Economic Background For most of its postwar history, South Korea has relied on economic liberalization worldwide to drive its economy. The country, squeezed between larger nations and strapped for natural resources, has used a close relationship between government and industry, as well as a proactive trade policy, to build a resilient economy. Along the way, it shed its reputation as a hermit kingdom to become a global economic power. The Korean Peninsula has a long tradition of innovation and development. Its people built the world's first astronomical observatory, developed metal printing presses hundreds of years before Western countries did and launched ironclad ships at the end of the 16th century. But invasion and occupation at the hands of larger, more powerful nations — namely China and Japan — punctuated each era of wealth and development.