ABSTRACT
South Korea’s economy has been touted as one of the most successful cases among the developing countries. This country’s economic success has produced two interesting puzzles in the field of the political economy of development. The first concerns the relationship between growth and distribution. Compared with the experience of most developing countries, rapid economic growth in South Korea has not been accompanied by severe distortions in the distribution of income and wealth, providing empirical ground to refute the thesis of incompatibility between growth and equity. The second puzzle involves the relationship between security, growth, and welfare. Acute security threats from North Korea since 1945 have caused South Korea to bear a rather heavy defense burden. For the past three decades, it has devoted about 5-6 percent of gross national product, and approximately 30 percent of the national budget to the defense sector. Despite this continued threat to national security and the resulting heavy defense burden, South Korea’s performance in economic growth and social welfare has remained impressive, posing an interesting anomaly to the theories on the tradeoffs between ‘guns’ and ‘butter.’
