By 2020, South Koreans will have a better standard of living than the French

Many Koreans have an affinity for French things. Namely, French baked goods. Witness the rise of Korean bakery chain Paris Baguette, which aims to become the McDonald’s of French-style boulangeries. (The French do not approve.) Consider that even amid widespread starvation in North Korea, elites there are desperately trying to find ways to get their hands on a good baguette.

At any rate, if a global baguette bidding war breaks out, South Koreans are increasingly well placed to compete.

In South Korea, per capita GDP—a ballpark gauge of living standards—has been gaining ground on what traditionally have been some of the world’s richest countries. South Korean GDP per capita has more than doubled since the end of the 20th century, to $35,277 last year, adjusted for purchasing power parity. In a recent analysis, analysts at Moody’s forecast that South Korea’s GDP per capita is set to rise to $46,980 in PPP terms by 2020, putting it above France’s forecasted GDP per capita of $45,887.

GDP_per_capita,_PPP-adjusted_France_South_Korea_chartbuilder (1)

It’s difficult to overstate what remarkable accomplishment this is. In the aftermath of the Korean war, South Korea was one of the poorest nations on earth. Its income per capita at that point was on par with some of the most impoverished nations of subsaharan Africa. It was resource-poor, with hardly any mineral wealth to speak of. But under the authoritarian leadership of general Park Chung-hee, who ran the country following a 1961 coup until his assassination in 1979, the country industrialized at breakneck speed, focusing intensely on sectors in which the country previously had little to no expertise, such as steel, shipbuilding and electronics.

Why it worked is a complex story of circumstances, timing, state-led industry, and extremely hard work. South Korea’s ties to the United States, which occupied the country after World War II and during the Korean war, pumped billions in cash into the country, providing a useful inflow of capital. The massive devastation of the war set the stage for years of above-trend growth afterward, as the country was reconstructed building by building. Protectionist policies shielded the large industrial conglomerates, the chaebols, to which the government channeled a flood of low-interest loans. And repressive labor laws kept wages cheap, enabling an export boom.

In The Competitiveness Advantage of Nations, Harvard Business School competitiveness guru Michael Porter wrote of Korea that “everyone had to start from scratch, motivated by a sense of crisis, a lingering resentment of the Japanese, and the feeling that there was nothing to lose. The competitive spirit that has resulted is perhaps the single greatest source of advantage that Korean companies have possessed.”

The relentless competitiveness also seems to carry some heavy costs. Korea’s hard-pressed school children consistently rank among the world’s least happy. Korean rates of liquor consumption and suicide are routinely among the world’s highest.

In part because of all the stress, birthrates have collapsed and the the population is aging rapidly. Indeed, for the Korean economic miracle to continue, the country needs children. And for that to happen, Korea may have to look beyond baguettes to other elements of French culture, such as a world-class social safety net, which has helped put French birthrates among some of the highest in the developed world.

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