Historical background[edit]

After the Korean Armistice Agreement was signed in 1953, South Korea experienced a period of rapid economic growth known as the "Miracle on the Han River". Following Park Chung-hee's ascent to South Korean presidency in 1961, screen quotas were gradually introduced to the local market in order to restrict the number of foreign films shown in cinemas.^[19] Previously, the South Korean film industry was unable to raise sufficient capital for the production of big-budget films. The introduction of these quotas was intended to prevent domestic films from having to compete with foreign blockbuster movies.^[20]

In 1986, the Motion Pictures Exporters Association of America filed a complaint to the United States Senate regarding "unfair" regulations and quotas imposed by the South Korean government on all foreign films.^[21] Facing pressure from the U.S. government, the South Korean government gradually lifted its restrictions and allowed major Hollywood studios to release their film productions. In 1988, Twentieth Century Fox became the first American film studio to set up a distribution office in South Korea. This was soon followed by Warner Brothers (1989), Columbia (1990), and Walt Disney (1993).^[22]

By the year 1994, Hollywood's share of the South Korean movie market had reached a peak of around 80 percent, and the local film industry's share fell to a low of 15.9 percent.^[23] In the same year, the former South Korean president Kim Young-sam was shown a report by the Presidential Advisory Board suggesting that cultural and media production should be encouraged and subsidised as part of the country's strategic export industry.^[24] According to South Korean media, the former President was urged to take note of how total revenues generated by Hollywood's Jurassic Park had surpassed the sale of 1.5 million Hyundai automobiles. With the latter widely recognized in South Korea as a source of national pride, this comparison between the Hollywood sector and the South Korean automobile industry finally led to the government's acceptance and recognition of culture as an exportable commodity.^[25]

K-pop (Korean pop) songs played by the South Korean conglomerate LGat the IFA trade exhibition in Germany

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As a result, numerous state research agencies were created to boost the nation's cultural industry. Although the term Hallyuwas coined much later in 1999 by China's Beijing Youth Daily,^[26] by the end of 1995, the foundation for the rise and spread of Korean culture was firmly laid out.^[25] The earliest mention of using culture to enhance the nation's soft power echoes back to the writings of Kim Gu, leader of the Korean independence movement and president of the Provisional Government of the Republic of Korea. Towards the end of his autobiography, he writes:

...I want our nation to be the most beautiful in the world. By this I do not mean the most powerful nation. Because I have felt the pain of being invaded by another nation, I do not want my nation to invade others. It is sufficient that our wealth makes our lives abundant; it is sufficient that our strength is able to prevent foreign invasions. The only thing that I desire in infinite quantity is the power of a noble culture. This is because the power of culture both makes us happy and gives happiness to others...