Author: @Talamond1998
Economy in South Korea developed from an agriculture-based to one of the largest and influential in the world in just 70 years. You might ask: "But how?" The answer is simple - economic system changes, which are critical to the country's progress. Another question: "Why do economic systems change?" In this essay, we aim to analyze the most interesting reasons and factors that lead to shifts in systems.
It is generally accepted that the economic system is the means by which societies or governments organize and distribute available resources, services, and goods within a geographic region or country. There are a lot of systems in the world; here are some examples:
Slave-based - a historical economic system in which individuals, known as slaves, are considered someone's property and forced to work without compensation. Slavery was economically ineffective because of the slave's main workforce's lack of motivation, resistances, and absence of a wage-based incentive system. Due to these reasons, slavery changed and is not used as a system nowadays. Some of its methods are used in feudalism.
Feudal system is an economic system dominated in medieval Europe during the Middle Ages; it is based on private (feudal) form of land ownership. The main labor force there were peasants, also known as serfs or villains who were given the land in exchange for their labor and obligations. At that time, people had their first money, which led to an evolution of the economic system. We can see similarities between capitalism and feudalism.
Capitalism is an economic system characterized by private ownership of the means of production and the pursuit of profit through market-driven competition. In capitalism, businesses operate in a free market, guided by supply and demand, and individuals have the freedom to own property and make economic choices. The main work force in the system is office workers, professionals, creatives, and gig workers. Most familiar to our generation. In our opinion, it will live longer than any other system.
The economy has changed over time, and understanding the reasons for these changes allows us to either prevent or contribute to them. Here are the reasons for a huge economic system such as capitalism to change:
The process that had an effect on South Korea is called industrialization; because of it, the capital of the country roughly tripled between 1971 and 1986. Industrialization refers to the process of transforming an economy from primarily agrarian and labor-based to one characterized with words mechanized, manufacturing, and technological innovations. Agriculture and light industries experienced relative decline as the focus shifted towards heavy industries. For instance, the Korean labor market, from a largely rural base - agriculture accounted for half of total employment in 1970 but less than 20 percent in 1990 - to one in which manufacturing’s share of total employment (25 percent) is now larger than it is in the United States. The transformation was achieved with a degree of relatively equitable income distribution by international standards. Industries like shipbuilding, steel, and chemicals saw significant growth, contributing to export expansion. Korea had corporations such as Samsung, LG, Hyundai, and Kia - they are part of the largest companies in the world. Nevertheless, Korea, like other countries, underwent significant changes due to another factor - the pandemic.
Pandemic is an epidemic that has spread across a large geographical area. Pandemic is a good example of an economic crisis (which affects economic systems too). Let's look at COVID-19 that influenced the economy of nearly all countries. Because of lockdowns all over the world, people had to stay in their houses; due to this, people started losing their jobs. According to the International Labour Organization's (ILO's) statistics, the total number of working hours decreased by 14%, equivalent to a loss of 400 million jobs. To illustrate, major unemployment leads to poverty and income instability, social unrest, skill erosion. World inflation increased by 6.4% in one year. The crisis has led to a serious disruption in the structure of supply and demand. Coronavirus affected not only the economic system but nearly all walks of life. But there was another side of it. The digital economy has risen. People started to spend more time online, and the value of companies like Netflix, Amazon, Zoom, Twitch, and others has grown a lot. The number of remote workers in the US has increased from 10.9% in 2019 to 26.3% in 2022, according to data analytics firm GlobalWorkplaceAnalytics. This means that about 45.6 million people in the US are now working remotely. The pandemic has changed capitalism.
Ultimately, the examination of South Korea's economic development within a larger historical framework highlights the central topic of why economic systems undergo change. The transition from agricultural to industrial economies symbolizes the fundamental necessity for adaptability to societal expectations, technological breakthroughs, and global concerns. The dynamic character of economic systems emphasizes the need for change, whether it is brought about by industrialization—as was the case in South Korea—or in response to the unparalleled disruptions of a global epidemic.
The historical perspectives of capitalism, feudalism, and slavery provide important insights into how economic arrangements change to meet the changing needs, capacities, and goals of society. The capacity to embrace innovation, cultivate resilience, and react deftly to outside influences will be crucial as countries manage these changes.