Sustainable Development

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  • The term was first used in 1987 by the World Commission on Environment and DevelopmentSustainable development is the concept of a relationship between economic growth and the environment.Development that meets the needs of the present without compromising the ability of future generations to meet their own needsWorld Commission on Environment and Development 1987
  • A diagrammatic representation of “strong” sustainability. The “nested egg” represents that sustainable development seeks consistency of both economy and society with the ecology of the Earth. It encourages (economic and social) development within the parameters of ecology. (Source: Bosselmann, "The Concept of Sustainable Development", in Bosselmann and Grinlinton (eds), Environmental Law for a Sustainable Society (New Zealand Centre for Environmental Law Auckland 2002), 91.)
  • The development imperatives of the current economic system favor market expansion, externalization of costs, and sustained private profit. The current imperatives of community development are to meet basic human needs, increase economic and social equity, and create community self-reliance. The imperatives of ecological development are established in the natural order. Humans can support ecological development by limiting the consumption of natural resources to a rate that allows nature to regenerate resources and by reducing the production of wastes to levels that can be absorbed by natural processes.The imperatives of these development processes often contradict one another. Many examples can be found of such contradictions. For instance, the externalization of costs in order to maintain rates of private profit can contradict the ecological imperative to value and conserve natural resources. The global expansion of markets and the integration of national economies through structural adjustment programs and free-trade agreements can undermine the community development imperatives of local self-reliance and meeting basic human needs.Sustainable development is a process of bringing these three development processes into balance with each other. The implementation of a sustainable development strategy therefore involves negotiation among the primary interest groups (stakeholders) involved in these three development processes. Once an Action Plan for balancing these development processes is established, these stakeholders must each take responsibility and leadership to implement the plan.
  • Figure 11 shows globalization, central governmentdeep concern for economic development, and the strongdevelopment oriented policies of local governments arestructured in a way to constrain sustainable developmentin Korea. Governmental growth-first policy led to economicconcentration and growth of business influence.Governmental deep concern for economic growth wasgradually institutionalized in the government and societyas a form of economism. Economism places heavyweight on economic value on every occasion. Globalizationsince the late 1990s further accelerated economism.Together with increased influence of business on governmentpolicy and society, government economic growthoriented policies are further accelerated, forming avicious circle. Under these circumstances, there seemsto be little room for sustainable development unlessthese structured constrains are lifted. Heavy economicconcentration on large conglomerates, institutionalizedeconomism which places heavy weight on economicgrowth, large business strong influence on society aswell as government, and impact of IMF crisis are legacyand context within which Korea society has to deal within pursuing sustainable development.
  • According to OECD Fact Book of 2005 (see Table1), Korea’s GDP is the 10th high one among OECDcountries, showing a rapid economic growth. 3.8% oflabor productivity increase rate is the second highestamong OECD countries and R&D expenditure is the 8thhigh. It also shows the highest percentage of householdwith PC, the least unemployment rate, and the highesteducation expenditure in OECD countries. On the surface,it seems fair to say that Korea has overcome financialcrisis in 1997 successfully and is making a firmprogress toward economic development.

Transcript

  • 1. Sustainable Development Case Study – South Korea By Meherunnesha Binte Mannan 28th April, 2011MGT 789 Special Topic in Technology Management
  • 2. Contents Sustainable Development (SD) Economic Growth in South Korea and SD Economy Sustainability in Korean Conclusion
  • 3. Sustainable Development 1987 – First used by the world commission on Environment and Development 1992 – Emphasize in Earth Summit 21st Century - alternative development model in business Korea is following since Earth Summit.  Sustainability indicators (Moon, 1998; Ahn et.al. 1990)  Sustainable urban and rural development strategy (Oh, 1998; Kim, 2003 et.al.)  Sustainable energy strategy (Yoon, 2002, 2003)  Residential perception on sustainable development (Choi, 2004)
  • 4. Sustainable Development First Concept:  World Commission on Environment and Development 1987  Development that meets the needs of the present without compromising the ability of future generations to meet their own needs General Definition:  Three closely interrelated components : Economical, Social and Environmental (Munro, 1995)  To achieve a SD, economic and social development needs to be attainable in a healthy balance apparatus without deteriorating natural environment. • Compromises and trade-offs in one sector are necessary to achieve improvement in another
  • 5. Figure: The sustainable development challenge
  • 6. Economic Growth in South Korea and SD Three phases  Growth phase ( 1960s – 1970s) • Economic Take Off under the authoritarian regime  Stabilization and liberation period (1980s - 1997) • Little progress in democratization  Globalization period (1998 – 2015) • Balanced development of politics with economy Korean development strategies were based on GIO( Growth – industry – and outward-oriented) strategy (Song, 1997)
  • 7. Economic Growth in South Korea and SD Growth phase ( 1960s – 1970s) : Economic Take Off under the authoritarian regime  President Park controlled the market economy suppressing democracy  Large scale enterprises (Chaebols) expanded rapidly in the 1960s  Further expansion during the heavy and chemical industry promotion period (1973-1979)  Example: 10 largest chaebols grew from 7.5 to 25.4 percent from 1972 to 1979 and assets 362 to 5263 billion won  Allocated resources by launching a series of EDPs  Export-led growth strategy was the best
  • 8. Economic Growth in South Korea and SD Stabilization and liberation period (1980s - 1997) : Little progress in democratization  New Government headed by Chun Doo Whan  Shifted from growth first to economy stabilization (without abandoning its economic growth)  Gradual reduction in government intervention in the market economy  Gradual opening of the Korean market to international market  Global Competition owing to rapid growth of developing countries, launce of WTO, and the unprepared acceleration of market opening to meet OECD entry criteria under the Kim Young Sam government.
  • 9. Economic Growth in South Korea and SD Unbalanced business strategies for external expansion.  Problem of ‘high cost and low efficiency’.  Less effective financial and real state sectors due to government concentration on few large chaebols.  Chaebols were preferred for getting the loan.  Growth oriented approach, business resistance to reform and political reasons economic growth raced ahead. Economic Crisis  Foreign debt 29.4 to 104.7 billion (1989 to 1996)  International investors repatriated capital from Korea. Ironic – Large conglomerate are the growth and crisis factor. Weakened economy basis sustainable development
  • 10. Economic Growth in South Korea and SDNeed to deal with Sustainable development under Heavy weight on economy Large business strong influence government Impact of IMF crisis
  • 11. Economic Growth in South Korea and SD Globalization period (1998 – 2015):  Pursuing a balanced development (politics with economy) for its structural reforms.  Need to consider advanced democracy (i.e. heavy economic growth) • Democratization influence economic development • Economic development could bring financial crisis • This condition forced to follow market based approach rather than monopolistic power. – Focusing on large business creating the problem
  • 12. Economy Sustainability in S.Korea According to OECD Fact Book of 2005  Korea’s GDP is the 10th high one among OECD countries, showing a rapid economic growth.  3.8% of labor productivity increase rate is the second highest among OECD countries  R&D expenditure is the 8th high.  The highest percentage of household with PC  The least unemployment rate, and  The highest education expenditure in OECD countries. On the surface  it seems fair to say that Korea has overcome financial crisis in 1997 successfully and  is making a firm progress toward economic development.
  • 13. Economy Sustainability in S.Korea Critics argue that  The Korean economy became more vulnerable to international market and foreign capital influence (SERI, 2002).  Besides, economic concentration of large business became deepened than before the IMF crisis, making Korean economy more dependent upon large businesses and leave small and medium businesses behind.  For example, • the number of subsidiaries of 30 largest businesses increased from 544 in 2000 to 624 in 2001 and • the economic concentration of the four largest businesses is greater than before the financial crisis of 1997.
  • 14. Economy Sustainability in S.Korea The percentage of total production by the four largest businesses in GDP increased from 6.8% in 1997 to 8.7% in 1998, 9.3% in 1999, and 10.9% in 2000. Total tax payment of the four largest conglomerates was 14.6% in 1997, 15.3% in 1998, 14.9% in 1999, and 18.5% in 2000. With regard to the total amount of export, the proportion has increased from 41.6% in 1997, 44.1% in 1998, 47.4% in 1999, and 49.8% in 2000. As of 2002, the largest 3 business groups in Korea -Samsung, LG, SK- were growing 100% annually since the 1998 and the total value among all businesses listed on the stock market increased from 28% in 1998 to 43% in 2002.
  • 15. Economy Sustainability in S.KoreaNation’s real GDP growth  Averaged 6.3 percent in the 1990s  Declined to 5.2 percent during 2000-07  Plunged to 0.8 percent in 2008-09 in the midst of global crisis  Potential growth for coming decades has fallen to an annual average 3 Needs to follow market based approach
  • 16. Conclusion Started from economy growth phase Experienced different phase transformation keeping focus on economy growth first Recent situation forced to follow market based approach Sustainable development contrast to market based approach Pure democratization is not appropriate for sustainable development  Environmentally Sound Economic Development.