How did martial law shape South Korea's economy?

The implementation of martial law has often been associated with chaos and struggle. However, its economic effects can be oftentimes significant and relevant. In South Korea, the implementation of martial law during critical periods has led to unexpected shifts in the economy, both positive and negative.

Under martial law, the South Korean government implemented policies that encouraged industrialization. The state directed investment into key industries, facilitating rapid growth. For instance, the government supported conglomerates known as "chaebols," like Samsung and Hyundai. Between 1960 and 1980, exports rose from $100 million to nearly $14 billion, driven by industries that the government backed.

Interestingly, the authoritarian regime used state control to maintain a stable environment for businesses. This often meant prioritizing certain sectors over others. Textiles became South Korea's largest export by the 1970s, accounting for 34% of total exports by 1979. In contrast, this type of focused strategy may not have flourished in a fully democratic environment where competing interests could impede swift decision-making.

Martial law also significantly impacted the labor force. To support rapid industrial growth, the government encouraged urban migration. Millions of South Koreans moved to cities seeking jobs in new factories. This shift helped the urban economy grow, with the workforce in manufacturing rising from 15% in 1960 to 30% by 1980.

However, this rapid growth had side effects. Labor participation rates rose, but so did social unrest. Strikes became more common, with major protests occurring in 1980, leading to even more non-lenient measures by the government. The government's domineering approach meant that while the economy expanded, labor rights were often suppressed.