The defeat of the Japanese in the Second World War opened the way to another traumatic phase in Korean history. As the Japanese hurriedly departed, Korean nationalism exploded, the country was divided into a communist north and an American-controlled south, and an externally aided civil war followed. All this is well known. Syngman Rhee dominated South Korean politics during this period, especially following the end of the Korean War in 1953 and then prior to 1960, when he was forced out of power. I analyze in broad strokes those elements of the emerging South Korean state and society during the Rhee period that contributed significantly to longer-term economic development.

The argument advanced is that a systematic pursuit of economic growth was really not a regime priority in Syngman Rhee's Korea. The main concern of the United States in South Korea was the threat of communism and, relatedly, maintaining political and economic stability. While Rhee facilitated some of this, he was an autocratic ruler whose priorities included securing personal power, holding the northern communists and domestic opposition at bay, and maximizing U.S. aid to South Korea. South Korean political economy in the period, including a middling economic performance, was more a product of these forces and less a result of any coherent economic strategy.

In spite of the economic neglect, a number of important developments during this period proved to be of long-term economic significance.