The Hidden Economics of Food - Part 1: From Famine Food to Economic Miracle

The Taste of Hunger

In a trendy Seoul restaurant, you might find dotorimuk—acorn jelly—served as an appetizer. It’s slightly bitter, pleasantly chewy, drizzled with sesame oil and soy sauce. Foodies describe it as “earthy” and “sophisticated.”

But ask any Korean over 60 about acorn jelly, and you’ll see something different cross their face. Not nostalgia exactly—something more complicated.

Because within living memory, Koreans ate acorns because they had nothing else.

The Korea That Was

In 1961, South Korea’s GDP per capita was $82—less than Ghana, less than Haiti, less than almost anywhere. The country had just emerged from a devastating war that killed millions and left the peninsula divided. There was almost no industry to speak of, few natural resources, and a population that had been brutalized by Japanese colonization and war.

The countryside was desperate. Families foraged for anything edible—acorns, bark, roots. The bitter tannins in acorns require elaborate processing to make them edible, but hunger is patient. You soak them, leach them, grind them, and make a jelly that keeps you alive another day.

This was the Korea of the early 1960s. Not the K-pop Korea, not the Samsung Korea, not the Korea that builds the world’s largest ships and most advanced semiconductors.

A country of acorn-eaters.

The Transformation

What happened next is often called the “Korean Miracle,” as if divine intervention were the only possible explanation. But there was nothing miraculous about it—just a set of choices that contradicted almost everything Western economists recommended.

The Orthodox Prescription

The standard development advice of the 1960s (and, remarkably, still today) went something like this:

1. Open your markets to foreign trade and investment

2. Don’t pick winners—let the market decide which industries develop

3. Minimize government intervention—the state should provide law and order, not direct the economy

4. Follow your comparative advantage—if you’re a poor country, you’re “naturally” suited to low-skill, labor-intensive production

South Korea did the opposite.

What Korea Actually Did

Protected infant industries ruthlessly. Korean companies were shielded from foreign competition until they were strong enough to compete. This wasn’t laissez-faire; it was deliberate, strategic protection.

Picked winners aggressively. The government decided Korea would develop steel, shipbuilding, automobiles, and electronics. Private companies were directed—sometimes forced—into these industries.

Controlled capital. Banks were state-owned or state-directed. Credit flowed to favored industries at subsidized rates. Companies that hit export targets got more credit; those that failed lost access.

Invested in education. Even when the country was desperately poor, it prioritized universal education. A workforce that could read and calculate was the foundation for industrial upgrading.

Exported relentlessly. Unlike import-substitution strategies that focused on domestic markets, Korea pushed exports from the start. This forced Korean companies to compete internationally, preventing the complacency that protection can breed.

The Comparative Advantage Myth

Here’s what conventional economics would have predicted for South Korea in 1961:

Given its abundant cheap labor and lack of capital, Korea should specialize in labor-intensive manufactures—textiles, toys, wigs (yes, Korea was briefly a major wig exporter). It should not try to build steel mills, which require massive capital. It should not try to build ships, which require sophisticated engineering. And it certainly should not try to make semiconductors, which require technology Korea didn’t possess.

In other words: know your place.

But Korea didn’t know its place. Or rather, it refused to accept that comparative advantage was fixed by nature rather than created by policy.

The Steel Nobody Wanted

In 1968, Korea announced plans to build a massive integrated steel mill—POSCO. The World Bank refused to fund it. American advisers said it was economically irrational. Korea had no iron ore, no coking coal, and no experience in steelmaking.

Korea built it anyway, with Japanese reparation money and government direction.

Today, POSCO is one of the world’s most efficient steel producers. South Korea is the world’s sixth-largest steel producer, exporting to countries that once told it steel was beyond its capabilities.

Ships That Shouldn’t Float

The shipbuilding story is even more dramatic. In the 1970s, Korea decided to become a shipbuilding power. At the time, Korean shipyards had never built anything larger than small fishing vessels.

The government directed Hyundai to build supertankers. Hyundai’s chairman, Chung Ju-yung, famously took orders for ships before he had a shipyard that could build them—using pictures of a British shipyard to convince customers of his (nonexistent) capabilities.

Today, South Korea builds about 40% of the world’s ships. It dominates the market for LNG carriers and other sophisticated vessels.

From Acorns to Semiconductors

And semiconductors? In the 1980s, Samsung decided to enter the memory chip business. Its first chips were years behind Japanese and American competitors. The company lost money for years.

The government supported it anyway—subsidized credit, research assistance, protection from foreign competition.

Today, Samsung is the world’s largest semiconductor company. Korean companies produce the majority of the world’s memory chips.

The Lessons They Don’t Want You to Learn

The Korean experience is deeply uncomfortable for orthodox economics. It suggests that:

1. Markets Don’t Automatically Produce Development

If markets naturally developed poor countries, South Korea would have remained an exporter of wigs and cheap textiles. Markets left alone tend to lock poor countries into low-value production. Breaking out requires active intervention.

2. The State Can Pick Winners

The standard economist’s objection is that governments can’t pick winners—bureaucrats don’t know better than markets. But Korea’s bureaucrats picked steel, shipbuilding, automobiles, and semiconductors. They were right every time.

The key isn’t whether government picks winners; it’s whether government picks them well and imposes discipline on the companies it supports.

3. Protection Can Work

Infant industry protection is supposed to breed inefficiency and corruption. Sometimes it does. But when combined with export discipline—you’re protected at home but must compete abroad—protection can nurture world-class industries.

4. Comparative Advantage Is Made, Not Given

Korea’s “natural” comparative advantage was cheap labor. Its created comparative advantage is sophisticated manufacturing. The difference is worth trillions of dollars.

The Inconvenient Model

Why don’t development economists trumpet the Korean model everywhere?

Because it’s inconvenient.

It suggests that free markets aren’t always the answer. It suggests that government intervention can work. It suggests that poor countries don’t have to accept their “natural” position at the bottom of the value chain.

Most uncomfortably, it suggests that rich countries developed using the exact tools they now tell poor countries not to use.

Britain protected its textile industry. America protected its manufacturers behind high tariffs for a century. Germany used state banks to direct industrial development. Every successful developer used industrial policy.

But once you’re rich, you tend to “kick away the ladder,” as economist Friedrich List put it—advocating free markets for others while having used protection yourself.

The Acorn’s Return

Today, dotorimuk is served in upscale restaurants as a delicacy. The same food that meant desperate survival now signifies sophisticated taste. Young Koreans eat it without the memories their grandparents carry.

But the acorn hasn’t changed. What changed was everything around it—the economy, the technology, the meaning.

An acorn jelly in 1961 said: “We are poor.”

An acorn jelly in 2024 says: “We remember where we came from.”

The Universal Lesson

Korea’s transformation offers a profound lesson: poverty is not destiny.

A country that ate acorns became a technological superpower within 50 years. Not through luck, not through natural resources, not through following the advice of international experts—but through deliberate, strategic, heterodox economic policy.

The free market fundamentalists won’t tell you this story. Or if they do, they’ll find ways to explain it away—special circumstances, Confucian culture, American security guarantees.

But the evidence is in the pudding. Or rather, in the acorn jelly.