation with Japan. To Rhee, however, this implied nothing but the revival of the Greater East Asian Co-Prosperity Sphere and the re-colonialization of the Korean economy. Rhee made full use of Korea’s geopolitical value to frustrate America’s effort while promoting import-substitution industries through reconstruction plans.

The Korean government also differed with the Americans on what kind of foreign aid it would receive. There were two types, one being project assistance and the other non-project assistance. The former was to be used for reconstruction, while the latter was to be distributed to private enterprises for civilian use. Korea received a large amount of foreign aid from the United Nations and the U.S. in the 1950s and 1960s. The Korean government preferred project assistance, while the American government preferred non-project assistance. In the end, the American preference prevailed; under ICA (International Cooperation Administration) aid, for example, project assistance made up 27 percent of the total and non-project assistance 73 percent. In any event, various reconstruction plans prepared by Rhee’s administration failed to spark economic growth in Korea. They remained just that-plans

Source : SaKong, Il and Koh, Youngsun, 2010. The Korean Economy Six Decades of Growth and Development. Seoul: Korea Development Institute.


· Choi, Sang-oh“, Foreign Aid and Import-substitution Industrialization,”in Dae-geun Lee (ed.), New Korean Economic History: From the Late Joseon Period to the High-growth Period of the 20th Century, Na-nam, 2005, pp.349-375 (in Korean).

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