chapter  4
25 Pages

REBUILDING THE HOMELAND

WithBuilding Bridges 48

During most of the 1950s, the lack of an adequate economic infrastructure and capital investment precluded long-term economic development in

Korea. Between 1954 and 1959, more than 70 percent of all reconstruction projects were financed by aid from other countries, most notably the United States.4 As a result, economic policy emphasized meeting people's immediate needs for consumer goods and easing distribution bottlenecks, rather than fostering long-term economic development. Urban sprawl and unemployment exacerbated Korea's early economic difficulties. Population growth reached 3 percent per annum after 1954. The influx of North Koreans during the Korean War only made the situation worse, with increased unemployment, higher demand for consumer goods, low capital formation, housing shortages, and greater political unrest. From 1953 to 1962, per capita GNP increased from $67 to only $87, while U.S. foreign aid increased from $194 million to $232 million.s Economic forecasters were unanimous in their lack of confidence in this backward country. Korea's prospects, on the whole, were exceedingly dim.