A Comparison of the Economic Development of the Republic of Korea and the Philippines since Independence


Korean Minjok Leadership Academy
International Program
Sim, Chi Kyu
Research Paper, AP European History Class, Winter 2007/2008



Table of Contents
Abstract

I. Introduction
II. Colonial History
II.1 Korea (1910-1945)
II.2 The Philippines (1898-1946)
II.3 Comparison
III. The Period Leading to the Park/Marcos Dictatorship
III.1 South Korea (1945-1961)
III.1.1 Split into Two : North and South (1945-1948)
III.1.2 The Korean War (1950-1953)
III.1.3 The Post-Bellum Period (1953-1961)
III.2 The Philippines (1946-1965)
III.2.1 Political History
III.2.2 Economic History
III.3 Comparison
IV. The Period of Park/Marcos Dictatorship
IV.1 South Korea (1961-1979)
IV.1.1 The 5.16 Coup d'Etat
IV.1.2 The Rise of the Chaebols
IV.1.3 The Role of the United States
IV.1.4 Five Year Development Plans
IV.1.5 The ROK-Japan Normalization Treaty 1965
IV.1.6 The Vietnam War
IV.1.7 Domestic Political History
IV.2 The Philippines (1965-1986)
IV.2.1 The Political Situation Prior to the Declaration of Martial Law
IV.2.2 Economic Measures Prior to the Declaration of Martial Law
IV.2.3 The Situation After the Declaration of Martial Law
IV.2.4 The Philippine Economy under Marcos
IV.2.5 The Relationship with the United States
IV.2.6 Crony Capitalism
IV.2.7 The Downfall of Marcos
IV.3 Comparison
V. The Post-Park/Marcos Period until 1990
V.1 South Korea 1979-1990
V.1.1 Transitional Period 1979-1980
V.1.2 The Kwangju Uprising and Constitutional Change
V.1.3 The Economy under Chun Doo Hwan
V.1.4 Foreign Policy under Chun Doo Hwan
V.1.5 The Fall of Chun Doo Hwan
V.1.6 The Roh Tae Woo Administration
V.2 The Philippines 1987-1990
V.2.1 The Aquino Government
V.2.2 The Economy under the Aquino Government
V.3 Comparison
VI. Notes
VII. Bbliography

Teacher's Comment


Abstract
            When South Korea and the Philippines gained independence in 1948 and 1946 respectively, South Korea lagged far behind the Philippines in terms of economic performance. The positions in which South Korea and the Philippines stand today, however, are completely reversed as various economic indices indicate that South Korea outperforms the Philippines. Because the post-independence circumstances for both countries share many similar geopolitical features ranging from geographical location to political history, corruption has been widely believed as the single differentiating factor for the growth gap between South Korea and the Philippines. By the means of comprehensive analysis of history, politics, and economics, this paper argues that there is not one single factor, but rather a number factors that play a part in the rapid development of South Korea and the relatively slow development of the Philippines. Specifically, this paper approaches the topic by examining both South Korea and the Philippines' political and economic situations of four different periods ? colonial, pre-dictatorial, dictatorial, and post-Park Chung Hee respectively Ferdinand Marcos periods ? and comparing their implications for the growth gap. By shedding a new light on the development studies of South Korea and the Philippines, this study also suggests the conditions of political environment conducive to economic development in developing countries.

I. Introduction
            South Korea (officially called the Republic of Korea) and the Philippines (officially called the Republic of the Philippines) share many features besides their adjacent geographical location: both South Korea and the Philippines were colonies, of Japan and the United States respectively; achieved their independence around the same time, Korea on August 15, 1948 and Philippines in July 4, 1946; and lastly, experienced a nearly concurrent period of dictatorship, South Korea from 1963 to 1979 under Park Chung Hee and the Philippines from 1965 to 1986 under Ferdinand Marcos.
            One point to clarify here before any further discussion is that Korea has been split into North and South Korea since 1945, a partition drawn by the United States and the Soviet Union that was initially meant to be temporary, but became a lasting one as a consequence of the Korean War (1950-53). This paper, when dealing with the Korean economy since 1945, will refer to South Korea exclusively.
            Despite aforementioned similarities, there seems to be stark differences between South Korea and the Philippines in their courses of economic developments as seen below:



            The figures show that while the Philippine economy with twice the size of the Korean economy in 1950 increasingly underperformed, the South Korean economy exhibited a rapid growth surpassing that of the Philippines by 1975 and those of most Asian states by 2000. The Philippines, once one of the Asian countries with highest per capita incomes - above those of South Korea and Taiwan, significantly higher than those of Thailand, Indonesia and China, and only below Japan, Malaya, and the city states of Hong Kong and Singapore (2) - has been stagnating in its economic development. On contrast, South Korea - one of the poorest countries until the early 1960s that had just experienced the civil war that ripped the country apart into two - has developed into the country with 12th largest economy in the world (3).
            This paper was written for the purpose of comparing and contrasting the economic developments of South Korea and the Philippines to find out what might have contributed to this miraculous overturn of economic performance. In doing so, because the growth gap between South Korea and the Philippines became especially conspicuous during the late 1970s and the early 1980s, this paper will be mainly focusing on the periods of dictatorial rules in the two countries which roughly match the time period. Furthermore, the question will be dealt not only in economic perspective but also in political perspective since politics seems to be closely related to economic performances of both South Korea and the Philippines.

II. Colonial History

II.1 Korea (1910-1945)
            Having modernized since the 1860s, Japan coerced Korea into signing the Japan-Korea Annexation Treaty in 1910. Although the validity of this treaty is controversial because some Koreans, for instance in a textbook, assert that it was never ratified by the Korean Emperor himself and thus invalid, Korea in fact became a Japanese colony in 1910 (4). Japan established the Joseon Viceroy Department to rule Korea as its colony, and in Gyeongbokgung, an imperial palace of Korea, the Japanese flag fluttered in place of the Korean flag. Korea lost its sovereignty as a nation.
            A Japanese viceroy titled the Government-General of Korea and other Japanese bureaucrats working for departments subordinate to him now ruled Korea. Some radical pro-Japanese Koreans, who supported the Japan-Korea Annexation Treaty, also participated in a department called Joongchuwon, an advisory committee. Their role, however, was limited to giving advice, mirroring the weak legal position of the native Korean population. Eckert also points out that Koreans were virtually excluded for meaningful participation in colonial governance as the Japanese officials outnumbered Koreans in the colonial bureaucracy and even more so at middle and upper levels (5). This fact becomes more evident with the percentage of Japanese residents in Korea involved in Korean politics: average 42 percent of Japanese residents were involved directly or indirectly in Japanese government in Korea throughout the Japanese colonization of Korea (6).
            The rigidity of Japanese rule in Korea differed from time to time, sometimes tending to be harsh, sometimes loose. Japanese rule overall, however, focused on exploiting the national resources and labor force of Korea. Notably, one of the first Japanese economic policies in colonial Korea was a series of land reforms. Many Koreans were not only reluctant to participate in the policies implemented by the Japanese, but they were also ignorant of the much too complicated process involved in registering their land or were late in the land registration often because the reporting term was too short. As a result, they often ended up being deprived of their land. After a comprehensive land survey between 1910 and 1918 by the newly established Land Survey Bureau, the Government-General became by far the largest landowner in Korea. In 1930, the state held a total of 21,756,000 acres (approximately 88,042,180,800 square meters and almost 40 percent of the land area of Korea itself) making some contemporary nationalists and post-liberation historians to characterize the land survey as a Japanese "land grab." (7) The amount of land held by Japanese private and corporate investors also grew as the Japanese authorities appropriated unregistered land as state property and sold it at a cheap price to them. Besides a land reform, Japanese exploitation of Korea extended to the areas of forestry, mining, and fishery as well, shipping many valuable Korean supplies to Japan. In 1911, the Company Law required Government-General approval for the formation of private and public corporations. This law discouraged the growth of Korean capital since all railroads, harbors, communication, aviation, and roads were owned by Japanese companies. In 1920, Japan removed this decree on company establishment to provide the Japanese companies an easier access to Korean resources. In 1923, Japan further removed trade barriers and tariffs between Korea and Japan to promote Japanese export to Korea. While most of the Korean industries with feeble foundations were certainly afflicted, some Korean entrepreneurs prospered along with the removal of the trade barriers and tariffs as free trade helped a few Korean exporting companies as well: textile industry in Gyeongsung (nowadays called Seoul), and knitwear and rubber shoes industries in Pyongyang were typical cases. The Rice Production Increasing Plan of the 1920s began as a rapid industrialization of Japan led to lack of farming population, a shortage that begot shortages of rice and other crops. Japan attempted to ship more rice from Korea as a breakthrough, and it necessitated an increase of rice production in Korea.
            On March 1, 1919, discontented Koreans protesting against Japanese suppression gushed out to the streets. Realizing the difficulty in forceful ruling with rifles and swords, Japan newly adopted the Cultural Policy throughout the 1920s. The new policy involved permitting once forbidden newspapers to be printed and sold to the public again and expanding educational opportunities to more variety of people. In 1930s, however, Japan resorted again to harsh treatment of Korea as the Great Depression and the subsequent World War II pressured the Japanese economy. Japan exploited every possible supply from food to human resources in Korea. Over five million Koreans were conscripted to various labors after 1939: men were conscripted to serve in the Japanese army, and women were coerced into working as war supply factory workers or sex slaves, euphemistically called "comfort women", who reached the number of 200,000 (8). Furthermore, from 1937, the Korean language was banned from official documents, and Koreans were obligated to adopt new Japanese names. Traditional Korean culture suffered heavy loss as numerous Korean cultural artifacts were destroyed or taken to Japan.
            Resistance against Japanese repression continued after the nonviolent March First Movement of 1919, a protest of which the estimates of casualties range from the official Japanese count of 553 killed, 1,409 injured, and 12,522 arrested to a Korean nationalist estimate of over 7,500 deaths, roughly 15,000 injured, and some 45,000 arrested. Thereafter the Korean liberation movement operated largely at the bordering areas of Manchuria and Siberia, Shanghai in mainland China, and the United States; however, much of Korean resistance outside Korea was performed in a limited scale, due to lack of funds and men, until the end of the World War II. Thus in Korean peninsula, Japanese remained in control until their surrender on February 15, 1945.
            Despite its severe exploitation, Japanese colonialism seems to have laid the foundation for a modern transformation of the Korean economy (9). While it is obvious that the colonial development was after all, as many people argue, geared towards Japanese, rather than Korean, goals and needs, that Seoul in the 1930s looked completely different in terms of modernity from Seoul in the late Joseon Dynasty is undeniable. The Japanese colonial industry in Korea expanded through 1930s and 1940s as railways, roads, rice mills, textile factories, hydroelectric plants, smelters, oil refineries, shipyards, and new cities were built to serve the Japanese Empire. Korea's growth of manufacturing, in fact, averaged about 10% per year (10). Although South Korea could not enjoy most of these industrial bases (concentrated in the north) due to partition and civil war, some important elements, including the railway system and the textile industry (centered in the south), remained as a framework for the reconstruction in the 1950s and for rapid export-led growth in the 1960s.
            Between 1910 and 1941, the number of Koreans living in cities of 20,000 people or more increased over threefold from about 6% to 20% (11). Many Koreans made their living in the city as factory wage workers, rather than traditional farmers tilling the land; a small number of Koreans were even allowed to develop into urban elite of businessmen, bureaucrats, white-collar workers, technicians, lawyers, doctors, and other modern professionals. Both the workers and the urban elite provided the social core and framework in the South for a new capitalist society that continued to develop with American support and aid after 1945.
            In the late nineteenth century, Korea had one of the most entrenched landed aristocracies in the world; a reluctance of this class to favor any serious change in the economic and political status quo was a major factor in the country's ultimate inability to meet the challenges of imperialism and ward off colonial domination. Japanese colonialism took the first step in eliminating this class from the political power, followed by land reforms in South Korea under the American military government, the North Korean occupation during the civil war, and the industrialization of South Korean economy by the Syngman Rhee (Lee Seung Man) regime. Many post-reform landlords were, instead, highly successful in making the transition to industrial society. A study conducted at Harvard in 1976, for example, concluded that the vast majority of the country's business leaders have come from the land-based traditional elite (12). By the mid-1950s not only were landlords no longer an obstacle to economic growth, but former landlords themselves and their children were already well on their way to become businessmen or white-collar professionals of one kind or another. It was the colonial period, especially after 1919, that saw the emergence of a nascent industrial capitalist class, who developed in cooperation with the Japanese colonial economic interests.
            The development of education was also part of the Japanese contribution. During Japanese colonization, the number of students attending elementary or secondary schools increased, creating an impressive pool of literate and experienced workers by 1945. Currently the most prestigious university in South Korea, Seoul National University (then called Gyeongsung Imperial College) was founded during the colonial period, in 1924. During its 1960s' and 70s' developmental process, South Korea was blessed in a sense that it had a work force that adapted quickly to changing foreign technologies because success in the international market for the so-called late-developing countries like South Korea relied on it. And such advantage may have been the product of the Japanese colonialism.

II.2 The Philippines (1898-1946) (13
            The Philippines, a former Spanish colony, was ceded to the United States in 1898 as a result of the Spanish-American War. At first, Filipinos had bitterness towards Americans since Filipinos expected liberation like the Cubans. However, as Americans began to form a strong attachment to the Filipinos, especially the U.S. President William H. Taft who called them his "little brown brothers" (14), there were not many problems between the Americans and the Filipinos. On April 1, 1901, at the Malacanang Palace in Manila, Aguinaldo, the first president of the Philippines (1898-1901) swore an oath accepting the authority of the United States over the Philippines and pledging his allegiance to the American government.
            Three weeks later he publicly called on his followers to lay down arms saying, "Let the stream of blood cease to flow; let there be an end to tears and desolation. The lesson which the war holds out and the significance of which I realized only recently leads me to the firm conviction that the complete termination of hostilities and a lasting peace are not only desirable but also absolutely essential for the well-being of the Philippines." (15)
            Aguinaldo's speech discloses the fact that the Filipino leaders have always been caught between the pull of rewards for accommodating the imperial power and the desire for independence (16). President Aguinaldo, upon his election in 1898, had picked men for his cabinet who were "distinguished persons," drawn from the upper classes, many of whom just months before had been members of the Spanish Consultative Assembly and against independence. The Filipino elite leaders largely collaborated with the United States; for example, the elite leaders readily accepted the American policy of free trade, which meant an added economic advantage to them as producers of cash crops with an open access to the U.S. market while rural grievances were left unresolved. Largely owing to these subservient men, the Philippines' status as a colony could only gradually improve when Americans felt it safe to grant Filipinos the right to participate in governing the country in 1916 and enhanced the country's status to become the Commonwealth of the Philippines in 1935, a promotion which provided Filipinos with a certain latitude of self-governance. In addition to its new status in 1935, Americans promised the Philippines her independence, which would follow after ten years.
            The American Commonwealth of the Philippines fell under the Japanese possession, however, when the Imperial Japanese Army attacked in December 8, 1941, a time when the U.S. military buildup had hardly begun. An Executive Commission, made up of more than 30 members of the old Filipino political elite, had been cooperating with Japanese military authorities in Manila since January, and American-Filipino forces, under General Jonathan M. Wainwright, surrendered in May 1942. Jose Laurel, the former associate justice of the Commonwealth Supreme Court and the only Filipino to hold an honorary degree from Tokyo Imperial University, became the president chosen by the Japanese. The collaboration with Japan was neither as voluntary nor as widespread as elsewhere in Southeast Asia, though there certainly was some resistance as well. After the defeat of American-Filipino military forces, several groups, notably the guerilla group Hukbalahaps (Huks) fighting against the Japanese repression, began their resistance against Japanese. The Japanese occupation, however, did not deflect Americans from their methods of ruling the Philippines on their return, principally because it scarcely altered the social basis and composition of the Filipino ruling class through which American influence had been exercised. (17)
            On their return in October 1944 via the U.S. landings on Leyte, the Americans ignored the claims of guerrillas who had resisted the Japanese; General MacArthur, for example, relegated guerrillas to the status of rebels. The Philippines was returned to the Commonwealth at least in name. General MacArthur first supported the President Sergio Osmena who had been a leading member of the government-in-exile and represented the pro-American leadership that had dominated the Filipino politics before 1942. However, once Manuel Roxas - a member of the land-owning oligarchy who had managed to serve the Japanese regime without breaking his links with the Americans - was officially cleared of the taint of treachery, the United States preferred Manuel Roxas to Sergio Osmena because, as far as the Americans were concerned, Roxas proved more compliant than Osmena might have been and more reliable in securing the country against radical social change as well as providing for American economic and strategic requirements (18). In April, Manuel Roxas, supported by the United States, was elected by a narrow margin and inaugurated as the last chief executive of the Commonwealth in May. Finally, after the passage of the Bell Act, which ensured free trade between the two countries, and the Tyding Act, which provided financial aid to the Philippines, the United States agreed to the independence of the Philippines on July 4, 1946. (19)
            American rule over the Philippines overall was pervasive yet non-transformative. The United States did plant on the Philippines institutions that were American in imprint, notably the educational, political, and legal systems (20). For instance, the United States introduced the use of English and encouraged a favorable orientation towards the West. But in political and economic terms, the Americans did little to transform the existing Filipino power structure. William Howard Taft, the first U.S. civilian governor, and his successors vested and endorsed the power to ilustrados, the rich intelligentsia who were the conservative elites and had gained power by assimilating to the Spanish ways, on the theory that the Filipinos deserved to govern themselves. These landowners and entrepreneurial classes naturally recoiled from economic and social reforms that would curb their prerogatives, preferring instead to preserve a feudal system. Stanley Karnow notes, "American officials, long aware of these inequities, only began to suggest improvements in the 1930s." (21) By then, however, it was too late and too little. The influence of the United States was so pervasive that the number of the Filipino elite naturally gravitated to the Americans. And Americans, from William Taft to General Douglas MacArthur, tended to feel most comfortable with those landed educated elites who spoke English and had adopted Western practices. From Sergio Osmena and Manuel Quezon to Ramon Magsaysay and later Marcos and Aquino, number of the Filipino elite either were the virtual creation of their American mentors, or they used their close relations with the United States to preserve their power and privileges. (22)

II.3 Comparision
            It seems quite clear that the post-independence situation of the Philippines was better off than that of Korea not only in terms of the economy but also in terms of preservation of social order. While the Korean economy was largely destroyed by the Japanese exploitation, the Philippines' economy was relatively intact. There may be several reasons for this different outcome for Korea and the Philippines.
            The difference in the process in which colonialists were received could have been a factor. Whereas in Korea, the Japanese annexation of Korea was received with much hostility from classes ranging from the top to the bottom, in the Philippines, the colonialist rule, both American and Japanese, were widely accepted by the Filipino elite, collaborating with colonialists for their advantages. Subsequently, the nature of colonial rules differed for Korea and the Philippines. While Japanese largely resorted to a harsh treatment of oppression in ruling Korea (though it may have been that the initial purpose of colonial Korea was to exploit, strong resistance by Koreans surely did nothing better than facilitating the use of strong measures), Americans maintained rather lenient ways of ruling to the extent of promising the Philippines' independence (the Philippines was the first country to be voluntarily freed by its colonial master), let alone collaborating with Filipinos in ruling the Philippines.
            Some may also argue that the Philippines should be no better off than Korea, since the Philippines too had been under Japanese control. However, the Japanese rule of the Philippines was fundamentally different in several aspects. First, the Philippines' relatively short period of subjugation from 1942 to 1944, compared to Korea's period of subjugation from 1910 to 1945, looks like a good explanation for why Japan was unable to implement severe, systematic exploitation in the Philippines. Second, favorable feelings towards foreign power, such as that received by Americans, seem to have worked towards Japanese as well. Less resistance by Filipinos meant less oppression by Japanese. Third, the geographical location probably was a factor. While the Philippines was not only an archipelago, in which each island was separated by bodies of water, but also far away from Japan, Korea was a peninsula, which bordered China located right next to Japan; therefore, Japan had both more incentive and need to exploit Korea rather than the Philippines.
            The contrasting colonial legacies - one more favorable and the other less favorable, however, laid opposite implications for development: Korea's development and the Philippines' under-development. While in Korea events tended to destroy the old order, in the Philippines they reinforced it. The number of Filipino elite tended to be legitimized by having close relations to the U.S. imperialists. In contrast, Korean elite were de-legitimized by their relations with the Japanese colonizers. Thus the U.S. colonization of the Philippines reinforced the existing structures, whereas Japanese colonialism caused Korea's existing political structures to wither away. (23) Traditional Filipino elite retained power and influence, but in Korea some of those rights exclusively enjoyed by yangban (landlords) had begun to dissipate.
            Issues regarding a land reform also provides some insight into how the difference in colonial rules - one reinforcing and the other dismantling - spawned the opposite outcomes for Korea and the Philippines. The importance of a land reform can be considered significant for a number of reasons. First of all, a land reform increases agricultural productivity. Second, a land reform frees up labor, as peasants previously tied to the land in sharecropper arrangements are now free to move to the city. Finally, a land reform breaks the power of the landed aristocracy, who traditionally opposes most industrialization policies. In Korea, the Japanese land reform was successful in destroying the centuries-old feudal land-tenure system. This initial act of redefining property rights was central to the Korean development. In stark contrast, a land reform has been an abortive issue in the Philippines since before World War II. Breaking the power of the agricultural plantations has proven enormously difficult. Under the U.S. colonial administration, land reforms were ignored because the Americans were reluctant to upset the existing arrangements, and by 1946 the tenancy rate in the Philippines was higher than it had been under the Spaniards. (24)

III. The Period Leading to the Park/Marcos Dictatorship

III.1 South Korea (1945-1961)

III.1.1 Split into Two : North and South
            After the collapse of Japanese Empire, the last standing Axis power, the Soviet and American occupation forces re-occupied colonized Korea, taking the land north and south of the 38th parallel respectively. The 38th parallel was actually just a line drawn by the Soviet Union and the United States to execute Japanese disarmament. As the Cold War and its ideological conflict intensified, however, such split became fixed, dividing Korea into North with the Soviet Union backing and South with the United States backing. On May 10, 1948, there was a general election in the South; the newly elected National Assembly decided on electing the president in the National Assembly through an indirect election. Syngman Rhee was elected the first president of the "Republic of Korea (ROK)" and his administration settled in August 15, 1948 when the Republic of Korea or South Korea was released into independence. South Korea was reduced into half a country with almost no natural resources (for most of them were concentrated in North), a thoroughly uprooted and aggrieved population, no domestic capital to speak of, and a minuscule domestic market. (25)

III.1.2 The Korean War (1950-1953)
            On June 25, 1950, just 5 years after the liberation of Korea from Japan, North Korea invaded South Korea and the Korean civil war, also known as the Korean War (1950-53), broke out. The war became something more than a mere civil war when the United Nations and Peoples' Republic of China entered the conflict during the course of the war. On August 29, 1950, the United Nations Command forces - the multinational military forces, established by Resolution 84 of the United Nations Security Council - arrived in the Korean peninsula to support South Korea. On July 27, 1953, South Korea and North Korea signed the Korean Armistice Agreement to suspend the war after the long period of offensive and defensive battles along the 38th parallel. The three years of war left despondent results for South Korea.



            Though leaving South Korea in a grave economic and social situation and delaying the economic growth, the civil war also played a role in Korea's subsequent economic growth. What the Japanese had begun with their massive shifts of Korean population in 1935-45, what the national division had intensified, the Korean War completed: Koreans of all classes were now thoroughly displaced from their local roots. Everyone was jostled or pushed or thrown bodily out of his or her social niche.
            Their [landlord aristocracy] political power was now mostly gone. Above all, their capacity to control the people "below them," in clan, clientele, and tenancy lineages, and their continuous tendency to control markets and stifle enterprise, was blasted to smithereens. People could no longer be frozen in place in rural settings: two successive wars had set them loose. In a country with such solidity of lineage and place, there now arrived the time of Thomas Hobbes's "masterless men," harbingers of anomie and modernity. Here is the deep meaning of the axiom that war is the great equalizer. (27)
            Cumings notes a good example of this change in Korean society, "A woman from one of Seoul's wealthiest families once told me she had been able to save only a handful of diamonds when the war began in June 1950; her husband killed, she lived at the margins of Pusan's vast agglomeration of refugee camps, trying to feed several young children. Upon her return to Seoul she was able to reoccupy the family residence, only to find less than half of it still standing and refugees from the North living in what was left. The ordeal had been so shattering that she resolved, should another war come, simply to commit suicide." (28
            In place of the aristocracy came entrepreneurs who had built up wealth through the auxiliary supply of warfare, a small but growing middle class of people engaged in commerce or attached to the enormous foreign presence and its many organizations, and rough people who had prospered at the nexus of human despair through money-lending and corruption, or simply the provision of services scarce in wartime such as clothing, shelter, food, and drink. For instance, Chong Chu Yong, later the billionaire chairman of the Hyundai Corporation, had run a small auto repair shop before the war, but got his big break by ferrying supplies to American bases on half-ton trucks or constructing billets. Many of the other chaebols - powerful families who own the companies that exercise enormous economic influence in Korea - got going at this time.

III.1.3 Post-Bellum Period (1953-1961)
            Post-bellum South Korea in the 1950s was a terribly depressing place, where extreme privation and degradation touched everyone. Cadres of orphans ran through the streets, forming little protective and predatory band of ten or fifteen; beggars with every affliction or war injury importuned anyone with a wallet, often traveling in bunches of maimed or starved adults holding children or babies; half-ton trucks full of pathetic women careened onto military base for the weekend, so they could sell whatever services they had. Ahn Junghyo, a well-known novelist of South Korea, wrote this about his family's existence just after the war :

      My father worked as a carpenter at the American base . . . and Mother ran a small shop at a nearby intersection of a three-forked road. Every day I used to go to the garbage dump a little distance off from my house. Often my foot was cut by a used razor blade, on the sharp teeth of a broken saw or a jagged lid of a can, but the cuts were worth it because the whole family could feast on pig soup at dinner if I happened to find a piece of meat among the garbage. . . . Sometimes you would have good fortune and unearth oranges, Hershey chocolate wrapped in sleek brown paper or Brach's jelly candies of five different crops shining like jewels in their cellophane wrappers. One day the American soldiers dumped a heap of chicken legs that had quite a lot of meat still hanging. . . . Mother boiled a delicious soup with those bones and meat and barley, even adding some precious rice. Where had I found all those chicken legs, Father asked me. I told him. That night, he took a rusty tin bucket from the kitchen and asked me to show him the way to the dump. (29)

            The U.S. interest in Korea has from the beginning been political and strategic rather than economic; support for South Korea since 1945 has derived as part of a global containment of international communism centered on the Soviet Union. After the U.S. intervention in Korea to push back a North Korean invasion during the Korean War, the United States has signed a mutual defense treaty with South Korea in 1953 and maintained tens of thousands of American troops and even tactical nuclear weapons on the peninsula while pouring vast sums of money into the development of South Korean military forces. Nevertheless, it is also true that American policymakers have also tended to see the development of a strong capitalist economy in Korea as an integral part of their anti-communist strategy and have consequently provided South Korea with large amounts of the two things it needed the most: capital and technology.
            After the war, the Rhee administration returned. The common subject of discussion among American expatriates in the 1950s was what a bizarre and muddled octogenarian Syngman Rhee was especially when it came to economy. What was so bizarre and muddled about Syngman Rhee's thought on Korea's economy ? In a nutshell, it was "Give us everything Japan has and give it to us tomorrow." (30) He wanted a full-blown and self-reliant industrial economy in steel, chemicals, machine tools, and the electric energy with the young industries incubated behind a wall of protection, especially a protection from Japan. But what did the United States want ? A Republican administration in fact wanted to cut back on the money going to people like Syngman Rhee and the immense outflows to defend them in the form of American troops - at least that is what Treasury Secretary George Humphrey wanted, saying so in several memorable NSC (National Security Council) outbursts. (31)
            That is not, however, the whole story. On second thought, the United States was willing to indulge certain countries, especially places like South Korea sitting on the fault lines of the Cold War, so that they could become self-supporting and competitive in the world markets. If that meant hothouse protection for their cement industry, so be it (32). Thus, South Korea hardly had free-market economics in the 1950s, in spite of a Republican administration in the United States. Syngman Rhee followed what specialists call "import substitution industrialization," or ISI - a trade and economic policy based on the premise that a country should attempt to substitute products which it imports with locally produced substitutes. A series of practices such as an active industrial policy to subsidize and orchestrate production of strategic substitutes, tariff and other protective barriers to trade, and a monetary policy that keeps the domestic currency were taken to reduce external competition for some domestic industries. Such a strong protectionist policy of South Korea was certainly not so helpful for the U.S. economy but Syngman Rhee was able to carry the plan out with the full support from the United States. Syngman Rhee proved himself a master at this business, wheedling so many direct grants out of the United States that, by the end of the 1950s, accounted for five-sixth of all Korean imports. About $12 billion of the American treasury went to Korea in the years 1945-65. In 1950s, there were years when aid funds alone amounted to 100 percent of the South Korean government budget. (33)
            Meanwhile, immense cases of corruption unfolded under Syngman Rhee administration whether it was the tungsten export case of 1952, the cotton import case of 1954, or many similar scams. Whenever South Korea received monetary aid from the United States, he was expected to explain how every American aid dollar was spent but instead he kept the embassy in the dark, not to mention the members of his own cabinet. Syngman Rhee knew there was a place for money in this world: in his pocket. Though it is hard to say that the underhand money has all gone to Syngman Rhee and his wife, it seems convincing that they made effective arrangements to enrich their cabinet officials, political friends, and cronies. Using South Korea's immense geopolitical leverage granted by the Cold War and his own personal skills, Syngman Rhee succeeded in extracting maximum rents from the United States but seems to have failed in using that money where it is desirable.
            Syngman Rhee had another goal while he was still in the office: to lengthen his presidential term. In 1952, he modified the presidential election system from an indirect vote, which was now unfavorable for him since most of newly elected members of the National Assembly opposed him, to a direct vote. Forcing this change in constitution by deploying military polices and political gangsters, he succeeded in prolonging his term once. When he got elected for the third time by further revising constitution - to allow more than 3 presidential terms exceptionally for the first president of the country - this time in order to set himself as the permanent ruler, Syngman Rhee faced a radical opposition. In April 19, 1960, a large demonstration against the corrupted Rhee administration occurred in Korea; the event is now called 4-19 Revolution. When he subdued this riot by the government use of military forces, further riots spread to all over the country. President Rhee eventually succumbed and resigned in April 26, 1960.
            In accord to the people's wish, the cabinet system, a system in which the power is focused on the National Assembly, was adopted instead of previous presidential government system. In July 29, 1960, there was a general election and an opposition party, the Democratic Party, won by a landslide. Yun Bo Sun was elected the president, but Chang Myun, who was the prime minister, had de facto power accorded to the cabinet system. The new administration, however, still failed to meet the demands of the public as it was lukewarm in carrying out needed reforms. Although Chang Myun regime had a blue print for the First Economic Development Plan, the plan was never implemented. (34)

III.2 The Philippines (1946-1965)

III.2.1 Political History
            While in the Korean peninsula the United States Army Military Government in Korea (USAMGIK) administered Korea south of 38th parallel, the Philippines was now left to rule the country with autonomy. Though the Philippines too, like many other Asian nations, was not entirely free from the effect of the war in terms of economic deterioration, the post-bellum situation of the Philippines seemed relatively favorable for potential growth - probably the most highly anticipated among the Asian nations - for several factors: relative intactness of much of its former political and social structure, close tie with the United States, fluent usage of English by many people, and status as a relatively stable Christian country. At the very least, the Philippines could grab the coat tails of the emerging U.S. superpower and just glide along to economic power. (35)
            Though a large part of Manila was destroyed due to an intense fighting in the last days of the Japanese retreat during World War II, the Philippines was now mostly free of any external threats. The hearing in the U.S. Senate, Committee on Foreign Relations, Subcommittee on U.S. Security Agreements and Commitments Abroad, confirms the idea of security to the Philippines after World War II :

      SENATOR SYMINGTON. You said in your statement, Admiral, that it was agreed the chief problem was ? I will read what you said ? ¡°The Board considers the principal threat to the Philippines to be Communist China with possible assistance from internal dissident groups.¡±
What is the capacity from the military standpoint of the Red Chinese today in the Pacific to menace the Philippines from a military standpoint since this is a military board?
ADMIRAL KAUFFMAN. I would say at the moment, Sir, very small.
SENATOR SYMINTON. General, what would you say ?
GENERAL GIDEON. Very small, very small.
SENATOR SYMINGTON. But you say it is the principal threat.
ADMIRAL KAUFFMAN. Of the threats that exist, I would say it is the principal threat; yes, Sir. (36)

            So the only principal potential threat to the Philippines from the outside was the menace of communism, which was virtually nonexistent from the perspective of the US Army. Although the external threats to the Philippines appeared relatively remote with a firm U.S. commitment for external defense, the internal threats to the security of the Philippine Republic were present. The guerilla operations of the Hukbalahaps - originally formed in 1942 to fight the Japanese Empire's occupation in the Philippines during World War II - now called themselves "People's Liberation Army" and continued existence, growth, and activities, a fact reflecting the ineffectiveness of the Philippine armed forces and the generally unsatisfactory social, economic, and political situation. (37)
            In 1948, Manuel Roxas, the first president of the independent Republic of the Philippines, declared an amnesty for those arrested for collaborating with the Japanese during the World War II except for those who had committed seriously violent crimes. The administration of President Roxas had passed legislation that claimed to guarantee tenant farmers seventy percent of the rice crop. In reality, however, the law allowed landlords to take half of the crop, which, of course, they did. (38) In this light, the Philippine government lacked the courage and initiative to take bold, vigorous measure to wipe out corruption, to create a stable administrative system and to encourage confidence in the government. Leadership in the Philippine government was still in the hands of a small group of individuals representing the wealthy propertied class, who failed to appreciate the need for reform. It was quite obvious then that the pressures were generated among less prosperous and more numerous groups of the population. Suffering a fatal heart attack, Mauel Roxas faced abrupt death on April 15, 1948 and was succeeded by his vice president, Elpidio Quirino.
            During his term, Quirino tried to negotiate an amnesty with the Huks, but the efforts were deliberately sabotaged by the wealthy and conservative landlords in his administration; Quirino then reverted to the mailed-fist approach. Terror and corruption by the Philippine Constabulary (PC), however, merely encouraged further support for the Huks. In the meantime, the Philippine elite further used political power for its personal aggrandizement. In 1946, Congress amended the tax laws to make the rates more regressive (39). Despite such unsettling situation, Quirino's six years as president were marked by notable postwar reconstruction, general economic gains, and increased economic aid from the United States mainly because the Philippines' participation in the Korean War, which lasted from 1950 to 1953, provided a stepping stone for economic growth.
            Though succeeded in achieving some degree of economic growth, Quirino, whose administration was tainted by widespread graft and corruption, was overwhelmingly defeated by Ramon Magsaysay, a candidate of Nacionalista party. Ramon Magsaysay was a close friend and supporter of the United States and also a vocal spokesman against communism. He led the foundation of the Southeast Asia Treaty Organization, also known as the Manila Pact of 1954, which aimed to defend South Asia from communism. During Magsaysay's administration, the Philippine Republic undertook a campaign to suppress the Huk movement with the collaboration of the Central Intelligence Agency (CIA) and U.S. military aid and advisors. Under his leadership, the Huk movement was largely subdued by the late 1950s.
            Carlos Garcia succeeds Magsaysay in 1957. A major thing to notice from this period on is the changing character of Philippine-US relations. Although the Philippine-US bond had been strong since the World War II, the trend apparently oriented towards weakening of the link. The leadership of the Philippine government, while friendly to the United States, was extremely sensitive and suspicious of actions by the United States, which would appear in Philippine eyes to be an infringement on national sovereignty. Not only the Philippines' public opinion but also the opinions of the other Asian nations generally would prove particularly sensitive to any step taken by the United States, which could be interpreted as implying a revocation or abridgment of the Philippines' independence (40). Economic nationalism, though first directed against the local Chinese community¡¯s dominance of retail trade, would be increasingly focused on the special status and prevalence of American business firms. One example of such prerogatives enjoyed by American companies was the Parity Amendment ? a part of the requirements by the United States for release of U.S. war-damage payments ? that gave the U.S. citizens equal rights with Filipinos in the exploitation of natural resources.

Table 1 : Percentage of sales, income, assets and equity controlled by 35 U.S. manufacturing corporations ranked in the top 110 Philippine manufacturing corporations (1971 data) (Unit: Pesos in thousands) (41)

Group Sales Income Assets Equity
110 Philippine corporations 10,723,372 592,373 10,305,830 4,319,764
35 U.S. corporations 3,605,047 278,753 3,552,295 1,596,352
U.S. firms' percentage of top 110 total 33.60 % 47.10 % 34.50 % 37 %

            At independence the Philippines' military ties with the United States were strong, but they seem to be diminishing since; an issue surrounding the U.S. military bases was the greatest single cause of friction. During Garcia's administration, the lease of the U.S. bases was shortened, by the Bohlen-Serrano Agreement, from 99 years to 25 years and was made renewable only after every five years. In 1979, formal jurisdiction over the base areas would be passed to the Philippine government. Garcia also implemented the Filipino First Policy, which heavily favored Filipino businessmen over foreign investors.
            The Philippine-United States relations did improve much during the term of the next president, Diosdado Macapagal, who once worked as vice-president under Garcia but belonged to the Liberal Party, a party in opposition to that of Macapagal. In 1962 when the United States made its final rejection of Philippine monetary claims for the destruction wrought by American forces in World War II, Macapagal changed the official celebration of the Independence Day from July 4 (the date in 1946 when United States granted independence) to June 12 (the date in 1898 when Emilio Aguinaldo declared independence from Spain).
            Macapagal focused on fighting graft and corruption in the government during his term that he was called the "Incorruptible." He stood out as the great, respected, and loved president of the Philippines. He was also affectionately known as the Champion of the Common Man because of his achievements in improving the plight of the masses and of the poor. Many of his reform efforts, however, were blocked by the Nacionalistas, who dominated the House of Representatives and the Senate at that time. Despite the hampering of the opposition party, Macapagal still managed to achieve an average GDP growth rate of 5.15 % during his administration. In 1965, he was defeated in the presidential election by Ferdinand Marcos, who had built a conservative coalition to block Macapagal's reforms.

III.2.2 Economic History
            Though short, wartime occupation by Japan of the Philippines had been destructive to the Philippine economy. Naturally, the Filipino reliance on the United States was heavy immediately after its independence in 1946. To gain access to reconstruction assistance from the United States, the Philippines agreed to maintain its prewar exchange rate with the United States dollar and not to restrict imports from the United States (42). For a while the aid inflow from the United States offset the negative balance of trade, but the economy gradually entered into a crisis.
            The Philippine government eventually responded by taking measures to secure its economic growth, one of which was to institute import and foreign-exchange controls. As import restrictions stimulated the manufacturing sector (added to the Korean War effect), Philippine Net Domestic Product (NDP) of manufacturing first grew rapidly, averaging 12 percent growth per year during the first half of the 1950s. (43) The Philippines also implemented an import-substitution ? a policy that helped the Philippines to achieve the average growth of 7.7 percent in the GNP ? to relieve its unbalanced trade. The problem was, however, that the growth rate did not get any higher than this ever since.
            Gradually, the United States-Philippines tie began to dwindle as well as the overall economic growth of the Philippines. Demand for import exceeded that of export and the allocation of wealth was still subject to corruption. In the second half of the 1950s, the growth rate of manufacturing fell about a third to an average of 7.7 percent, and real GNP growth was down to 4.9 percent (44). In 1962, the Philippine government devalued the peso and abolished import controls and exchange licensing. Pressure from industrialists intensified and the Philippine government had to impose these measures back in 1968. The real GNP growth was mediocre. To stimulate industrialization, improvements in the Philippines' economic structures such as incentive structures, current import substitution, and protective trade seemed necessary. However, reform attempts faced with resistance from industrialists, and efforts to liberalize the economy and emphasize export-led industrialization were largely unsuccessful.

III.3 Comparison
            Though both Korea and the Philippines came out of the ashes of the war and the colonial experience around the same time, what followed after their common post-war and post-colonial period was strikingly different. On the one hand, South Korea, truncated into half the territory of united Korea, was functioning in half (or perhaps less) its original productivity, which was not so high in the first place either for much exploitation by Japanese colonization. On the other hand, the Philippines, though may have suffered some damage (still to much lesser degree than Korea) during its colonial period, stayed relatively solid in terms of its state unity and function. The Korean War that followed in 1950 proved deleterious for South Korea while at the same time was beneficial for the Philippines. The war left South Korea in a grave economic situation, but gave the Philippines the boost that pulled GNP growth per capita to an average rate of about 4 percent and per capita income higher than South Korea and most of other Asian countries over the first decade and a half since its post-war or post-colonial period. By 1955, the Philippines was a regional leader in economic growth with its GNP ($4.7 billion) outdoing that of South Korea ($2.3 billion) by more than two times as seen from the table below.

Table 2. Comparative Economic Performance: Korea and the Philippines (Unit: GNP in billions of U.S. dollars at current exchange rates; population in millions) (45)

Year 1955 1965 1975 1985
GNP 2.3 3.0 20.9 88.8
S. Korea Population 21.5 28.3 33.3 41.2
GNP/capita 107 106 590 2133
GNP 4.7 5.9 15.9 32.6
Philippines Population 23.6 31.8 42 54.4
GNP/capita 199 188 375 599

            In spite of all the auspicious economic statistics, the Philippines was still left with its most potent and chronic source of conflict: a classical structural conflict of masses versus elite. There were attempts for social and economic reforms by some presidents such as Ramon Magsaysay and Diosdado Macapagal, but their attempts ended in futility largely because of the conservative outlook of the legislature and the bureaucracy, dominated by a small number of influential elite families. For instance, the centuries-old arguments calling for land reform to close the gap between the rural masses and the elite are still relevant today, and Suter notes that if the Philippines could modernize its land ownership system and provide for land reform, it could become a richer society for all. (46)
            On the contrary, South Korea was rather successful at least in land reform. After liberation, the United States Army Military Government in Korea (USAMGIK) administered land reform by distributing lands that were previously owned by the Japanese, amounting to 13 percent of South Korea¡¯s total farmland. Another stage was undertaken by Syngman Rhee when he used land reform as a means of breaking the power of the landed aristocracy; the National Assembly passed a land reform bill on February 2, 1950, that provided landowners with government bonds that could be used to purchase the vested Japanese industries. The Korean War brought still another sort of a land reform, and 40 percent of total farmland in Korea was subject to redistribution by 1954. Overall, the gradual South Korean land reform was successful in destroying the centuries-old feudal land-tenure system. This initial act of redefining property rights seems central to later development of South Korea. (47)
            So arguably, the propensity for conflict between political structures was greater in the Philippines than in South Korea. In the Philippines, the discrepancy between the class of tenants and the class of landowners enlarged to cause constant social upheavals such as the Huk movement (1946-1953), which derived considerable support from the peasants who had been severely disadvantaged. While it is difficult to argue that South Korea did not have such discrepancy between the tenants and the landowners, it seems logical to conclude that firstly, South Korea had less problem owing to its dismantling much of feudal-tenure system and secondly, the discrepancy should have deeper impact on the Philippines considering its larger dependence on agriculture sector than does its counterpart.
            The difference in internal threats for the Philippines and South Korea seems to be reversed when it comes to their external threats: whereas the Philippines was the location for massive U.S. military deployments at the Subic and Clark bases, as well as protected by the Pacific Ocean from any realistic attack, South Korea sat uneasily in the shadow of North Korea, China, and the Soviet Union. Such marked contrasts in the level of external threat induced differences in policies in the two countries and had much different implications for the two countries.
            Post-independence Philippines was without much external threat under the US protection. This meant that Philippine elites were not forced to make the hard choices and trade-offs necessary for growth, especially when the U.S. commitment provided them with access to largesse and markets. (48) On the positive side, the U.S. creation of military bases, such as Clark and Subic bases, as the main American naval positions in Asia eliminated virtually any external threat against the Philippines. Furthermore, military bases also directly contributed to economic lift. For example, Subic Bay, occupying over thirty-six thousand acres of land, employed up to thirty thousand Philippine workers in 1972. When the United States got ninety-nine-year leases on the Subic and Clark military bases, the Philippines received a free trade agreement that ensured it continued access to and dependence on the U.S. market in return. On the negative side, the Philippines signed a free trade agreement with the United States (the Bell Act) that allowed significant U.S. corporate presence in the islands and forced the Philippines to make major concessions to the United States on trade and investment in order to receive that aid. The U.S. companies quickly dominated the Philippine market in such diverse sectors as automobiles, power generation, textiles, and consumer goods.
            A dominance of the United States in the Philippine economy, however, seems to have roused some anti-American sentiment. The U.S. intrusion into the Philippine economy was not only vast but also harming the Philippines' national sovereignty. When Quirino visited the United States in February 1950, the State and Treasury Departments recommended that the President Truman "firmly advise the President Quirino that no further American aid could be considered unless and until there is tangible evidence that the Philippines has taken steps to put its house in order and that it would then need and be in a position to effectively use additional aid." (49) Specifically, Truman suggested the U.S. economic survey mission - which, after an exhaustive survey of the Philippine economy, stressed the necessity of a program of widespread social and economic reforms - be sent to the Philippines, an offer Quirino reluctantly accepted. Against such threat from the United States, the Filipino First Policy, which heavily favored Filipino businessmen over foreign investors, shows the step towards Filipino will of economic autonomy. Moreover, the change of Independence Day from the date granted by the United States to the one declared by Emilio Aguinaldo demonstrates the weakening of the United States-Philippines relations. However, failing to carry out what the United States demanded or liked seems to have caused the Philippines to fall out of the U.S. favor. Though a substantial program of financial assistance through loans and grants were carried out at first, the U.S. aid dwindled as the time went by.
            In contrast to the Philippines, South Korea faced a serious external threat, which induced Koreans to focus on industries and on maintaining positive military and economic ties to the United States. Yet the U.S. commitment to South Korea was not so strong. In 1948, the United States had withdrawn its troops except for a small Korean Military Advisory Group (KMAG) and did not consider South Korea to be a significant ally. American decision makers argued that the United States had "little strategic interest in Korea, or maintaining troops or bases in Korea ... and the Soviet threat is not immediately serious." (50) The outbreak of the Korean War forced the United States to fight a communist menace and by 1953, the United States was entangled in defending South Korea as part of broader U.S. geopolitical interests. Thus, South Korea became an important ally for the United States not from a genuine interest but from a desire to contain communism. Such geopolitical situation allowed South Korea to receive an enormous amount of aid, later exceeding now-out-of-favor Philippines as seen from the table below. This enormous amount of aid should have provided a large part of South Korea¡¯s economic development.

Table 3. U.S. Aid Received, Various Countries, 1946-1980 (Unit: millions of U.S. dollars) (51)

Post-War Relief Period (1946-1948) Marshall Plan (1949-1952) Mutual Security Act (1953-1961) Foreign Assistance Act (1962-1980)
S. Korea 181.2 498.1 4,364.10 8,681.60
Philippines 329.3 712.5 499.5 1,658.0

            With the external threat, especially that of North Korea, always existing, South Korean presidents had to envision two possible worlds, one in which the United States was committed to South Korea and one in which the United States was absent from the peninsula. Such uncertainty and instability of situation gave the South Korean state the incentive to develop domestic capacities for both economic production and fighting wars. And while this uncertainty had been used in justifying a number of repressive measures designed at least in name to provide security, it contributed to relatively consistent domestic policy, unlike in the Philippines, where collision between the Liberals and the Nacionalistas resulted in inconsistent and unfulfilled reforms and policies. For instance, during the Garcia's administration, the president Garcia (the Liberal Party) worked with the vice-president Macapagal (the Nacionalista Party) even when the Liberal and Nacionalista party often differed in their policy pursuits.
            The analysis so far diagnosed the Philippines and South Korea's different implications of this post-war or post-colonial period for the later era. Both countries, however, failed to achieve high economic growth in this period before dictatorships regardless of favorable or unfavorable economic situations. This fact comes to prove how important a leader or a leading group of one nation can be in terms of economic development. In the Philippines, an elite landowner class was never removed from power and its struggle to maintain power had thwarted any reform-minded president from changing the society drastically. Indeed, over 70 percent of the politicians have, in effect, inherited their seats in government. (52) Furthermore, most of the presidents themselves often came from the landed families. These politicians don¡¯t seem to be the sort of people who will want to introduce major reforms that could threaten the wealth of the families. The obvious result was graft and corruption in government, a situation in which the masses found repulsive. In South Korea, the first and the long-lasting President Syngman Rhee actually worked to break apart the landed aristocracy. However, Syngman Rhee was the corrupt man himself. A large portion of foreign aid, which could have been used for the development of Korean economy, went into the pockets of him and his cronies. Rather than concern for Korean economy, Syngman Rhee was busy contriving up the ideas to lengthen his presidential term.
            Throughout 1950s, both South Korea and the Philippines were unable to develop rapidly but the Philippines was still better off owing to its initial auspicious condition. However, the implications for the future seemed brighter for South Korea.

IV. The Period of Park/Marcos Dictatorship

IV.1 South Korea (1961-1979)

IV.1.1 The 5.16 Coup d'Etat
            On May 16, 1961, General Park Chung Hee and his approximately 3,500 officers and soldiers carried out a coup against the Chang Myun Cabinet. Despite some resistance, Park Chung Hee managed to seize all the major government facilities as well as President Yoon Bo Sun and his department ministers. To inform the people about the coup, Park Chung Hee occupied the Korean Broadcasting System (KBS) radio station and had the announcer read out both the purpose and the goal of junta.
            Park Chung Hee's diary on the day before the plotted coup reveals how he felt about the South Korea's situation at the time and why he chose to rise against the government. He wrote the following in his diary after seeing starving people in Gyeongsang Province, who were wandering around looking for something to eat :



Table 4. Per Capita Income of South Korea in 1950s (Unit: U.S. dollars) (54)

Year 1953 1954 1955 1956 1957 1958 1959 1960
Per Capita Income 67 70 65 n/a 74 80 81 82

            As Park Chung Hee accurately pointed out, South Korea's economic performance and living standard were low, similar to those of contemporary Ethiopia. All through 1950s, people earned less than $100 a year. Few people could eat three meals a day and even the meals provided were often lacking in nutrition. Per capita export in 1960 amounted to mere $1.3 with export items mainly being primary products such as agar, Alaska pollack, raw silk, pig bristle, rice, and tungsten. (55) From the outer perspective, Japanese government report on South Korean economy, published in July 27, 1961, described the situation of South Korea as :



            Park Chung Hee claimed to have saved South Korea; he initially sought to hand over the country to honest politicians while he and his army return to their duty of national defense. As it turned out, however, Park Chung Hee never gave his power back to politicians. Instead, he himself became the President of South Korea in 1963.

IV.1.2 The Rise of the Chaebols
            A Chaebol is defined as "a family-owned and managed group of companies that exercises monopolistic or oligopolistic control in product lines and industries." (57) The rapid growth of South Korean economy, so called "the miracle on the Han," paralleled with that of chaebols. The Korean model of strong state-business coordination, however, was not an idea Park Chung Hee held in the first place.
            Park Chung Hee and his officers, who took power in 1961 through the coup, were simultaneously anti-capitalist and desperate to build up Korea's national strength :

      The junta leadership . . . [had] a peasant's suspicion of the wealthy. When they thought of capitalism, they thought of a conspiracy of the rich; when they entertained the notion of economic development, they thought of a rich nation and a strong army, and wartime Japan came to their minds; and when they awakened to the need for domestic resource mobilization, they badgered the rich and forced citizens through campaigns and edicts, to salt away chunks of their salaries. (58)

            The junta arrested the import-substituting businessmen who had fattened at Syngman Rhee's trough and marched them through the streets Cultural Revolution-style, with dunce caps and sandwich placards displaying "I am a corrupt swine," "I ate the people," and other such appetizing slogans. (59) Soon the junta had lined up a large group of "illicit profiteers," those who had made a lot of money during Syngman Rhee's time; chief among them was Lee Byong Chol, chairman of Samsung. He went to General Park and suggested that instead of hewing close to the government in order to glom onto Japanese properties as in the past, the businessmen should be encouraged to seek foreign capital to get the economy moving: Samsung, Goldstar, and other firms had begun to saturate Korea's small domestic market, so why not see if they could succeed in exporting ? Park Chung Hee listened to Lee Byong Chol and soon called in ten major business leaders, including Lee Byong Chol, to strike a deal with them: he would not jail them, and in return, they would invest the money in new industries and donate "shares" to the government. The new industries would in the end learn to sell in foreign markets. (60)
            From this time on, there was a close cooperation between Park Chung Hee administration and entrepreneurs of companies, especially large-sized ones. Woo Jung En, the author of Race to the Swift: State and Finance in the Industrialization of Korea, describes the financial policy of Park administration like this :

      "The government set financial prices at an artificial low to subsidize import-substituting, heavy, chemical, export industries. . . . The political economy of this bifurcated financial system was illiberal, undemocratic, and statist. . . .Every bank in the nation was owned and controlled by the state; bankers were bureaucrats and not entrepreneurs, they thought in terms of GNP and not profit, and they loaned to those favored by the state . . . The result was that each favored chaebol, for all practical purposes, was a private agency of public purpose; the public purpose was to herd them into specific, selected industries that would build the rich country, strong army." (61)

            For instance, Park Chung Hee set a so-called negative interest for businesses, the rate at which Park Chung Hee would give businesses a few million dollars on the condition that the money be thrown into electronics or steel. After all, it isn't too hard to imagine the incentive for the businesses, if the bank rate is 20 percent per annum on loans, and the state gives out the same loan for 10 percent, or even 5 percent interest. In addition to the negative interest, Park Chung Hee guaranteed a steady supply of educated and disciplined labor at a set price by outlawing unions and sending in the army whenever dangerous combinations emerged at the workplace.
            The contribution of chaebols in the South Korean economic development was truly amazing. At the beginning of the 1990s the combined turnover of the top ten chaebol equaled 77.3% of the gross national product. (62) The top 30, said the Korean Development Institute, accounted for 45% of the total capital in domestic finance by 1991. (63) In fact in the 1990s, when the South Korean government later tried to diversify the concentration of the nation's resources, chaebols defied the effort and kept getting bigger.

IV.1.3 The Role of the United States
            One of the first steps Park Chung Hee took after the coup was to visit John F. Kennedy, the President of the United States. On November 11, 1961, in his meeting with the President Kennedy, Park Chung Hee succeeded in having John F. Kennedy promise all possible aid and cooperation.
            Ironically, during the period of 1945-60, it was rare to find any American official who thought South Korea would become economically viable. Even the specialists on East Asia had trouble seeing South Korea's future in this period, so wrapped up were they in the previous two decades' perception of economic stagnation and dislocation. Even in 1965, James W. Morley wrote that South Korea had still not "taken off" :

      "[it] has made little progress. It has remained politically unstable and economically prostrate. . . . The day when it can be more than a ward of the United States not only has not dawned but cannot now be foreseen." (64)

            According to Morley, American economic and military aid still accounted for about 75 percent of the South Korea's military budget, 50 percent of the civil budget, and nearly 80 percent of the available foreign exchange. (65) So how was such a promise of aid and cooperation possible ?
            Despite unfavorable conditions of South Korea, some Americans did see the potential for the South Korean economy. Ambassador Samuel Berger gave a strong endorsement to the junta, reporting to Secretary of State Dean Rusk that it was "moving on all fronts, especially economic, with lightning speed, and by and large in the right direction." (66) W. W. Rostow, the author of The Stages of Economic Growth (subtitled A Non-Communist Manifesto), and his close associate Robert Komer, also thought differently from most of the Americans at the time. When Rostow was named national security adviser to President Kennedy, he hit the ground running for South Korea. He had taken a close look at South Korea and argued that in spite of its truncated and isolated condition, it had strong human resources and was an ideal place to develop light industries for export. In a March 15, 1961 memo called "Action in Korea," Komer outlined "the major thrust of U.S. efforts over the next decade": (1) "crash economic development," (2) "creation of light labor-intensive industry," and vigorous U.S. action "in directing and supervising Republic of Korea economic development." (67) Both Komer and Rostow thought Korea had one great, under-utilized resource: its people. American economic aid quickly increased by nearly 50%, from $192 million in 1961 to $245 million in 1962. (68) Furthermore, a major revision of U.S. policy towards South Korea in 1965 embodied the new American judgment. Although it restated South Korea's utility as a strategic backstop for Japan, it now also touted South Korea as an example, like Taiwan, that "the non-Communist approach to nation-building pays off." (69) Between 1946 and 1976 the United States supplied a total of $12.6 billion in economic and military assistance to South Korea - more dollars per capita of aid than to any other foreign country except South Vietnam and Israel. Indeed, between 1953 and 1962 American aid financed about 70 % of South Korea's imports and accounted for nearly 80 % of total fixed capital formation, mainly in the areas of transportation, manufacturing, and electric power. Nearly all of the American aid to South Korea before 1964 was provided on a grant basis, thus making it possible for the country to begin its export-led growth in the 1960s without a backlog of debt. Even after South Korea has gradually freed itself from its reliance on American economic grants, South Korea has continued to depend on the U.S. support for concessional and commercial loans from the World Bank, the International Development Bank, the International Finance Corporation, and other international public and private lending institutions. American military aid, moreover, which totaled about $6.8 billion in the thirty years after liberation (not including the military equipment supplied during the Korean War), has also been an important factor in economic growth by freeing domestic resources for development. (70)
            The influx of American capital into South Korea has been accompanied by a corresponding flow of American technology and technical expertise. Aid has helped finance technology transfers from American firms and the creation of official research and development organizations like the Korea Development Institute (KDI) and the Korea Institute of Science and Technology (KIST).
            Special United States-Korea relationship also gave South Korea privileged access to U.S. markets. Until recently the United States more or less accepted South Korean protectionist policies as a necessary part of the growth process and gave many South Korean exports duty-free status under the General System of Preferences (GSP), a program instituted in 1976 to promote trade with developing countries.

IV.1.4 Five Year Development Plans
            The 5-Year Development Plan was first formulated at the time of Yoon Bo Sun Democratic Party administration, but the plan just remained as a blueprint and was never implemented. Instead, it was the new junta led by Park Chung Hee that implemented the 5-Year Development Plan with some modifications and complements.
            Brought forth by Economic Planning Board (EPB), an economic planning and monitoring center established in 1961, the 5-Year Development Plans have been the backbone of South Korean economy from the First 5-Year Development Plan (1962-1966) to the Seventh 5-Year Development Plan (1992-1996). The First, Second, Third, and Fourth 5-Year Development Plans, more specifically called 5-Year Economic Development Plans, were executed during the Park administration.
            The 5-Year Economic Development Plans brought about significant changes in economic policies. In the early 1960s, the Park government shifted the South Korean economy from an import-substituting to an export-led economy, a move that both Syngman Rhee and Chang Myun have found difficult to carry out with all their vested social, economic, and bureaucratic interests in import-substitution. In 1964, the Korea Exports Industrial Complex was established with the specific purpose of increasing the amount of exports. The new policies of export promotion gave exporters in targeted industries special licensing, tax, and financial privileges to encourage exports in every possible way. Every year South Korea held an "Export Day," a national celebration at which President Park would give guidance, laud a new export target over-fulfilled, cut a ribbon on a Hyundai ship, try out some new slogans, and make a speech. (71) Furthermore in 1967, South Korea joined General Agreement on Tariffs and Trade (GATT) to expand export routes. At first, South Korea concentrated on exporting light industry products such as textiles and shoes because light industry could absorb a lot of human resources. South Korea's workers have not only been quick and skillful but also been cheap until recently. In the early 1960s the labor cost saving for firms in the United States willing to move to Korea was a factor of 25, since workers were paid one-tenth of American wages but were 2.5 times as productive. (72) A number of factors have made this possible: the country's low standard of living in the early stages of the growth process; the workers' low pay relative to business profits; poor working conditions (especially at the smaller factories); the longest average work week in the world (about fifty-four hours); workers' forbearance in the face of such hardships especially in the 1960s and early 1970s; and until recently the refusal of the South Korean government to permit workers freely to organize and take collective action in their own interests. One of the main reasons, for example, that South Korean companies were able to compete so successfully in the Middle East construction market in the 1970s was their ability to offer package deals that included the utilization of thousands of experienced and inexpensive South Korean workers. With such hard effort by the workers, South Korea was quite successful with the export-led growth: the export exceeded $100 million in 1964, $300 million in 1967, $1 billion in 1970, and $10 billion in 1977. (73)
            Park Chung Hee, however, thought there was a limit to sales of light industrial products. The state continued to act as the general manager of the economy, supervising a major transition in the 1970s from labor-intensive light industries like textiles to heavy and chemical industries. Even during 1970s, with huge amounts of petrodollars sloshing through world markets after the Organization of Petroleum Exporting Countries (OPEC)-induced quadrupling of oil prices, and thus with bankers begging people to take loans, the Korean state mediated that flood of money, pointing it toward the immensely expensive six industries of Park's "big push," (74) which were chemicals, automobiles, shipbuilding, machine tools, and electronics.
            As a result, Pohang Steel started production in 1973 at an annual capacity of 1 million tons; 2.6 million tons of crude steel were pouring out of the mill by 1976, and 5.5 million by 1978. Also by 1973, an independent Korean chemical complex emerged at Ulsan, making polyethylene, methanol, and other materials. For shipbuilding, Park Chung Hee trusted Chung Ju Yung, who flew off to Greece and landed two contracts for 260,000-ton oil tankers, by promising cheaper and quicker delivery than any other company. Though South Korea had virtually no shipyard to build ships and no technology to make them, Chung Ju Yung finished the tankers before the deadline. Park Chung Hee further established Changwon Machine Building Industrial Complex in the harbor of Masan, and Changwon took off like a rocket, with machine building increasing an average of 36 percent per annum during the Third 5-Year Plan. By 1977, domestic parts made up 90 percent of Korean autos. (75)
            There was negative side to such high growth, however. During 1970s, South Korea borrowed abroad at Latin American rates and foreign debt to finance for economic growth rose 42 percent shortly after the oil shock. By the end of the decade Korea was among the big four debtors in the world. South Korea certainly, however, experienced a rapid growth, which grew by an average of 11 percent from 1973 to 1978, with heavy industry accounting for 70 percent of total manufacturing investment. (76)

IV.1.5 The ROK-Japan Normalization Treaty 1965
            From 1947 onward, one of the major U.S. foreign policies towards Korea was to bring Japanese economic influence back into Korea. (77) However, no significant progress in Korean-Japanese relations was made before the 1961 military coup. When the military coup took over, Washington pushed once again for normalization with Rostow and Robert McNamara in effect reviving Acheson's strategy of pushing Japan towards a regional economic effort in Northeast Asia. (78)
            The relations between South Korea and Japan gradually improved. In November 1961, Park Chung Hee accepted an invitation from Prime Minister Ikeda (a visit that had been brokered by Dean Rusk, the U.S. Secretary of State) and spent long hours in personal discussions with Ikeda and other Japanese leaders. By 1963, imports from Japan had reached $162 million, 30 percent of Korea's total imports at the time and four times the highest level under Syngman Rhee. (79) The gradual improvement, however, still failed to bring about the major breakthrough in relations until April 14, 1965 when Korean and Japanese finally struck up the ROK-Japan Normalization Treaty. In the normalization treaty, South Korea received from Japan a direct grant of $300 million and loans of $200 million in 1965 dollars, and private firms put in another $300 million in investment. (80) As it was a time when Korea's total exports were $200 million, the money received did wonders for the Korean economy especially in installing the steel mill in Pohang with the latest Japanese technology. (81) Meanwhile, the treaty also provided grounds for ongoing controversy that the money received was too little compared to what Korea had suffered; whether Japan should compensate additionally to what it had given in 1965 is still an issue as many comfort women are claiming for more compensation.
            Within little more than a year after the Normalization Treaty, Japan surpassed the United States as South Korea's most important trading partner and continued to hold this position throughout the period of rapid growth in the 1960s and 1970s. Since 1971, moreover, Japan's investment in South Korea has been considerably greater than that of any other country, accounting for about 54 % of all foreign investment since 1962 compared to about 26 % for the United States. (82) At a time when American aid was being reduced and the Park government was desperately seeking alternative sources of capital to finance its new development plans, the treaty provided South Korea the money she needed over a ten-year period.

IV.1.6 The Vietnam War
            The Vietnam War, broke out in 1954, was being dragged on for years. When the U.S. President Lyndon Johnson escalated the war in Vietnam in 1965 by having the United States involved in the war, he launched a major diplomatic effort to secure troop commitments for the war from European and Asian countries, both to create the impression of international solidarity with the United States on the war issue and to reduce the burden on U.S. combat forces. In April 1965, American ambassador to Vietnam, Henry Cabot Lodge came to Seoul with Lyndon Johnson's personal message to Park Chung Hee asking for Korean combat troops in the war against Vietcong. After several months of negotiations, South Korea decided on her entry into the war, which quickly turned into an economic bonanza for South Korea.
            South Korea eventually emerged as the most important contributor by far, dispatching a total of about 300,000 troops to Vietnam between 1965 and 1973 (83). In return, South Koreans demanded and received a remarkable package of military and economic payments and perquisites formalized in the so-called Brown Memorandum of March 4, 1966 (Winthrop Brown was the U.S. ambassador to South Korea at the time). In implementation of the Brown memorandum, about $1 billion in American payments went to Korea in the period 1965-70. (84) In addition to equip, train, supply, and pay all the ROK forces deployed in Vietnam, which was estimated about $7.5 million per division, the United States further agreed to modernize the ROK forces in South Korea itself and to suspend the program, instituted by the United States in the early 1960s, to shift the burden of American military aid to the ROK defense budget. (85)
            Moreover, Vietnam became a frontier for Korean enterprises as many companies made contracts to be given expanded opportunities to participate in American construction projects in South Vietnam and to provide other services, including the employment of skilled Korean civilians. Vietnam developed into an economic boon for South Korea as it absorbed 94 percent of Korea's total steel exports and 52 percent of its export of transportation equipment. (86) Scholars estimated that these arrangements in the Vietnam War annually accounted for between 7 and 8 percent of Korea's GDP in the period 1966-69 and for as much as 19 percent of her total foreign earnings. (87)
            Although rapid export-led economic development was already underway in South Korea by 1965, the Vietnam War boom, like the ROK-Japan Normalization Treaty, gave the economy an important lift during the critical take-off period. Many South Korean business firms, including two of the largest business conglomerates or chaebols, Hanjin and Hyundai, got their first big economic boost from the war. Cho Chung Hun, Hanjin's founder, set up a land and marine transport company in South Vietnam and eventually assumed responsibility, with the blessing of the U.S. Army, for the whole operation of the port of Qui Nhon. Hyundai and other South Korean construction companies became major contractors for the U.S. army in South Vietnam and later made use of their Vietnam contacts and experience to expand into the international construction business, most notably in the Middle East. Between 1974 and 1979, South Korea's top ten chaebols took home nearly $22 billion in Middle East construction sales, of which Hyundai's share alone was over $6 billion. (88) The economic environment created by South Korea's participation in the Vietnam War, and the subsequent construction boom in the Middle East, where South Korea captured almost 7 % of the market and became the sixth largest international contractor in the region was an important factor in South Korean economic miracle. (89)

IV.1.7 Domestic Political History
            From the late 1960s, the Park administration faced many challenges. As effective as Park Chung Hee's industrialization policies may have been, workers had to suffer from the longest working hours in the world, bad working conditions, and no right to protect themselves through means such as forming a union; complaints of workers only got bigger as unequal distribution of wealth continued. An opposition party began to enjoy a rise in popularity. However, it was not only the working class who opposed the Park administration. Dissent in the 1960s took much the same form that it had in the 4¡¤19 Revolution, namely, an elite protest by students, intellectuals, and remnant aristocrats (like Yoon Bo-Sun).
            Finally in October, 1972, Park Chung Hee declared Yushin, a new constitution that would make him president for life. The Yushin Constitution changed the presidential term from previous 4 years to 6 years and the president was to be selected not through the public election, but through an indirect election in a gymnasium. Limitation for number of times allowed to run for president was removed, so indefinite rule became possible. In addition, the president was to be given the power to dissolve the National Assembly. During the Yushin period, the Korean Central Intelligence Agency (KCIA) worked as a rogue institution, using its immense power at will to push through what the government intended to accomplish.
            The Yushin system may have been seen by Park as essential to the solution of problems in his state-business coalition but it also created a mass labor movement for the first time. (90) Korean churches were primary sanctuaries of resistance to the Park dictatorship mainly because even the KCIA worried about knocking down the doors of churches with tanks (banging through university gates did not bother the KCIA). Furthermore, the Urban Industrial Mission, an organization run by Christians, had sought to make workers aware of their rights for many years. On Easter Sunday, 1973, Reverend Park Hyong Gyu led a peaceful demonstration against the Yushin system. In 1979, the Korean economy ran into severe difficulties, caused first by sharp increases in oil prices during the second oil shock triggered by the Iranian revolution, second by idle assembly lines in the heavy industries of the big push (many of which were running at less than 30 percent of capacity), third by an enormous debt burden comparable to Argentina's ($18 billion in 1978, Korea's burden grew quickly, to nearly $44 billion by the end of 1983, when only Mexico's and Brazil's were higher), and finally by rising labor costs among skilled workers caused by the export of many construction teams to the Middle East. (91) The growth rate fell by 5 percent in 1979, the economy lost 6 percent of the GNP in 1980, and exports continually decreased from that point until 1983. (92) Massive urban protests hit Masan and Pusan, as workers and students took to the streets of cities in the southeast, shocking the Park leadership. For the first time since its inception in 1970, workers in the Masan free-export zone succeeded in organizing four labor unions, and some appeared in the other export zones in Iri and Kuro. Students returned to their campuses and mounted large demonstrations.
            By October, the regime's leaders got into an internal debate whether more repression or some sort of decompression of the Yushin dictatorship was the better remedy for the spreading disorders. President Park went to a nearby KCIA safe house to have dinner with its director, Kim Chae Gyu. At some point an argument broke out. Kim Chae Gyu drew his pistol and shot Cha Chi Chol, President Park's bodyguard. And then, inexplicably, Kim also shot and killed Park Chung Hee. Pandemonium broke out among the power elite in the security services, extending well through the night until military forces under General Chong Sung Hwa took control and ordered Kim Chae Gyu arrested.

IV.2 The Philippines (1965-1986)

IV.2.1 The Political Situation Prior to the Declaration of Martial Law
            In November 1965, the Nacionalista candidate, Ferdinand E. Marcos was elected as president. For the next two decades, Marcos dominated the Philippine political scene: first as an elected president in 1965 and 1969, and then as a virtual dictator after his proclamation of martial law in 1972. During his first term as president, Marcos initiated many public works projects such as roads, bridges, schools, health centers, irrigation facilities, and urban beautification projects. Massive spending on public works was, politically, a cost-free policy not only because the pork barrel won him loyal allies, but also because both local elites and ordinary people viewed a new civic center or bridge as a benefit. (93) On the contrary, the need for a land reform program, the most needed change in the economy of the Philippines and the part of Marcos' platform during the presidential election, was overlooked because of the powerful landowner elite.
            Marcos sought economic and military aid from the United States, but resisted much of the pressure imposed by the United States to get involved significantly in the Vietnam War: the Philippines' only contribution to the United States in the Vietnam War was 2,000 people of the Philippine Civic Action Group sent to the Republic of Vietnam between 1966 and 1969. (94) In 1967, the Philippines became one of the founding members of the Association of Southeast Asian Nations (ASEAN) for cooperation in regional prosperity.
            In 1969, Marcos became the first president of the independent Philippines to get elected the second time. However, problems began to arise. The crime rate spiraled as random violence and insurgency occurred. Although the Huk movement was suppressed by the late 1950s, no practical implementation in terms of land reform left the problems of the agricultural sector unsolved. And the agrarian discontent spawned the New People's Army (NPA), the Communist Party of the Philippines-Marxist Leninist (CPP)'s military arm formed by Jose Maria Sison, which spread to many parts of the Philippine archipelago. Increasing tension between Muslims and Christians also contributed to an increase in insurgencies. Violence was increasing in Mindanao and the Sulu Archipelago as the conflict between Muslims and Christians worsened. The Muslims - concentrated largely in Mindanao, Sulu, and Palawan - numbered only 8 percent of the total Philippine populations and were struggling to defend their heartland from the continuing Christian migration to the south. (95) The conflict between the two groups enlarged when the local economic infrastructure came to be dominated by Christians. To achieve the goal of seceding from the Philippines, the Muslims formed the Moro National Liberation Front (MNLF) in 1969 with the support of Libya, members of the Islamic Conference and the Malaysian state of Sabah to stir up insurrections in the Philippines. (96)
            Meanwhile, in response to the dishonest and lavish (in terms of use of funds) 1970 election for a widely representative Constitutional Convention, student demonstrators gathered in front of the presidential mansion but were oppressed by the riot police. Subsequently, random bombings, superficially designed to stop communists, occurred to stop further demonstrations. The grenade explosions in the Plaza Miranda in Manila during an opposition Liberal Party rally on August 21, 1971, killed 9 people (8 of whom were Liberal Party candidates for the Senate) and wounded 100. (97)
            The overall insecurity in the Philippines motivated many Filipino families to organize their own vigilantes. With more firearms readily available, armed clashes occurred more frequently. Investors were frightened off and economy took a dive. The situation got worse with the coincidence of natural disasters. At the same time, however, insecure situation provided the occasion for Marcos, who was approaching the end of his constitutionally delimited eight years in office, to lengthen his rule.

IV.2.2 Economic Measures Prior to the Declaration of Martial Law
            Meanwhile, the Philippine government did take measures to provide incentives to firms, both domestic and foreign, to invest in priority areas of the economy. In 1967, an Investment Incentives Act, administered by a Board of Investments (BOI), was passed to encourage and direct investement more systematically, and in 1970, an Export Incentives Act was passed, furthering the effort to move the economy beyond import-substitution manufacturing. (98) However, the incentive structure in the late 1960s was criticized for favoring capital-intensive investment as against investments in agriculture and export industries.

IV.2.3 The Situation After the Declaration of Martial Law
            On September 21, 1972, Marcos issued Proclamation 1081, which declared martial law over the entire Philippines, citing the constitutional provisions that supported him: such action was sanctioned 'in case of invasion, insurrection, or rebellion or imminent danger of thereof.' (99) By declaring martial law, Marcos opened the new era of maximum government. He suspended the habeas corpus for individuals and created the political structure called the 'New Society', which stood in contrast to the pre-1972 situation :

      "The old society was individualistic, populist. It tended to gravitate around rights. Naturally it was self-centered. Society broke down on the Jeffersonian principle of concentrating on rights instead of duties. It became a popular saying that that government was best which governed the least. Well, that is no longer valid." (100)

            Marcos newly emphasized the spirit of self-sacrifice for the national welfare as necessary if the Philippines were to equal the accomplishments of its Asian neighbors, such as Taiwan and South Korea. (101) This shows that Marcos himself felt the development gap - now reversed from the 1950s - between the Philippines and South Korea. Despite such realization and his criticisms of the old society, Marcos seemed more interested in practicing the wide-scale corruption.
            On the one hand, Marcos acted as if he was carrying out reforms. Within one month of the declaration of martial law, Presidential Decree No.27 for the emancipation of the tiller of the soil from bondage gave ownership of land to all tenants on rice and corn field. This promulgation, however, was not matched by implementation as the Department of Agrarian Reform, which was in charge of the reform, failed to clarify many points in its administrative policy, thus making things complicated for the tenants to actually own a piece of land. This itself raised questions on the extent to which the president Marcos, a major landowner himself, wanted to push land reform. (102) Mark Thompson writes that ¡°land reform came to a standstill after the first few years of martial law; it had served largely to undermine Marcos' landlord opponents, not to lessen inequality in the countryside. (103)
            On the other hand, Marcos was using his power to get rid of his opponents. On his command, the military arrested opposing journalists, student and labor activists, and most importantly his fiercest political opponent Benigno Aquino. A total of about 30,000 detainees were kept at military compounds run by the army and the Philippine Constabulary. (104) Marcos also started to destroy the rival families. Private armies connected with prominent politicians were confiscated of their weapons and then were broken up. The powerful Lopez family, for instance, was stripped of its political and economic assets. Because many powerful families derived their wealth from sugar and land, Marcos set up the Philippine Sugar Exchange to control all the marketing of sugar abroad and purchased land holdings exceeding 100 hectares at low prices with force. A decline in world price and demand of sugar worked in Marcos' favor to bring the powerful families down. The pluralistic system of the Philippines, thus far maintained by different elites composing local political dynasties, was replaced by the system, which concentrated the power to Marcos and his cronies. The martial law was only lifted on January 17, 1981 with the issue of Proclamation 2045 after Marcos had secured his power through amendments to the Constitution in 1976, 1980, and 1981. Some controls were in fact loosened, but mostly the post-martial law government proved to be only a superficially liberalized

IV.2.4 The Philippine Economy under Marcos
            Although the real GNP growth remained low throughout the 1960s, it did improve somewhat after the declaration of martial law in 1972. Despite the 1973 oil shock, the combined effect of social stabilization, rise in business confidence, green revolution, construction boom, and increased foreign borrowing set grounds for the moderate growth. The oil-pushed inflation rate, reaching 40 percent in 1974, was trimmed back to 10 percent the following year. (105) The Philippine government also reduced its dependence on imported oil by domestic finds and energy substitution measures, such as geothermal energy programs. Marcos attracted foreign capitals in many industrial projects by offering incentives such as tax exemption. And though there was little impact on local landowning elites or landless poor peasants, land reform initiatives resulted in the formal transfer of land to some 184,000 farming families by late 1975. (106)
            The cost of growth for the Philippines was tremendous debt left to pay. The total Philippine foreign debt, public and private, rose from $2.2 billion in 1972 to $9 billion in 1979 with the government borrowing surpassing the private indebtedness along the way. (107) The second oil shock of 1979 and the subsequent collapse in commodity prices began to weigh the Philippine economy down even further. To overcome the situation, some important economic programs such as the Kilusang Kabuhayan at Kaunlaran (Movement for Livelihood and Progress), which aimed to promote the economic development of the barangays, and Sariling Sikap (Self-Reliance Program) were initiated without success in the 1980s. In the negotiation with foreign creditors including the International Bank for Reconstruction and Development, World Bank, and the International Monetary Fund (IMF), the Philippines had to borrow more than ever at worse terms. In just three years from 1980 to 1983, foreign indebtedness rose from 6.6 percent to 49.4 percent of the GNP while growth per capita slipped from 2 percent to zero. (108) From 1984, the Philippine economy experienced negative growth and continued to decline despite various recovery efforts done by the government. The wave of anti-Marcos demonstrations scared off tourists and the political troubles also hindered the entry of foreign investments and loans.
            The National Economic and Development Authority, an institution that assumed the mandate for both macroeconomic planning and project planning and implementation, was established in January 1973. It came up with plans calling for the expansion of employment, maximization of growth, attainment of fiscal responsibility and monetary stability, provision of social services, and equitable distribution of income were produced by the Marcos administration for 1974-77, 1978-82, and 1983-88. However, these recovery programs failed largely because of the civil unrest and rampant graft and corruption. It is known that Marcos himself diverted large sums of government money for his private use: for instance, his party's campaign funds. For instance, after Marcos' collapse, the Swiss government returned $684 million in allegedly ill-gotten Marcos' wealth to the Philippine government. (109) Accordingly, Marcos is ranked by Transparency International as the second most corrupt head of government ever only after Suharto. (110)
            Overall, the economic performance during the Marcos administration was relatively strong at times, but when looked at his term as a whole, it was weak and left staggering effect on later phases of the Philippine economy. Though the Gross National Product rose from $5.9 billion in 1965 to $15.9 billion in 1975 (refer to the Table 2), most of the growth resulted from foreign debt that would later become an unbearable burden. The country's foreign debt was less than $1 billion when Marcos assume the presidency in 1965, but was more than $28 billion when he left office in 1986. (111) Until today, much of the country's revenues are being outlaid for the payment on the interst of loans. In addition, Penn World Tables report that when looked at the overall period of Marcos, an annual average growth was only 1.4 %. (112)



IV.2.5 The Relationship with the United States
            Although the United States was aware of the impact Ferdinand Marcos would bring to the Philippines, the United States, with few occasions, supported the Marcos regime. The following remark in 1969 by Senator Fulbright of the United States gives some insight to the reason : "Is it not inevitable that . . . we would always use our influence for the preservation of the status quo ? We will always resist any serious change in political and social structure of the Philippine government." (114)
            During the 1970s, the special relationship between the Philippines and the United States was greatly modified as their trade, investment, and defense ties were redefined. The Laurel-Langley Agreement defining preferential U.S. tariffs for Philippine exports and parity privileges for the U.S. investors expired on July 4, 1974 and trade relations were instead governed by the General Agreement on Tariffs and Trade (GATT). Also, Japan increasingly challenged the United States as a major foreign participant in the Philippine economy.
            The status of U.S. military bases was also redefined when an amendment to the 1947 Military Bases Agreement was signed in 1979, which reaffirmed Philippine sovereignty over the bases and reduced their total area. The future reviews of the bases agreement was to be done every five year.

IV.2.6 Crony Capitalism
            During the martial law period, Marcos' cronies expanded their influences to many parts of the society. Imelda Marcos, the wife of Ferdinand E. Marcos, built her own power base by concurrently holding the office of the governor of Metro Manila and of the minister of human settlements, a post which was newly created for her. Marcos' cronies came to control the business in the Philippines as well. They gradually came to control most of the largest, most productive, and technically most advanced enterprises in the Philippines. For instance, the huge business conglomerate orignally run by the Lopez family, which included major newspapers, a broadcast network, and the electric power company, was broken up and distributed to Marcos' loyalists, such as Imelda Marcos' brother, Benjamin K. Romualdez, and Roberto Benedicto. (115) According to staunch Marcos critic Jovito Salonga, author of the book Presidential Plunder: the Quest for the Marcos Ill-gotten Wealth, monopolies in several vital industries, such as coconut (under Eduardo Cojuangco Jr. and Juan Ponce Enrile), tobacco (under Lucio Tan), banana (under Antonio Floirendo), manufacturing (under Herminio Disini and Ricardo Silverio), and sugar (under Roberto Benedicto) have been created and placed under the control of Marcos' cronies. (116) The Marcos and Romualdez families became owners, directly or indirectly, of the nations largest corporations, such as the Philippine Long Distance Company (PLDT), the Philippine Airlines (PAL), Meralco (a national electric company), Fortune Tobacco, the San Miguel Corporation (Asia's largest beer and bottling company), numerous newspapers, radio, and television broadcasting companies. (117) So, these enterprises formed huge monopolies or oligopolies in areas such as manufacturing, construction, and financial services. When they proved unprofitable, the government subsidized them with millions of pesos. For example, Philippine Airlines, the nation's international and domestic air carrier, was nationalized and turned into what can be called a "virtual private commuter line" for Imelda Marcos and her friends on shopping excursions to New York and Europe. (118) In the cash-crop sector, distribution and marketing monopolies for sugar and coconuts were established so that the farmers were obliged to sell only to those monopolies at the lower price than the world price. Millions of dollar profits made from these monopolies were diverted overseas into Swiss bank accounts, real estate deals, and purchases of art, jewelry, and antiques.
            In terms of the military, the previously nonpolitical, professional Armed Forces of the Philippines was changed to work in favor of Marcos. Because Marcos gave preferential treatment to the people from the same regional background or with strong loyalty, he first appointed officers from the llocos region, his home province, to the highest ranks in the Armed Forces of the Philippines. For example, Fabian Ver, Marcos' chauffeur who had been a childhood friend of Marcos, rose to become chief of staff of the Armed Forces of the Philippines and head of the internal security network apart from his talent. Marcos then supported both the officers and the rank-and-files by giving them generous salary increase. The size of the Armed Forces increased from about 58,000 in 1971 to 142,000 in 1983. (119) Relationship between Marcos and the military evolved into a symbiosis under the martial law. Such phenomenon, however, contributed to incompetency of the military. A military proved ineffective in dealing with growing communist insurgency and Muslim separatist movement. Cruel treatment of civilians by the military made them to cooperate with the insurgents. The communist insurgency, though seemed to be waning in the 1970s, quickly grew back in the early 1980s. The Muslim separatist movement reached its peak in the mid-1970s and continued to prevail until the divisions in the leadership of the movement weakened the movement.

IV.2.7 The Downfall of Marcos
            When Benigno Aquino was assassinated on his return to Manila in August 1983, people generally believed it to be the work of the military related to Marcos. When General Fabian Ver, Marcos' cousin and the most trusted general, as well as other high-ranking military officers were acquitted of the crime, it was widely received as injustice. So, the incident came to be the catalyst of overthrow of Marcos by escalating public discontent. By 1984, U.S. President Ronald Reagon began to withdraw his support for Marcos, which he and previous U.S. Presidents had given even after Marcos declared martial law. Under mounting pressure from both inside and outside the Philippines, Marcos, who had more than a year left in his term, called for a snap presidential election in 1986. While the final tally of the National Movement for Free Elections, an officially accredited election watchdog in the Philippines, showed Corazon Aquino, Benigno Aquino's wife who was the major opponent against Marcos, winning by almost 800,000 votes, the government tally showed Marcos winning by almost 1.6 million votes. (120) This apparent fraud made not only the Filipinos, but also the U.S. Senate to condemn the election. In response, millions of Filipinos participated in a mostly nonviolent four-day mass demonstration in Metro Manila, an event referred to as the EDSA (121) Revolution or the People Power Revolution. Marcos and his family went into exile to Hawaii, and then Aquino assumed the presidency.

IV.3 Comparison
            Comparative analysis of almost concurrent dictatorship periods in both South Korea and the Philippines is particularly important because it is during this time that the gap in terms of economic development widened as the economic performance of South Korea began to quickly outdistance that of the Philippines. Although the Philippines was still ahead of South Korea in both the per capita and absolute GNP before this period and even into the late 1960s, by 1985 just a year before Marcos' fall from the power, the Philippines' per capita GNP ($599) lagged far behind South Korea's per capita GNP ($2,200). (122) Several factors from politics, foreign relations, and policies together seem to be at the play in this dramatic overturn.
            A significant change brought forth during this period, of course, is an extension of the government power. In South Korea, Park Chung Hee seized the power in 1961 through a military coup, which meant that people found his subsequent rule hard to resist however dictatorial. In the Philippines, Ferdinand E. Marcos was elected president in 1965 and then proclaimed martial law in 1972, thereby also expanding the government influence. The economist Alexander Gerschenkron points out that late development assumes an active economic role for the state. (123) True, while a maximum government is advantageous in terms of making and continuing a consistent policy with relative freedom, it may be considered disadvantageous in that its success is contingent upon the capacity and performance of government heads. And this very dependency on government performance is likely to have made a big difference between South Korea and the Philippines, though both countries satisfied the condition noted by Gerschenkron. While Park Chung Hee have never been implicated in a single financial scandal and known to the public as having led a frugal life, Ferdinand Marcos had already been charged with involvement in several financial scandals during his time in office.
            In South Korea, there was sufficient motivation for economic development. Seen from his diary the day before the coup, Park Chung Hee seems to have been very motivated by the fact that South Korea was in the state of abject poverty. Aside from the poverty, an external fear factor - being vulnerable to North Korean invasion at any time - also seems to have been a strong motivation for development in South Korea. Tensions remained high along the De-Militarized Zone (DMZ) since the division of Korean peninsula, but whereas Syngman Rhee had been the beneficiary of a stable (though grudging) US commitment, Park Chung Hee was not receiving the same benefit as the United States increasingly diverted its attention to Southeast Asia, especially the Vietnam War. When the United States was withdrew almost half its military forces by the late 1960s, it became clearer that South Korea needed to develop its defense capabilities, both industrial and military. Park Chung Hee mentioned in his speech in 1970 :

      "The forthcoming seventies will become one crucial era of our country's national security . . . we must at least prepare ourselves to deter and annihilate by our own capacity an independent military aggression by the North. We should also modernize our military equipment . . . and promote defense industries . . . Today, we can hardly think of national security and war without a basis in economic power." (124)

            This strong desire for growth not just from the situation but also from the President Park himself led to various measures, which became successful for the development of South Korea.
            In the Philippines, on the contrary, there was relatively little motivation for development of the country as a whole. The phrase "country as a whole" means that there was the desire to get rich, but not for the Philippines as a whole but for the certain group of people. Before the declaration of martial law, rich landowning elite in government sought to benefit themselves, and after martial law, members of the Marcos and his cronies set the priority to themselves over the entire Philippines. As a matter of fact, the Philippines had no threat from outside as was the case in South Korea and was still richer than most countries in Asia at least until the late 1960s. It probably seemed possible that Filipino masses wait since a strong incentive for development lacked.
            An examination of financial foreign aid gives further insight to the question of how South Korea outperformed the Philippines. Comparing the amount of monetary aid from the United States to South Korea and the Philippines during the period of 1962-1980, South Korea received $8,681 million, an amount that goes well beyond the Philippines' $1,658 million (refer to the table 3). This huge difference resulted in part from their participation in the Vietnam War: whereas South Korea made a full use of the war, the Philippines did not seize the opportunities the war provided. At the request from the United States for reinforcement in the Vietnam War, Park Chung Hee initially deployed two divisions - the "White Horse" and "Tiger" including 48,000 soldiers - and later more troops under various conditions that would help South Korea militarily as well as economically. In return for South Korea's dispatch of its troops, the United States agreed not only to suspend withdrawing any of its forces from South Korea without prior consultation, but also to strengthen South Korean troops in terms of their ammunitions and trainings. In terms of economy, many Korean enterprises were given the opportunities to expand their businesses through supplying to the U.S. Army or constructing necessary structures in Vietnam. Some entrepreneurs grew up to be chaebols, who later became the backbone of Korean economy through their gain and experience from Vietnam. In return for South Korean participation in the Vietnam War, the United States Agency for International Development (USAID) provided $150 million specifically for Korean economic development. (125) Additionally, the United States paid for all the Korean goods sent to Vietnam in support of the troops, which were estimated at $36 million or 8 percent of South Korea's export at the time. (126)
            The Philippines, however, was reluctant to help the United States in the Vietnam War. Resisting much pressure by the United States to send troops to Vietnam, the Philippines only sent 2,000 people of the Philippine Civic Action Group. (127) Consequently, it was left out from most of the benefits from the United States that South Korea enjoyed. Given these contrasting levels of the U.S. aid, it should not be a surprise that South Korea grew faster than the Philippines.
            The Korean advantage in accruing external financing continued for its foreign borrowing. A study by the Korea Development Institute (KDI) estimates that foreign capital was responsible for over forty percent of Korean growth from 1962 to 1982. (128) Some may raise a question at this point on the fact that the Philippines borrowed much money from external sources as well. One thing to keep in mind here is, however, how the fund was used. In terms of real investment, for instance, South Korea by the late 1960s was investing almost 20 percent of its GDP whereas the Philippines was mired in the low teens. (129)
            A transition from agriculture-based industrial structure to manufacturing-based industrial structure also mattered. Park Chung Hee focused on heavy and chemical industries in the 1970s, successfully leading the industrialization of South Korea.



            As it can be noted from the graphs above, agriculture remained around 20 percent of Philippine exports until 1980, but it was increasingly replaced with manufacturing in South Korea, a fact that supports why South Korea may have been more competitive in terms of economic development through industrialization. As South Korea steered away from a trade policy of import substitution in the 1950s and went towards an export-oriented industrialization in the 1960s, manufactured products probably became more competitive items than do agricultural products. In contrast, size of the manufacturing sector in the Philippines was stagnant for a long time. Even nowadays, the Philippine economy is heavily dependent upon agriculture compared to its counterpart, South Korean economy as seen in the table below.

Table 5. Sectoral Employment Shares in Selected East Asian Countries, 2000 (Unit: %) (131)

Sector Philippines South Korea
Agriculture 38.6 10.86
Manufacturing 9.53 20.15
Mining 0.39 0.09
Other 51.78 68.9

            Such discrepancy in agricultural and manufacturing sector can be derived from difference in policies. In South Korea, Park Chung Hee implemented financial policies directed towards fostering chaebols, who usually owned huge manufacturing enterprises. For example, chaebols could borrow money from the bank at specially set low interest as long as they attempted to manufacture and sell their products for exports. The Philippines, in contrast, could never implement coherent and systematic policy reforms: the Philippine banking system remained subject to manipulation and mismanagement. (132) Furthermore, unlike Park Chung Hee, Ferdinand Marcos used his power to eradicate families with huge manufacturing enterprises, thus preventing groups like chaebols in South Korea to grow. Therefore, industrialization through fostering manufacturing sector proved difficult. Moreover, tremendous disparity between the tenants and the landowners came as a huge trouble in the Philippines because the portion of the agricultural sector was big and disruption in the production left a great impact on the Philippine economy.

V. The Post-Park/Marcos Period until 1990

V.1 South Korea 1979-1990

V.1.1 Transitional Period 1979-1980
            When Park Chung Hee was assassinated, Choi Kyu Ha, premier under President Park, was elected president in December 1979 by the National Conference of Unification, composed of a rubber-stamp electoral college. Aware of increasing protests against authoritarian regime, Choi Kyu Ha stated in his inaugural speech on December 21 that a new constitution supported by a majority of the people would be adopted within a year and that a fair general election would soon be held afterward. Even before his inauguration, Choi Kyu Ha, as an acting president, abolished Emergency Measure Number Nine that was implemented to suppress any disobedience against the government, releasing several hundred individuals ? including eminent political figures such as Kim Dae Jung and student activists ? who were under the charges of violating the decree.
            Another major event in December was coup within the army. In December 12, 1979, Lieutenant General Chun Doo Hwan, who was a longtime loyalist of Park Chung Hee, used the Ninth Division, Seoul's capital garrison, to overthrow the ROK Army chief of staff and asserted his control over the army. He later made himself the head of the KCIA while keeping his post as head of the Defense Security Command in April 1980.
            While South Korea was undergoing vast political transitions, college students became restless for action. When the new semester began in March 1980, students on various campuses demanded the removal of professors, who were thought to have close ties with the Park regime, and university presidents, who were thought to have amassed fortunes by operating their institutions. In May, student interest was getting off the campus affairs as students demanded the removal of the remnants of the Yushin system in society, including Chun Doo Hwan. As demonstrators flooded to the streets, Chun Doo Hwan declared martial law on May 17, 1980, closing down the universities and banning all political activities, having Kim Dae Jung and other politically dangerous figures arrested in the midnight hours. All publications and broadcasts were to receive censorship and criticism of the incumbent and past presidents was outlawed.

V.1.2 The Kwangju Uprising and Constitutional Change
            Chun Doo Hwan's hard-line policy led to a confrontation in Kwangju, a city in Cholla Province. From May 18, 1980 to May 27, 1980, people called for the cancellation of martial law and the release of Kim Dae Jung, who opposed Chun Doo Hwan. As the demonstration reached its peak, Chun Doo Hwan warned Kwangju citizens that the Twentieth Division would enter the city at dawn on May 27; all were to disarm and return to their homes. At 3 AM, the soldiers came in shooting, killing people who had refused to put down weapons. The United States' role in quelling the demonstration became controversial because many thought that General John A. Wickham, Jr. had released South Korean troops from the South Korea-United States Combined Forces Command to end the rebellion and that the U.S. President Ronald Reagan had strongly endorsed Chun Doo Hwan's actions. (133) The U.S. embassy would respond that there was no such involvement, which as a matter of high policy in Washington may have been true, but which could not have been true in the dailiness of American-Korean relations. (134) Nevertheless, anti-American feelings grew among many Koreans.
            Having suppressed the Kwangju uprising with force, General Chun further tightened his grip on the government. On August 5, 1980, he promoted himself from lieutenant general to full general in preparation for retiring from the army on August 22. On August 27, he was elected president by the National Conference for Unification, receiving 2,524 of the 2,525 votes cast. (135) On September 29, 1980, Chun Doo Hwan pushed for the promulgation of a new constitution and the holding of a national referendum to approve it. Though the new constitution seemed to be consisting of many democratic provisions, such as right to privacy in communications, the prohibition of torture, and the inadmissibility in court trials of confessions obtained by force, it was again used for lengthening the incumbent Chun Doo Hwan's presidential term as it basically allowed Chun Doo Hwan to earn a single seven-year term instead of the conventional four-year term.

V.1.3 The Economy under Chun Doo Hwan
            Although the Chun regime inherited an economy suffering from side-effects of Park Chung Hee's export-oriented development program and policy of expanding heavy and chemical industries, economic development of South Korea during the 1980s seemed immune to these problems. True, the international economic environment of the early 1980s was extremely unfavorable for South Korea's development structure because South Korean form of economic growth was directly influenced by the worldwide stagflation. First, rise in price of raw materials and fall in demand for South Korean exports placed direct restriction on export-driven economic growth. (136) Second, loans from foreign countries were no longer available in favorable conditions; for instance, higher interest rate. (137) Under such restraints, development of heavy and chemical industry, which required a great deal of capital, was impractical. As a result, Chun Doo Hwan concentrated on stabilizing the economy for the first two years of his term, controlling inflation and attempting to bring about economic recovery. Under the Chun administration, investment was redirected from the capital-intensive heavy and chemical industries towards labor-intensive light industries that produced consumer goods. The regime also intended to do away with excessive protection of industries and to encourage creativity, and therefore, lifting the import restrictions. Chun Doo Hwan actively pursued economic foreign diplomacy as well. In 1982, the Chun government negotiated a second low-interest loan agreement for $4 billion with the Nakasone government that reaffirmed the Japanese economic commitment to South Korea. (138)
            The economy began to improve in 1983 with the upturn in the world economy. While South Korea even suffered a negative growth rate in 1980, it attained an 8.1 percent growth rate in 1983. (139) Exports began increasing in mid-1983 and the economy began to gain strength. In 1983, South Korea achieved its export target of $23.5 billion, a 7.6 percent increase from 1982. (140) In 1982, Fifth Five-Year Development Plan, now renamed from previous Economic Development Plan to Economic and Social Development Plan, got on its way. Having experienced the side-effects of growth-first policy, the Chun government revised the Fifth Five-Year Economic and Social Development Plan to focus on social aspects as well, thus pursing stabilization of economy. As a result, an increase in employment opportunities would be facilitated, cooperation between labor and management such as the removal of controls on labor organizing brought about, and an increase in farmers' income increased via continuing the Saemaul Movement. In economic aspect, the plan called for steady growth for the next three years, low inflation, and sharply reduced foreign borrowing. The target annual growth rate was, on purpose, set to 7.5 percent, but the actual performance was higher as the economy picked up the momentum, thanks in large part to a decline in international interest rates, the revival of the U.S. economy, and the increased competitiveness of South Korean exports following an appreciation of Japanese yen. (141) The real GNP growth rate was 7 percent in 1985, but for the next three years, it was 12.9 percent, 12.8 percent, and 12.2 percent, respectively. (142) A current account surplus, first registered in 1986, allowed the government to reduce its foreign debt from a peak of about $47 billion in 1986 to about $35 billion in 1988. (143) There was even widespread talk among government officials of South Korea's becoming a net creditor as early as 1992. Chaebols' contribution during this period cannot be ignored. At the mid-1980s, the combined sales of South Korea's top chaebols (excluding intrafirm transactions) accounted for nearly 66 % of GNP, and two of them, Samsung and Hyundai, according to Fortune magazine, ranked among the fifty largest business firms in the world. (144) During the Chun administration for its remarkable development, South Korea was successful in inviting the 1988 Olympics to be held in Seoul, which was expected to work favorably to South Korean economy.

V.1.4 Foreign Policy under Chun Doo Hwan
            During his presidential term, Chun Doo Hwan maintained a close tie with Ronald Reagan as the United States had been an important ally of South Korea. This was in contrast to the previous Park Chung Hee-Jimmy Carter relationship, in which Carter administration criticized Park administration's dictatorship and threatened to withdraw U.S. combat troops from South Korea. As a matter of fact, such relationship continued until the demise of Park Chung Hee when the Koreagate scandal, which involved an alleged bribery of more than 100 members of Congress by the Park government, occurred in 1977.
            In the new relationship, however, Reagan provided unmitigated support to Chun Doo Hwan and to South Korea's security. President Chun visited the United States as the President Reagan's first official guest in the White House, and Reagan visited Seoul in return in November 1983 to reaffirm his support of Chun. It is probably true that such strong support from the United States bolstered South Korea's stature and security in both domestic and international level. At the same time, however, United States' strong support of what most Koreans believed to be an authoritarian regime fostered the subculture of anti-Americanism. The past image of the Unites States as a supporter of democracy was replaced with that of defender of its own interests, who is impervious to injustices committed in South Korea. This atmosphere led some Koreans to take extreme measures, such as arson committed at the United States Information Service building in Pusan in 1982 and the occupation of the United States Information Service Library in Seoul in 1985.
            Japan had been another important ally during the Chun administration. Just like in the Park Chung Hee period, South Korea-Japan relation was an important element in economic development during the Chun Doo Hwan period. The Chun government utilized the United States' support and its strategy of allocating greater responsibility to Japan in the East Asian region to persuade Tokyo to grant Seoul a large public loan. As a result, South Korea was able to obtain a low-interest loan from Japan that significantly contributed to boosting South Korea's credit rating at the opportune time when South Korea was seriously indebted and badly in need of an improved credit rating. At the end of 1983, for example, South Korea's foreign debt had reached $41 billion.
            Another focus of the foreign policy during the Chun regime was Nordpolitik, the policy that referred to South Korean efforts to reach out to the traditional allies of North Korea, such as China and the Soviet Union. Chun Doo Hwan's policy towards China and the Soviet Union, both of whom were the long allies of North Korea, had been largely amicable. As a part of the beginning of Nordpolitik, Chun Doo Hwan considered China and the Soviet Union as two important players in charting the future of the Korean Peninsula. On the whole, the interactions and communications with China and the Soviet Union gradually increased from the state of nonexistence as officials and sport teams visited back and forth to and from the two countries for conferences and sport events, respectively. Out of friendlier atmosphere, the economic relation also grew; for instance, since China and South Korea began indirect trade in 1975, the volume has steadily increased. (145)

V.1.5 The Fall of Chun Doo Hwan
            From his inauguration in September 1, 1980, Chun Doo Hwan (at least superficially) emphasized his campaign to create a new society where all past corrupt practices would be replaced by mutual trust and justice. One of the measures he took in order to accomplish this goal was to leave only the politicians certified as "clean." The clean-up campaign forced many politicians to give up their wealth and retire from politics, though later the controversy was raised as to whether the President Chun himself was actually clean. Anyways, some 300 senior KCIA agents; more than 230 senior officials including former cabinet officers; 4,760 low-level officials in the government and banks; and 1,819 officials of public enterprises and affiliated agencies were dismissed on corruption charges. (146)
            Despite "clean" image-making and considerable results in economy and diplomacy, Chun Doo Hwan failed to win public support because the public basically regarded him as a usurper of power, who had deprived South Korea of its opportunity to restore democracy. In fact, most of Chun Doo Hwan's lofty pronouncements were not met by actions. Stigmatized as the oppressor during the Kwangju demonstration, Chun Doo Hwan further debased his regime when his promise of creating the new just society was shattered as two major financial scandals between 1982 and 1983 involved Chun Doo Hwan's in-laws. To make things worse, the argument for restricting democracy became less credible as the international environment, especially the perceived threat from North Korea, moderated. In the 1985 National Assembly elections, opposition parties together won more votes than the government party, clearly indicating that the public wanted a change.
            In the spring of 1987, a student named Park Chong Chol was tortured to death by the Korean police. When the police tried to cover up the incident by giving an unreasonable excuse, the case touched off nationwide demonstrations on June 10, 1987. While having riot police to subjugate the civilian protestors, the ruling party nominated Roh Tae Woo to succeed Chun Doo Hwan under the existing anti-democratic system without any real presidential election. The public, of course, was outraged. A mass movement for democracy by students, workers, and middle class people finally brought a democratic breakthrough in South Korea. Even the Reagan administration, heretofore taciturn about South Korea's internal politics, urged the Chun administration not to ignore the public outcry that might enlarge to a full-fledged revolution. Finally on June 29, 1987, Chun Doo Hwan accepted the demands of the masses, and Roh Tae Woo, the government party's choice as Chun's successor, announced an open, direct presidential election for December 1987. Furthermore, the presidential term was to be restricted to a single five-year term, a decision in which stays the same until today.

V.1.6 The Roh Tae Woo Administration
            In this first most democratic election held after the long military-based government rules, however, the opposition groups managed to split and both Kim Dae Jung and Kim Young Sam, leading separate political parties, ran against the ruling party candidate, Roh Tae Woo (ex-military) in the December 1987 election. Once again, the power failed to be handed over to a civilian regime as Roh Tae Woo earned a few more votes than Kim Dae Jung and Kim Young Sam.



            Two most distinguishing feats during Roh Tae Woo administration were hosting of the Seoul Olympics in 1988 and the foreign policy of Nordpolitik. Continuing the initiatives in normalizing relations with communist countries, such as China and the Soviet Union, Roh Tae Woo sought to reduce the military tensions between North and South Korea as well as to improve South Korean economy. In part from Roh's diplomatic efforts, the Seoul Olympics in 1988 was a great success both politically and economically because it eased the East-West tension as the largest number of countries in heretofore Olympics history participated in the event from both the East and the West sides.
            The political system under Roh was by no means a civilian regime: the military coexisted with the ruling bloc while it exercised veto power over opposition groups. (148) When one courageous journalist, Oh Hong Gun suggested clearing the military culture completely out of politics, agents of the Army Intelligence Command stabbed him with a bayonet. (149) The Roh administration did bring some democratization, though. For instance, the regime had continued to work on removing controls on labor organizing since the summer of 1987. Just a year later, unions increased their membership by 64 percent, adding 586,167 new members. (150) Labor disputes, strikes, and lockouts occurred, but were nevertheless a historic advance for Korean labor.
            The economy maintained a high growth with the implementation of the Sixth Five-Year Economic and Social Development Plan. While the target annual growth rate of the plan was 7-7.5 percent, the actual performance reached an average of more than 8 percent growth, and the South Korea's GNP per capita reached $6,498 by 1991. (151) Behind the rapid growth of South Korea, however, a huge problem was hidden: though both imports and exports increased, the trade imbalance was causing more and more trade deficits and by 1991, South Korea ranked one of the top ten indebted countries in the world. (152)

V.2 The Philippines (1987-1990)

V.2.1 The Aquino Government
            Although Corazon Aquino, widow of the assassinated senator Benigno Aquino, Jr. who ran against Ferdinand Marcos in 1986 presidential election, was officially reported to have lost the election to Marcos, she became the next president of the Philippines when the election turned out to be fraudulent and Marcos fled in the face of huge popular demonstrations. As a president, Corazon Aquino abolished the constitution of 1973 and returned the Philippines back to democracy that it had been before the imposition of martial law in 1972. A new constitution was ratified in February 1987 in a general referendum and the legislative elections took place in May 1987. The new government, however, faced with many pressing problems, most of which were inherited from Marcos.
            One of the greatest problems that the Philippines faced at the time in light of its economy was an enormous external debt, which amounted to $28 billion when Aquino took office. (153) Although economists within the National Economic and Development Authority (NEDA) argued that economic recovery (moderate growth of about 6.5 percent per year) would be difficult, if not impossible, to achieve in a relatively short period if the country did not reduce the size of the resource outflows associated with its external debt, President Corazon Aquino ultimately claimed that the Philippines would honor all its debts when business-oriented groups and their representatives in the president's cabinet vehemently objected to taking unilateral action on the debt, arguing that it was essential that the Philippines not break with its major creditor in the international community. (154)
            Another pressing problem was a highly contentious land reform issue. One of the things Aquino emphasized during the 1986 presidential campaign was the moral imperative of reaching out to the poor and meeting their needs. NEDA economists also agreed that more purchasing power had to be put in the hands of the masses in order to get the economy going again. Achieving this objective required a redistribution of wealth downward, a goal that is most likely to come with the land reform. Given the power and the opportunity to proclaim a substantive land reform program, Corazon Aquino, however, chose to provide only a broad framework; specifics were to be filled by the new Congress, which was heavily represented by landowning interests. The result, of course, was another failure to carry out an appropriate land reform.
            During her administration, Corazon Aquino continued to face repeated military coup attempts and communist insurrections. Marcos' loyalists continued to oppose the government, culminating in a failed July 1986 attempt to establish a rival government at the Manila Hotel, with Arturo Tolentino as temporary president. A more serious threat came from an attempted coup in August 1987 which was repeated in December 1989. Both military coups were led by Colonel Gregorio Honasan. Even after those threats, the Aquino administration was continually plagued by rumors of coup attempts.
            During the new Aquino government, traditional political patterns appeared to be reasserting themselves. One study of the first Congress elected under the 1987 constitution showed that only 31 out of 200 members of the House of Representatives, were not previously elected officials or directly related to the leader of a traditional political clan. (155) It isn't so hard to figure out that the Aquino administration was unable to cooperate with the Congress to enact effective measures for the Philippine economy. In the mounting pressure from soaring government deficit, Secretary of Finance Jesus Estanislao introduced a package of new tax measures as the Philippine government had promised that it would implement new taxes as advised by the IMF in their agreement for new standby credits. But the Aquino government acquiesced in finding a new way to reduce its budget as the Congress argued the new tax measures to be an onerous imposition on the economy. Accusations were widespread in Manila's press about the 1990-91 impasse. Some claimed that Aquino and her advisers had no economic plan while others claimed that the Congress was unwilling to work with the president.

V.2.2 The Economy under the Aquino Government
            The Philippine economic growth rate in 1986 when Ferdinand Marcos was ousted from the presidency was very low, but the international community was supportive in rebuilding the Philippine economy after Corazon Aquino's inauguration. Although foreign investment did not respond immediately after Corazon Aquino took office, it began to pick up from 1987. Foreign aid became readily available as well. For example, the Multilateral Aid Initiative, a multinational initiative to provide assistance to the Philippines that was also called the Philippine Assistance Plan, pledged a total of $6.7 billion. (156) The economy began to pick up. (refer to the Figure 3). Industrial capacity utilization, which had been as low as 40 percent in 1985, was near a full capacity by mid-1988, and investment in durable goods grew almost 30 percent in both 1988 and 1989 owing to the buoyant atmosphere. (157) Net direct investment of the Philippines increased as shown in the graph below.



            Economic recovery, however, generated its own problems. The trade deficit rose rapidly, as both consumers and investors attempted to regain what had been lost in the depressed atmosphere of the Marcos era, especially 1983-85 period. Although debt-service payments on external debt were declining as a proportion of the country's exports, they remained above 25 percent. (159)
            So, the economic growth did not last long as it, though positive, began to fall from 6.7 percent in 1988 to 5.7 percent in 1989 and just over 3 percent in 1990. A combination of events contributed to a steep decline in growth rate. A prolonged drought resulted in the increased need to import rice. A major earthquake hit Northern Luzon in July, causing extensive destruction. In November, a typhoon inflicted considerable damage on the Visayas. A continued coup attempts were also a cause. The government also suffered from its deficient power-generating capacity on Luzon and resorted to brownouts, which became a daily occurrence. By 1990, economic indices again indicated a red light: industrial growth fell from 6.9 percent in 1989 to 1.9 percent in 1990; government construction, which grew at 10 percent in 1989, declined by 1 percent in 1990. (160)
            Direction of economic planning and how it was executed help to explain only a mediocre economic recovery during Aquino's time. Although expansion of public sector enterprises occurred during the Marcos era, the Philippines traditionally had a private enterprise economy both in policy and in practice, and the government limited the direct state involvement, but intervened primarily through fiscal and monetary policy. The Aquino government set a major policy initiative towards consolidating and privatizing government-owned and government-controlled firms. The NEDA devised the Medium-Term Development Plan, 1987-92, which reflected Aquino¡¯s campaign themes, such as elimination of structures of privilege and monopolization of the economy; decentralization of power and decision making; and reduction of unemployment and mass poverty, particularly in rural areas, with goals of the plan included alleviation of poverty; generation of more productive employment; promotion of equity and social justice; and attainment of sustainable economic growth. (161) In order to achieve the goal, implementing agrarian reforms, strengthening the collective bargaining process, undertaking labor-intensive infrastructure projects, and providing social services were to be done, and the government was to encourage and support private initiative but minimize the direct state participation since the private sector, not the public sector was thought to be the initiator of the country's development. Furthermore, the plan involved implementing more appropriate, market-oriented fiscal and monetary policies, achieving a more liberal trade policy based on comparative advantage. Proper management of the external debt to allow an acceptable rate of growth was also important.
            As a part of privatization project, President Aquino issued a Presidential Proclamation 50, which created the Committee on Privatization (COP) and the Asset Privatization Trust (APT). These two programs started selling the crony assets, and at the time the measure was welcomed as it was generally viewed as a taking back of assets from the crony-associates of Marcos. Most of the assets, however, were no longer profitable by the time the Aquino government auctioned them off to the private sector. In most cases, the government had to absorb the debt incurred by these corporations or infuse fresh capital to make them marketable, and the government was selling at a loss of around 42 billion pesos. (162) The result was abysmal: the privatization of the power sector, for instance, saw the infamous eight-hour blackouts that literally debilitated entire industries whose products or management depended on electricity. As such was the case, the economic performance fell far short of plan targets as mentioned before. The real GNP growth rate from 1987 to 1990 averaged 25 percent less than the targeted rate, the growth rate of real exports was one-third less, and the growth rate of real imports was well over double. (163)
            Why did Aquino's economic planning and policies fail in the end ? Both Aquino's campaign promises and the policies embodied in the planning document emphasized policies that would favorably affect the poor and the rural sector. But, because of dissension within the cabinet, conflicts with Congress, and presidential indecisiveness, policies such as land and tax reform either were not implemented or were implemented in a weak manner. In addition, the Philippines curtailed resources available for development projects and the provision of government services in order to maintain good relations with international creditors.

V.3 Comparison
            What two separate but similarly long periods of dictatorial rule left for South Korea and the Philippines was strikingly different: South Korea exemplified a successful economic miracle whereas the Philippines represented the opposite, in which an economy was lagging behind those it once overwhelmed. More democratic orders were newly established in both South Korea and the Philippines of the post-dictatorship era, but South Korea had an advantage over the Philippines in terms of its time of transition.
            Although Park Chung Hee's feat of resplendent South Korean economic development was undeniable, side effects of an excessive focus on heavy and chemical industries were beginning to surface in the late 1970s. The unexpected sudden assassination of Park Chung Hee in 1979 duly changed the course of South Korean economy at an opportune time : a large portion of excessive focus on heavy and chemical industries was redirected towards light industries, and development no longer only concerned economic aspects but social aspects as well. As a result, South Korean economy enjoyed stabilized and continued development throughout 1980s once the side effects from the Park regime were solved.
            While South Korea in the early 1980s strived to recover from temporary economic recession that occurred at the end of Park Chung Hee's term, the Philippines was still suffering under the corrupted rule by Ferdinand Marcos. Foreign indebtedness amounted to almost half the nation's GNP in just a few years by the mid-1980s, and effective economic reforms were obviously not being implemented. When the Philippines was finally liberated in 1986 from incompetent and egotistical rule by Ferdinand Marcos, the country had completely lost its previous reputation as one of those stronger economies in Asia; instead, Corazon Aquino, the new president of the Philippines, found herself in a position to address problems ranging from century-old issue of land reform to external debt, which had rapidly risen over the past few years.
            One interesting thing to notice is that the absolute amount of debt was larger for South Korea than for the Philippines. In 1986, South Korea held $47 billion (164) as a debt, but the Philippines only had $28 billion (165) as a debt. Considering both countries' economic sizes, however, it is no surprise that the greater amount of debt was less of a burden to South Korea and was in fact helpful in building its economy. While South Korea of the late 1980s was expected to pay off all its debt and become a net creditor by early 1990s all the while keeping high growth rate, it was predicted improbable for the Philippines to sustain even the moderate growth rate if the country had to pay off its debt as South Korea does. The investment was much larger in South Korea than in the Philippines proving that debts could be helpful if it were to be used a right way.
            Despite unfavorable circumstances, Corazon Aquino did bring up the Philippine economy somewhat. With international support, the Philippine economy achieved moderate growth, much better than economy during Marcos' period. Net direct investment inflows, for example, soared from below $200 million to above $600 million during most of Aquino's term in office. (166) Economic growth rate also hovered around 5 percent, a much enhanced rate compared to martial law period during Marcos.
            Another factor that deserves an attention is political structure. In the Philippines, traditional political patterns reappeared as indicated by one study that proved majority of members of the House of Representatives to be related to traditional political clans. They were unwilling to cooperate with Corazon Aquino when she attempted reforms, such as a new tax law, to ameliorate Philippines' habitual government deficit. This probably limited the government's role in the economy in addition to the Philippines' conventional weak emphasis on the role of the public sector. In South Korea, political structure of the Park government continued for a while in a sense that Chun Doo Hwan also exercised great authority over the country. Less democratic government might not have been the best form of government for the masses, but it certainly was more streamlined in organizing and carrying out projects without much interference by either the people or the parliament. Had Korean government been swayed every time public protest or dissension from the parliament occurred, persistent and coherent development policy, typical of South Korean economic miracle, might not have been possible.
            The Philippines' differences in growth rates with South Korea as well as other Asian nations narrowed in the 1990s, (167) so the current gap can be said to have largely been the product of the 1980s, the lost decade for the Philippines in which the really pronounced divergence occurred, and the decades preceding it. The Philippines was improving starting from the mid-1980s, but it probably looked more so because of extreme conditions experienced during the Marcos era. By 1990, South Korea had intensified its lead that started to occur some 15 years before. However, both countries were on the road to the same economic crisis ? the 1997 Asian Financial Crisis ? as the debts increased and the current accounts failed to stay positive as indicated in the figures below :





VI Conclusion
            When South Korea and the Philippines achieved independence in 1948 and 1946 respectively, South Korea lagged far behind the Philippines in terms of economic performance. The gap even enlarged after the division of the Korean peninsula into North and South Korea and the Korean War (1950-53) in which the Philippines reaped large economic benefits while South Korea was damaged of her economy. The positions in which South Korea and the Philippines stand today, however, are completely reversed as various economic indices and rankings indicate: 2006 tally of GDP by the IMF amounts $888.267 billion for South Korea and $117.562 billion for the Philippines; GDP per capita amounts $18,391.681 for South Korea and $1,351.718 for the Philippines (170); and Global Competitiveness Index announced by 2007 World Economic Forum ranks South Korea in the 11th place and the Philippines outside the 50th place. (171)
            A comprehensive analysis of history, politics, and economics provides explanations to this miraculous reversal of situation. First, different colonial and historical legacies for Korea and the Philippines lay a background for different growth. In Korea, thirty-five years of Japanese rule completely altered the existing Korean social order. Social stratification collapsed as the traditional aristocrats, who based their power on land, were deprived of their power source due to extensive land reforms. Industrial focus began to shift from agriculture to manufacturing as a result of forced industrialization and reduction of agricultural labor. The Korean War that followed reinforced this trend as many people regardless of class were displaced from their homes. In hindsight, the removal of traditional order was fortunate in that there hardly was anyone with vested interest to deter economic development for his or her own sake. In contrast, decades of American rule of the Philippines were non-transformative. Owing in part to collaborative Filipino elite in ruling the Philippines as a colony, Americans saw little incentive in shaking the existing social order. Preservation of traditions certainly saw less confusion and more stability, but it was counterproductive for economic development as vested authorities resisted any change against their interest; for instance, one study has found that more than half the members of Congress still hail from traditional political families. (172) In addition, existence of external threat provided contrasting motivations for development. While South Korea have always been susceptible to the huge threat from her northern counterpart, the Philippines have always been relatively safe without any perceivable threat except for negligible internal insurrections. Different levels of sense of security gave South Korea great incentive to develop to overplay North Korea, but gave the Philippines relatively little incentive to set economic development as her priority.
            Second in terms of political structure, South Korea had the upper hand over the Philippines. In general, democracy in developing countries is a wash. Xavier Sala-i-Martin, the Columbia University economist, says the data show that democracy "just doesn't help economic growth." (173) Simply put, a communist government like that of China doesn't have to worry about building consensus on economic policies while a multiparty democracy often prevents consistent economic policies. Since her liberation, South Korea saw a pattern of authoritarian strongmen. This fact may have prevented an early arrival of democracy to South Korea, but it facilitated the legislation and implementation of continuous and coherent economic policies. The 5-Year Development Plans were consistently implemented from the 1960s to the 1990s despite the changes of regimes, and a long-term solid back-scratching alliance of the government and big businesses known as chaebols could exhibit synergy effect in driving the South Korean economy. In the Philippines, on the contrary, the democratic era lasted much longer than in South Korea during the period 1950-90. The democratic era in the Philippines, however, saw corruption, jurisdictional battles between the executive and the legislature, and a bureaucracy permeated by outside interests. The state, therefore, was unable to formulate consistent or coherent economic policies. When the Philippines finally became both more coherent and more autonomous from social interest groups under Marcos, the problem fell not on a lack of state strength but on the uses to which such strength was put. Thus, the quality of political leadership played a crucial role in both Korea and the Philippines' developmental stages. While both Park Chung Hee and Ferdinand Marcos were "corrupted" in a sense that a collusive business-government relationship existed during their presidential term, direction of the relationship was constructive for South Korea but destructive for the Philippines. Although that a few chaebols benefited and grew from exclusive privileges given to them is indisputable, Park Chung Hee on the whole directed this collusive business-government relationship towards the benefit of the entire country. Ferdinand Marcos, on the opposite, directed the relationship towards the benefit of himself and his associates. Park Chung Hee promoted the growth of chaebols as a means to drive forward the Korean economy, but Ferdinand Marcos used the power of the state to destroy the potentially dangerous elite families and their conglomerates and expropriate wealth for himself and his cronies. In short, the Philippines had the potential to pursue a more disciplined development under Marcos, but he lacked any constraint on his excess, and the Philippines lost her opportunity to grow rapidly.
            Economically, South Korea acquired higher position than the Philippines in terms of amount of available financial aid and usage of that developmental fund. Ranked within top five countries receiving the greatest amount of the U.S. aid during the period 1950-90, both South Korea and the Philippines were able to benefit from their geopolitical locations as the United States pursued the containment policy. However, South Korea garnered additional two main advantages: the Vietnam War and the compensation from Japan. Unlike Philippines' reluctance to dispatch troops, South Korea's enthusiastic participation in the Vietnam War not only confirmed strong South Korea-United States alliance, but also harvested enormous financial aid and economic opportunities for South Korean government as well as enterprises. Japanese compensation through financial grants and loans for physical and mental damage done to colonial Korea also added as an advantage on South Korea's part. In addition to greater access to developmental fund, South Korea used the money more aptly. Unlike in the Philippines where the developmental fund fell into the wrong places such as pockets of Ferdinand and Imelda Marcos, most of the fund was invested to modern industries, shifting the major industrial focus from traditional agriculture to more profitable manufactured goods.
            Phenomenal growth of South Korea that surpassed once more prosperous Asian neighbor the Philippines wasn't an overnight miracle; rather it was a long process of formation in which several factors - historical legacies, political situations, economic policies, and even personal qualities of leaders - played their parts to bring out a grand outcome. The other part of the answer - besides from rapid growth of South Korea - was, of course, a disappointing economic performance by the Philippines. Though improved compared to the past, non-transformative nature of the Philippines still plagues the country : for instance, the vested interest by the landowners still remains unsolved. The Philippine economy is in need of innovation not just from the economic perspective, but also from the political perspective. South Korea, however, is not in any position to rest either : jammed in between developed Japan and rising China, South Korea could also use some unprecedented innovations in order to become one of the leading economies of the world.


Notes

(2)      Basilacan 2003 p.1
(3)      World Economic Outlook Database." International Monetary Fund. Oct. 2007
(4)      Ha and Lee 2006 p.230
(5)      Eckert 1990 p.258
(6)      ibid. p.257
(7)      ibid. p.266
(8)      Ha and Lee 2006 p.242
(9)      Eckert 1990 p.390
(10)      ibid. p.391
(11)      ibid.
(12)      ibid. p.400
(13)      This paper only covers the American and brief Japanese rule of the Philippines, not that of Spain.
(14)      Kennedy 2002 p.393
(15)      Brands 1992 p.59, quoted after Wikipedia : Philippine-American War
(16)      Kang 2002 p.26
(17)      Tarling 1999 p.21
(18)      ibid. p.21
(19)      Schirmer 1991 p.1
(20)      Kang 2002 p.26
(21)      Karnow 1990 p.15
(22)      Kang 2002 p.27
(23)      ibid. p.23
(24)      ibid. p.28
(25)      Cumings 2005 p.300
(27)      ibid. p.302
(28)      ibid. p.303
(29)      Ahn Junghyo, White Badge (New York: Soho Press, 1989), p.54, quoted after Cumings 2005 pp.303-304
(30)      ibid. p.304
(31)      ibid. p.305
(32)      ibid.
(33)      ibid. p.306
(34)      Hong 2005 p.21
(35)      Suter 2007 p.1
(36)      Schirmer 1987 p.144
(37)      ibid. p.107
(38)      ibid. p.111
(39)      ibid.
(40)      ibid. p.108
(41)      Table 1. Percentage of sales, income, assets and equity controlled by 35 U.S. manufacturing corporations ranked in the top 110 Philippine manufacturing corporations (1971 data) (Unit: Pesos in thousands) Source: Schirmer, 1991 p. 142. Note the large make-up of the U.S. corporations in the Philippine economy
(42)      Dolan 1991
(43)      ibid.
(44)      ibid.
(45)      Table 2. Comparative Economic Performance: Korea and the Philippines (Unit: GNP in billions of U.S. dollars at current exchange rates; population in millions) Source: IMF, International Financial Statistics (Washington, DC: International Monetary Fund, various years).quoted after Kang 2002 p. 54.
(46)      Suter 2007 p.1
(47)      Kang 2002 p.28
(48)      ibid.
(49)      Schirmer 1991 p.112
(50)      Kang 2002 p.35
(51)      Table 3. U.S. Aid Received, Various Countries, 1946-1980 (Unit: millions of U.S. dollars) Source: Office of Planning and Budgeting, Bureau for Program and Policy Coordination, U.S. Agency for International Development, U.S. Overseas Loans and Assistance from International Organizations, July 1, 1945-September 30, 1980 (Washington, DC: U.S. Government Printing Office, 1981). Notice how from 1953, a year in which the Korean War ended, the U.S. aid to South Korea far exceeds the aid to the Philippines.
(52)      Suter 2007 p.1
(54)      Table 4. Per Capita Income of South Korea in 1950s (Unit: U.S. dollars), after Hong 2005 p.18
(55)      Hong 2005 p.20
(57)      Cumings 2005 pp.326-327
(58)      ibid. p.311
(59)      ibid. p.312
(60)      ibid.
(61)      quoted after Cumings 2005 p.319
(62)      Kirk 1994 p.11
(63)      ibid.
(64)      Cumings 2005 p.310
(65)      ibid.
(66)      ibid. p.319
(67)      ibid. p.310
(68)      Kang 2002 p.55
(69)      Cumings 2005 p.311
(70)      The figures in the paragraph are from Eckert 1990 p.396
(71)      Hong 2005 p.110
(72)      Cumings 2005 p.313
(73)      Hong 2005 p.213
(74)      The term "big push" was adopted from Cumings 2005 p. 311.
(75)      The figures in the paragraph are from Cumings 2005 pp. 313-314.
(76)      The figures in the paragraph are from Cumings 2005 p. 315.
(77)      Cumings 2005 p.318
(78)      ibid. p.319
(79)      ibid.
(80)      ibid. p.321
(81)      ibid.
(82)      Eckert 1990 p.393
(83)      ibid. p.398
(84)      ibid.
(85)      Cumings 2005 p.321
(86)      ibid.
(87)      ibid.
(88)      Eckert 1990 p.399
(89)      Cumings 2005 p.322
(90)      ibid. p.375
(91)      ibid. p.378
(92)      ibid.
(93)      Dolan 1991
(94)      ibid.
(95)      Tarling 1999 p.98
(96)      ibid. p.98
(97)      Dolan 1991
(98)      ibid.
(99)      Tarling 1999 p.97
(100)      ibid. p.99
(101)      Dolan 1991
(102)      Tarling 1999 p.99
(103)      Kang 2002 p.28
(104)      Dolan 1991
(105)      ibid.
(106)      ibid.
(107)      ibid.
(108)      ibid.
(109)      Article : Ferdinand Marcos, from Wikipedia
(110)      ibid.
(111)      ibid.
(112)      ibid.
(114)      Kang 2002 p.33
(115)      Dolan 1991
(116)      Article : Ferdinand Marcos, from Wikipedia, Note 29
(117)      ibid.
(118)      Dolan 1991
(119)      ibid.
(120)      ibid.
(121)      EDSA stands for Epifanio de los Santos Avenue, a main highway in Metro Manila where the demonstration took place.
(122)      Kang 2002 p.42
(123)      quoted after Eckert 1990 p.403
(124)      Kang 2002 p.39
(125)      ibid. p.38
(126)      ibid.
(127)      ibid. p.39
(128)      ibid. p.45
(129)      ibid. p.42
(131)      Table 5. Sectoral Employment Shares in Selected East Asian Countries, 2000 (Unit: %) Sources: BLES-DOLE (1999, 2000), Current Labor Statistics; Asian Development Bank (2000), Key Economic Indicators. Indirectly quoted from Balisacan and Hill 2003.
(132)      Kang 2002 p.49
(133)      Savada 1990
(134)      Cumings 2005 p.389
(135)      Savada 1990
(136)      Cho 2007
(137)      ibid.
(138)      Savada 1990
(139)      ibid.
(140)      ibid.
(141)      Eckert 1990 p.417
(142)      Savada 1990
(143)      Eckert 1990 p.417
(144)      quoted after Cumings 2005 p.388.
(145)      Savada 1990
(146)      ibid.
(148)      Cumings 2005 p.394
(149)      ibid.
(150)      ibid. p.392
(151)      Cho 2007
(152)      ibid.
(153)      Dolan 1991
(154)      ibid.
(155)      ibid.
(156)      ibid.
(157)      ibid.
(159)      Dolan 1991
(160)      ibid.
(161)      ibid.
(162)      Bello 2005 p.96
(163)      Dolan 1991
(164)      Eckert 1990 p.419
(165)      Dolan 1991
(166)      Basilacan and Hill 2003 p.88
(167)      ibid. p.7
(170)      World Economic Outlook Database. International Monetary Fund. Oct. 2007
(171)      "The Best Countries For Business." TIME 26 Nov. 2007. pp. 29-30
(172)      "Family Affairs." TIME 12 Nov. 2007. p. 52
(173)      "The Best Countries For Business." TIME 26 Nov. 2007. p. 31


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