KOREA INC.
Most people don't like dictators, but many South Koreans are different. It's Sunday afternoon, and Jin Yeon Bae, a 38-year-old farmer, has brought his three children to visit the house where Park Chung Hee was born in the town of Kumi, about a 90-minute drive up a winding freeway from Ulsan. Though he ruled South Korea for 18 years, Park suffered the same humble beginnings of most Koreans. His former home is a 100-year-old clay-and-wood hut; a worn wooden desk on which Park would scribble out his grammar-school homework still stands in one claustrophobic room. Park, a former army officer who seized power in a 1961 coup, was a brutal man whose all-pervasive security forces tortured dissidents and beat up protesters. (Ironically, Park's reign ended in 1979 when his own security chief shot him under mysterious circumstances during dinner near the presidential palace.) But today, Jin and most other Koreans have forgiven him for his cruelty. Jin takes one of his daughters inside a shrine next to the old home and stands silently in front of flower-ringed pictures of Park and his wife, paying his respects. "I know he did things that were wrong," Jin says. "But he was what we needed at that time. Certain things had to be sacrificed. He made Korea rich. This would not have happened without such a strong leader."

Non-Koreans might see Jin's exoneration of Park as twisted, but if you're as poor as the Koreans were, a full belly seems more important than a free press. Park is easily the most important figure in South Korea's Miracle. Many of the photographs lining the walls in the Kumi shrine play up Park's economic achievements. In one, he's christening a new highway with champagne; in another, he stokes a furnace in a formal suit, a flower pinned to the jacket lapel. Though many economists credit Japan with forging the state-driven economic model that created the Miracle—all of the other Asian tigers have been described as mere followers, like geese flying in a well-ordered V—Park took the strategy to another level. Unlike Japan, which had already been industrializing for nearly 100 years by the 1960s, Park was starting from scratch. He corralled what meager resources South Korea could muster and pushed them into favored industries. South Korea—like other Asian countries that enjoyed the Miracle—first utilized its plentiful cheap labor to make shirts and shoes, and then moved into heavier industries, like Hyundai's cars and ships. But most of all, Park chose champions, energetic entrepreneurs who could make his vision for the country become reality. In the process, Park created the chaebols—the massive conglomerates that built South Korea—and the tightly wound government-business cabal that became known as Korea Inc.

Hyundai's Chung Ju Yung was one of those champions. At its height in the 1990s, Hyundai made ships, cars, microchips, elevators, steel, and shipping containers. It constructed apartments, brokered stocks and managed mutual funds. Businessmen joked that South Korea should be renamed the "Republic of Hyundai," and the press dubbed Chung "King Chairman." Ulsan is very much the town that Hyundai built. Hyundai's shipyard, car factories and other plants directly support a quarter of Ulsan's population. Ulsan residents live in Hyundai-built flats, drive Hyundai cars, shop in Hyundai department stores, study at Hyundai-founded University of Ulsan, and elected Chung's son, Chung Mong Joon, as their delegate to the national parliament. There is even a Hotel Hyundai.

Chung's beginnings, though, were just about as humble as Park's. Born in a village that is now in North Korea, Chung moved to Seoul in the 1930s, where he ran an auto-repair shop, then took on building projects for the U.S. Army and the South Korean government. Park befriended him in the 1960s, when Chung oversaw the construction of the nation's first cross-country highway. According to former BusinessWeek journalist Mark Clifford's authoritative book Troubled Tiger, Park once made a spot inspection of the work at dawn by helicopter, only to find the tireless Chung already awake, pushing on his workers from the roadside. During the construction, Park supposedly asked Chung, "Do you know anything about cars?" Chung mentioned the auto-repair shop, and Park told him: "You're building the road. Now we need cars." In 1967, Chung came to Ulsan and launched carmaker Hyundai Motor. Five years later, he added the shipyard.

Chung's factories were more than just places to work; they were beacons of hope. Kim Tae Yong, now 49, recalls when Chung's factories first began to appear in Ulsan. On his way home from middle school to his family's four-room hut, where he was crammed in with his six brothers and sisters, he would climb up a hill near the coast and look over Hyundai's shipyard. For a poor fisherman's son in hand-me-down clothes, the sight of the massive ships was enthralling. But it provided even more—the view gave Kim a glimpse of his future. "Whenever we saw the big machines working, we thought it was just great," he says. "I thought: I want to work there. Fishing and farming weren't providing enough money for my family to survive."

After graduating from high school and serving his mandatory military service, Kim's dream came true. In 1979 he applied for a job at Hyundai Motor, and after a brief interview and two weeks of training, he began checking car quality on the assembly line. On his first day, he walked into the cavernous factory and became mesmerized just like he had been as a teenager. The long production lines were a whirl of machinery and frantic workers. "Everything was new," he says. "The machines were new, the factory was new. I was wondering: Am I really working at this place? I was very optimistic. I thought I was going to have this job for the rest of my life."

But Miracles don't last forever. One summer day in 1998, Hyundai Motor employee Choi Byung Joon received a yellow envelope. Inside, a note informed the 43-year-old that he was being "retired." Choi was shocked. "I thought the sky was falling," he says. "I went home to tell my wife. For many hours, we were drinking and smoking and wondering how we were going to survive."

Choi wasn't alone. Asia was in the throes of a financial crisis, and workers were getting sacked all over the region. The Crisis began far away in Thailand in 1997, with a loss in confidence in the Thai baht, and spread like an epidemic across Asia. Nearly all the tigers faced national bankruptcy. In Indonesia, the Crisis forced the resignation of strongman Suharto amid wild rioting in the streets of Jakarta. In South Korea, the Crisis exposed the faults of Park's Korea Inc. The cozy chaebol-government connections may have made the country rich, but by the 1990s, the system was rotten and corrupt, the chaebols were debt-ridden and bloated, and Korea Inc. came tumbling down. In 2000 the massive Hyundai conglomerate began to break apart, and in 2001 Chung died, his empire in shambles.

Choi's life collapsed with it. After four months without work, he found a job at one of Hyundai's suppliers, but at one-third his previous salary. His savings dwindled; and he had to fight off thoughts of suicide. Though he has since found a better paying job, the large debt he has built up has made it impossible for his life to get back to normal. Fed up, his wife abandoned him and their two children. "I'm in a very desperate situation," Choi says. "There is no hope." What keeps him going is a belief that one day he will work at Hyundai again. Management had promised that when the economy improved, laid-off workers like him would be rehired, and it's a promise he clings to frantically. About half a dozen times a month, he and a handful of others stand outside the front gates of the Hyundai car factory in Ulsan and chant: "Keep your promise!" (A Hyundai Motor spokesman says 95% of laid-off workers have been rehired, and the company hopes to re-employ the rest.)

The promise that Ulsan once held out for South Korea, however, is fading. Ulsan's best days may be behind it. These days, companies like Hyundai Motor, chasing global markets, are investing in China, India, even the U.S., instead of in Ulsan. The new industries now driving the South Korean economy are popping up elsewhere in the country, like in Park's hometown of Kumi. A short drive from Park's clay-and-wood hut sprawls a massive industrial park where companies like Samsung and LG make the mobile phones, flat TVs and other hip digital gadgetry for which South Korea is becoming renowned. At LG.Philips LCD's newest factory, glass for the LCD panels is escorted to the assembly line on automated carts that use puffs of air to hold the sheets in stacks. The sheets are so thin that if touched by the human hand, the glass would crumble. Employees walk about the clean rooms clad in white suits worthy of a space-shuttle launch.

Whatever the changes, the generation that created and experienced the Miracle is still grateful. In Ulsan, Hyundai Motor's Kim Tae Yong still has the same job he started doing 26 years ago, and now commands a $65,000 salary. His living room is cluttered by a piano, a large TV set, and rows of old photographs—in one, he poses in front of the Capitol building in Washington. He flips through the pages of a brochure for the brand-new, four-bedroom apartment he recently bought in an Ulsan high-rise. It's still under construction, and Kim can't wait to move in. The complex includes a parking lot, where he can put his luxury sedan, and a basketball court and a soccer field next door. "When I was young, I never thought I'd live this way," he says. In Ulsan, and all across Asia, millions are voicing the same sentiment, and trusting in an even better tomorrow.

—With reporting by Lina Yoon/Seoul

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