apan (North and South Korea) was divided into two parts, South Korea, which was influenced by the U.S and North Korea, which was influenced by the USSR. In essence, South Korea adopted capitalism and democracy while North Korea adopted a communistic economic system and authoritarian political system.
According to Maria, South Koreans enjoy a better living standard than their counterparts in the North due to the different political and economic changes adopted by their respective governments in the mid-20th Century. The newly independent South Korean government heavily relied on political institutions managed by Syngman Rhee, who was supported by the U.S government. However, by 1948, when the first election was held in South Korea, the state was not democratic. In fact, both Syngman Rhee and his immediate successor, Gen. Chung-Hee, adopted authoritarian systems of government but implemented economic system based on the forces of demand and supply. The economic institutions recognized and protected private ownership of land, which is a core principle for any successful market economy (Maria, 2003).
Acemoglu et al is of the opinion that the government of Gen. Chung-Hee is credited for the economic prosperity of South Korea, which was achieved by adopting an economic system based on aiding profitable sectors of the economy (firms) with credit and subsidies to facilitate rapid economic growth and development. In addition, the facilitation of private ownership of land ensured the development of the economy thorough innovation and technological advancements, which are key ingredients of a successful market economy. To foster even greater economic growth, the government encouraged trade, exports, foreign direct investments, transfer of technology and industrialisation, by setting up favorable economic conditions. Policies that promoted investment in education were also adopted, which led to the achievement of high literacy levels for the entire population, thus enhancing