A History of Korea (104 page)

The South Korean economy has faced two critical problems—labor disputes and foreign competition. Government effort to make the labor market more flexible, as part of a U.S.-style neoliberal market economy, generated fierce resistance from the strong South Korean labor movement. South Korea has been known in overseas markets as a nation haunted by combatant labor disputes. Frequent strikes and sit-ins also angered domestic customers. Fewer and fewer South Koreans have supported the militant labor movement that was seen in the 1980s and the 1990s.

Phenomenal plans for investment in the development of the high-tech industry have not entirely superseded South Korea’s substantive center of economic
gravity in heavy manufacturing—automobile production, shipbuilding, steel, chemicals, and consumer electronics. Moreover, the light industries and self-owned businesses, such as textiles and clothing, footwear, and food processing, have still commanded a significant part of employment, trade, and investment. These industries have faced serious foreign competition, especially from China. As the technological gap between South Korea and China narrowed, Chinese exports in steel and shipbuilding have threatened to undermine South Korea’s economic strength. There are growing concerns that South Korea, “sandwiched” between high-tech Japan and low-cost China, might quickly lose its competitive edge if it fails to develop new economic growth engines.

The policy mind-set has not yet substantially changed since the 1980s, still emphasizing export-oriented industrialization. Economic regulators have remained vigilant against capital outflows for foreign investment, leading to charges of corporate xenophobia. Furthermore, the persisting problems of big government–big business collusion have put a dark cloud on the economic horizon. Charges of rampant corruption have filled the headlines of South Korean dailies. Public dissatisfaction with corporate power and crony capitalism has also remained very much front and center.

In late November 2007 the National Assembly passed a law appointing an independent counsel to investigate alleged irregularities by the Samsung Group. Corruption allegations against Samsung had been in the media spotlight since late October 2007, when the group’s former chief attorney blew the whistle on the nation’s largest conglomerate, arguing that he had evidence to prove that it had amassed slush funds in order to bribe everyone wielding political or other influence in South Korea. South Koreans have often called their country the “Republic of Samsung.” On 17 April 2008, after a 99-day inquiry, Yi K
ŏ
nh
ŭ
i, chairman of the Samsung Group, was indicted for tax evasion and breach of trust, but he was cleared of charges of bribery and illegal lobbying because of a lack of evidence. Five days later, on 22 April, Yi resigned as Samsung’s chairman. Yi was dogged for years by civic groups claiming that Samsung’s opaque ownership structure, based on cross-shareholdings by group companies, led to abuses and was meant to ensure that control of the conglomerate passed seamlessly from Yi to his son.

In 2002 and 2003, South Korea was the world’s 11th largest economy in terms of
GDP
. Thereafter, its ranking dropped as the relative size of other emerging economies, including India, Brazil, Russia, and Australia, accelerated their economic growth. In 2005 South Korea’s global ranking was 12th; in 2007 the
ranking dropped to 13th; and in 2008 it again fell to 15th. The slide was not surprising, as the economy recorded lower than usual growth compared to the global average. Concerns have been raised that South Korea failed to keep up momentum amid rising political and socioeconomic uncertainties.

In the second half of 2008, a sudden global financial crisis and a worldwide market downturn hammered South Korea’s export-led economy into its first recession in 11 years. But the country recovered faster than many other major countries as improving exports, domestic consumption, and corporate investment eased jitters over a global recession. By the end of 2011, South Korea became the world’s ninth-largest trading nation with its yearly trade exceeding $1 trillion; it stood as the eighth nation to see annual exports more than $500 billion and ranked seventh in the world in terms of outbound shipments.

Although South Korea has developed the high-tech industry and is Asia’s fourth largest economy and a member of the G20, the number of its people who feel unhappy with their lives continues to increase, and many South Koreans are weary from their persistent yearning for material wealth. Because South Korea ranks at the bottom in various happiness indexes, the government needs to improve the quality of its people’s lives.

As the “democratization forces,” represented by Kim Young-sam and Kim Dae-jung and their followers, triumphed over the “modernization forces,” symbolized by the military and big business, authoritarianism became increasingly intolerable and virtually disappeared in South Korean society. In the new political climate, the military was afforded no opportunities to perform any significant role in political life and was forced to commit itself to defending the nation.

As democracy came into full bloom, the centuries-old Confucian traditions of hierarchical authoritarianism and collectivism gradually gave way to egalitarianism and individualism in human relations and social organization. As a dominant value system and political ideology, Confucianism had always permeated major institutions and individual life in Korea. But as South Korea increasingly developed into a mature industrial society, Confucian values gave way to such modern economic values as rationality, efficiency, instrumentalism, materialism, and secular success. South Korean culture as a whole became more consumer-oriented, and the country’s values and attitudes underwent tremendous change. Even so, Confucian values still loomed large in people’s private, if not national, lives. The Confucian values have been most evident in
their influence on education, a major factor in South Korea’s economic progress. Equally apparent has been the persistence of hierarchical, often authoritarian, modes of human interaction. Although South Koreans today are more likely to live in nuclear families compared to their parents or grandparents doing so, old Confucian ideas of filial piety remain strong. The new urban class has parents and grandparents who were agricultural workers, and therefore it is still bound by family ritual and obligation. Farm villages are still dear to the heart of almost all South Koreans, and more than ten million Koreans continue to visit their hometowns to observe the lunar New Year’s Day and Korean Thanksgiving Day, Ch’us
ŏ
k.

An affluent society, South Korea has experienced the inevitable backwash of industrialization. The household-income gap between the top and bottom economic brackets has been increasingly broadened. In order to compensate for income polarization, every South Korean administration has been required to expand spending for welfare programs with the funds secured through tax reform. With the widening income gap, moreover, the middle class has shrunk, and an increasing number of South Koreans have fallen to lower rungs of the social ladder.

The transformation of South Korean society, especially the decline of traditionalism, has greatly impacted the very social foundation, the family. The divorce rate has risen nearly three times in the past decade, catapulting the divorce rate in South Korea past that in European Union countries and Japan. Simultaneously, as South Koreans have increasingly become individualistic and pursued a higher quality of life, the fertility rate has consistently declined. This suggests an imminent decline in South Korea’s total population. In the 1960s and 1970s South Korea was in the class of high-fertility countries. For instance, in 1960 the total fertility rate (
TFR
) was 6.0. Therefore, the South Korean government had adopted strong policies to reduce fertility. Thanks to these policies, the TFR declined to 4.53 in 1970 and 2.87 in 1980 and has consistently decreased since then, reaching 1.59 in 1990, 1.47 in 2000, and 1.08 in 2005, the lowest in the world. The TFR in the United States is 2.05, and in France it is 1.90. With more and more married couples facing mounting child-care costs and other financial burdens, South Korea’s fertility rate has become far below the rate of 2.2 needed to maintain the nation’s current population.

The low fertility rate and rising longevity have thrust into focus the specter of a rapidly aging society, generating concerns among politicians and pundits about the “gray” future. In fact, the number of South Koreans aged 65 or over
has continued to climb. With the anticipated fall in future manpower, South Korea’s growth potential will fall along with investments and savings, while the burdens of pensions and medical costs will rise. South Korea is expected to become the most aged country in the world, as senior citizens over 65 will account for some 38 percent of the population by 2050, higher than the average 26 percent of other developed countries.

South Korea has become inescapably high-tech. The penetration of cellular phones and the Internet is almost total. The phenomenal popularity of blogs, chat rooms, and online games has generated an alternative reality for many South Koreans, and new online news sites have challenged the conservative mainstream media’s monopoly. Press clubs, a Japanese colonial legacy that controlled the flow of news, have become weakened or have been eliminated.

Recently Korea, formerly perceived as an ethnically homogeneous nation, has been increasingly transformed into a multicultural, even multiethnic, society, as the labor shortage has led to the influx of foreign workers and the rise of international marriages. The number of foreign residents surpassed one million in 2007, accounting for over 2 percent of the nation’s entire population. The idea of a “multicultural Korea” is evidenced in the growing number of restaurants selling international food. More striking has been the increasing number of international marriages, noted above. Among newly married couples, approximately one out of ten has been interracial. These international marriages have represented the flip side of the South Korean economic miracle. Urbanization and industrialization have depleted the countryside of young women, who have moved to cities to seek better educational and employment opportunities, as well as a more fashionable lifestyle. The grinding, unglamorous life of family farming has repelled many women, and this by itself has caused a shortage of brides in the countryside. Simply put, present-day South Korean society has all the traits of a mature post-industrial society.

Having experienced rapid industrialization and modernization, South Koreans have grown accustomed to a culture that believes “the faster, the better,” with increasing tendencies to ignore ethical considerations and achieve goals more quickly. A striking example is the public furor over South Korean researcher Hwang U-s
ŏ
k, who, in December 2005, was revealed to have fabricated data to support his claim that he cloned human embryos and extracted stem cells from them.

Hwang U-s
ŏ
k, a Seoul National University (
SNU
) veterinary professor, first came to international attention in 1999, when he said that he had cloned a cow. But after Roh Moo-hyun’s inauguration as president in February 2003, Hwang gained the status of national hero and global stardom by claiming three firsts— the first cloned human embryonic stem cells, the first patient-specific stem cells, and the first dog clone. Stem cells are master cells that can evolve into blood, liver, muscle, and other cells. They show promise for the treatment of medical conditions including Parkinson’s disease, Alzheimer’s, diabetes, and spinal cord injuries. The South Korean government poured enormous funds into Hwang’s research, designated as a “next-generation motor for growth.”

Hwang U-s
ŏ
k began drawing South Korea’s adulation in February 2004, when he became an international celebrity for writing in the leading U.S. scientific journal
Science
that he had succeeded in producing the world’s first human embryonic stem cells from cloned human embryos. In May 2005, he claimed to have developed the world’s first human embryonic stem cells tailored to match the
DNA
of individual patients, and he published the results in
Science
again in June. In August 2005 Hwang reported in the journal
Nature
that he had developed Snuppy, the world’s first cloned dog.
Time
magazine named the cloned Afghan puppy the invention of the year in 2005.

The national worship of Hwang was rooted in the fierce national pride in the hearts of ordinary Koreans. His rise to international fame was attributed to the eagerness of South Koreans to embrace new technology and their almost obsessive and fiercely nationalistic desire to become the number-one nation in the world, as exemplified by the South Korean computer chip and shipping industries.

In June 2005 an investigative reporting program of
MBC
, a major broadcaster in South Korea, received a tip that Hwang’s research team may have violated ethical codes and that his 2005 paper in
Science
on tailor-made stem cells was fraudulent. Since November 2005, Hwang’s research had been questioned publicly. On 13 November Gerald Schatten, a U.S. professor and a partner in Hwang’s research, announced that he had cut all ties with Hwang because he suspected unethical research conduct. On 22 November,
MBC
broadcast a program which included strong evidence that Hwang’s research team had used ova extracted from its junior researchers. Two days later Hwang admitted ethical violations and said that he would resign from all public posts.

In December 2005 the scandal heated up further. On 14 December Schatten asked
Science
to remove his name from the list of coauthors of the 2005 paper.
The next day,
MBC
aired a follow-up program on Hwang’s work, questioning the authenticity of the research itself. On 16 December, Hwang stated that he had asked the journal to retract the paper after its coauthors admitted partial data manipulation. Two days later,
SNU
launched a probe into Hwang’s research, and on 23 December 2005 the
SNU
investigating panel announced that Hwang had fabricated the entire paper that he had published in
Science
in 2005.