Korea At Night: Why Capitalism Beats Communism Summed Up In One Image

The image above of the Korean peninsula was taken by NASA in 2016 and perfectly sums up why capitalism, for all it’s faults, is still a far, far better system than the communist alternative.

Capitalist South Korea takes up the bottom half of the peninsula, and you can clearly see all the bright lights of Seoul and other South Korean cities on the map.

Contrast that with Communist North Korea, which looks almost entirely black except for some feeble lights coming from its capital Pyongyang.

Look even further north and you can see capitalist (despite being run by the Communist party) China’s bright lights as well.

North Vs South Korea In Numbers

To put the contrast into numbers have a look at the following comparison between North and South Korea:

Metric	South Korea	North Korea	Difference
Population	52,081,799	26,072,217	100%
Biggest City	Seoul: 26,037,000 (metro)	Pyongyang: 3,157,538	724%
Area	100,363 km2 (38,750 sq mi)	120,538 km2 (46,540 sq mi)	-17%
Density	507/km2 (1,313.1/sq mi)	212/km2 (549.1/sq mi)	139%
GDP (PPP) Total	$3.058 trillion	$40 billion	7,545%
GDP (PPP) Per Capita	$59,330	$1,800	3,196%

Yet, North Korea was once economically stronger and more developed than South Korea, particularly in the early decades following the Korean War (1950–1953).

Key Points to Understand:

Post-Korean War Recovery:

After the Korean War, both North and South Korea were devastated. However, North Korea had a head start in recovery due to several factors, including substantial aid from the Soviet Union and China.

The North had more developed heavy industry and infrastructure, much of which had been built during the Japanese colonial period (1910–1945) and further developed during the early years of communist rule.

Industrial Base and Soviet Aid:

In the 1950s and 1960s, North Korea benefitted significantly from Soviet economic aid and Chinese support. The North Korean economy was heavily oriented towards heavy industry, steel production, and mining.

By the 1960s, North Korea had a relatively higher per capita income compared to the South, which was still largely agrarian and struggling with political instability.

South Korea’s Economic Struggles:

South Korea faced numerous challenges in the immediate post-war years, including widespread poverty, political turmoil, and a lack of natural resources.

It was only in the 1960s that South Korea began to develop its economy under the leadership of President Park Chung-hee, who initiated the country’s rapid industrialization and export-led growth strategy.

Divergence in the 1970s and Beyond:

By the 1970s, South Korea’s economy began to outpace North Korea’s due to its export-oriented industrialization, economic reforms, and integration into the global economy.

Meanwhile, North Korea remained isolated and reliant on a centrally planned economy. The collapse of the Soviet Union in the early 1990s dealt a severe blow to North Korea’s economy, leading to stagnation and decline, while South Korea became one of the “Asian Tigers” and experienced rapid economic growth.

How did South Korea become so much wealthier than North Korea?

South Korea became significantly wealthier than North Korea due to a combination of economic policies, strategic international alliances, political stability, and social reforms that enabled rapid development and modernization.

Here are the key factors that contributed to South Korea’s economic transformation:

Export-Oriented Industrialization and Economic Planning:

• In the 1960s, South Korea shifted from an agrarian economy to an industrialized one under the leadership of President Park Chung-hee. The government implemented a series of five-year economic plans focusing on industrialization, export-led growth, and modernization.
• South Korea invested heavily in infrastructure, education, and technology, which laid the foundation for its economic growth. The government also provided incentives for businesses to grow and expand into international markets, particularly in manufacturing, electronics, shipbuilding, and automotive industries.

Chaebol System and Private Sector Development:

• South Korea developed a unique model of state-business cooperation centered around large, family-owned conglomerates known as “chaebols” (e.g., Samsung, Hyundai, LG, and SK Group). The government supported these chaebols with favorable loans, subsidies, and protectionist policies, which allowed them to grow rapidly and compete globally.
• This strategy helped South Korea develop a strong manufacturing base and move up the value chain in technology and innovation.

Education and Human Capital Development:

• South Korea invested significantly in education and skill development, creating a highly educated and skilled workforce. The country prioritized science, technology, engineering, and mathematics (STEM) education, which became crucial for its industrial and technological advancements.
• The emphasis on education created a culture of hard work, discipline, and continuous improvement, which drove productivity and economic growth.

Political Stability and Institutional Reforms:

• South Korea underwent a period of authoritarian rule during the 1960s to the 1980s, but this period was marked by relative political stability and strong central governance, which allowed for effective economic planning and policy implementation.
• After a series of democratic reforms in the late 1980s, South Korea transitioned to a fully democratic system. Political stability and strong institutions fostered an environment conducive to economic growth, investment, and entrepreneurship.

Integration into the Global Economy:

• South Korea pursued active integration into the global economy through trade liberalization, joining international organizations like the World Trade Organization (WTO), and signing numerous free trade agreements (FTAs). This strategy opened up South Korean businesses to international markets, encouraging exports and foreign direct investment (FDI).
• Integration into the global economy allowed South Korea to benefit from technological transfers, access to capital, and knowledge sharing, further enhancing its economic development.

Technological Advancement and Innovation:

• South Korea heavily invested in research and development (R&D), becoming a global leader in innovation and technology. The government provided support for R&D initiatives and promoted collaboration between universities, research institutions, and the private sector.
• Companies like Samsung, LG, and Hyundai became global leaders in consumer electronics, automotive, and other high-tech industries, contributing significantly to South Korea’s GDP.

North Korea’s Isolation and Economic Mismanagement:

• In contrast, North Korea remained committed to a centrally planned economy, with minimal external trade and reliance on heavy industry and military spending. North Korea’s leadership followed a “self-reliance” (Juche) policy that isolated the country from the global economy, limiting its access to international markets, technology, and capital.
• The collapse of the Soviet Union in the early 1990s resulted in the loss of crucial economic support for North Korea. The country faced severe economic challenges, including famines and a lack of foreign currency reserves, which led to stagnation and decline.

Impact of International Sanctions and Diplomatic Isolation:

• North Korea’s continued pursuit of nuclear weapons and ballistic missile programs led to international sanctions and diplomatic isolation. These sanctions restricted North Korea’s access to international trade, foreign investment, and humanitarian aid, further hindering its economic development.
• In contrast, South Korea enjoyed strong diplomatic ties with Western countries, particularly the United States, which provided security guarantees and facilitated economic growth through trade and investment.