South Korean Economy

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  • 2. • A global superstar •Market economy •third largest in Asia, the 13th largest in the world •donor to international financial aid •member of OECD •Four Asian Tigers •G-20
  • 3. Confucian Heritage • Strong emphases on education • Hard work
  • 4. South Korean Economy Distinctions • state involvement in its economy • Economic Planning Board (EPB) • one of the most indicatively planned market capitalist economies in the world • influence, subsidies, grants, and taxes •SK - incentives, regulation of foreign exchange and highly centralized fiscal policies
  • 5. South Korean Economy Distinctions • higher levels of corporate concentration in the chaebol (chae wealth, property + bŏl faction, clan) a family-controlled industrial conglomerate in South Korea 1960s
  • 6. South Korea at its poorest • Japanese occupation of Korea (1945) • 38th parallel division of the Korean peninsula (1948) • Korean War (1953)  complete loss in economy  Decline of production sectors  dependency on US aid
  • 7. Syngman Rhee (1875-1965) • First president of South Korea (1945-1960) • anti-Communist • later years: any political opponent = communism. • Regime • authoritarian, corrupt and inefficient. • 1960 - student demonstrations ousted Syngman Rhee from presidency. • Main achievement: land reform Photo credits:
  • 8. Park Chung Hee (1917 –1979) • seized power through a military coup d'état that overthrew the Korean Second Republic in 1961. • Authoritarian • Political Activities Purification Law • Indicative Planning • Miracle on the Han River • Five-Year Plan (FYP) Photo credits: Hulton Archive / Getty Images
  • 9. Five Year Plan • Aims to increase wealth within South Korea and strengthen political stability. • change in policy • import substitution industrialization to export-oriented growth • Nathan Plan • UN plan for the economic recovery of South Korea • Not implemented
  • 10. Components of the Development Plan • an “unlimited” but educated labor force • foreign loans • export in world markets • the government
  • 11. First Five Year Plan (1962-1966) • Emphasized industrial growth rather than food self-sufficiency • GOAL: lay a foundation for future economic growth by developing a base industry in South Korea
  • 12. Second Five Year Plan (1967 – 1971) • sought to shift the South Korean state into heavy industry • emphasized textile exports as a leading sector • increasing the public sector for social overhead capital investment
  • 13. Third Five-Year Plan (1972-1976) • Heavy Chemical Industrialization Plan (HCI Plan); Big Push • government borrowed heavily from foreign countries • Left South Korea with a large foreign debt
  • 14. Fourth Five-Year Plan (1977-1981) • GOAL: efficiency in manufacturing and investment in industries that can compete internationally. • Shifted towards electronics, machinery and shipbuilding with lower foreign borrowing • Increase in exports • Worldwide economic recession (late 1970s) • Economy suffered from inflation and low GDP
  • 15. Fifth Five-Year Plan (1982-1986) • Had similar sectoral goals as Fourth FYP • Sought to shift emphasis away from heavy and chemical industries to technology-intensive industries • Plan exceeded its targets
  • 16. Sixth Five-Year Plan (1987-1991) • part II of Fifth FYP •Emphasis: Science and Technology • Expanded welfare state programs • Emphasized domestic research and development • Called for liberalization of financial system
  • 17. Seventh Five-Year Plan (1992-1996) • high technology • greater free marketization •Kim Young Sam GOALS: • develop high technology fields • maintain balance between growth and stability • achieve more economic concentration of the chaebol groups
  • 18. The chaebol and the South Koreans • SK Policy of concentrating wealth in the hands of a few wealthy businessmen + elevation and development of the South Korean economy -unequal distribution of income • Domination will still continue.