Korean Miracle Finish


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Korean Miracle Finish

  1. 1. Kyung Hee UniversityGraduated School of Pan-Pacific International Studies International Workshop Prof. Tae Hwan Yoo Isis Quiñones 2009535001 International Business 1
  2. 2. Table of Contents1. Introduction2. South Korean Economic Development3. Factors of South Korean Economic Development-Human Capital Inversion:-Exports Strategy (Industrialized):-Economy Political Constance (Economy Plans):-Technology Revolution:4. South Korea and the G20.5. How is South Korea getting out faster of the Crisis?6. Conclusion 2
  3. 3. 1. IntroductionIn the latest years students and professionals have experienced the need of been activelyconnected and involved into the international community. This is one of the strongest reasonswhy nowadays we see students leaving their native countries to study in other countries whichcould offer them the opportunity to be in contact with new ideas, concepts and visions of theirfield of studies. International Workshop class was one of the most significant classes that wehave coursed this fall semester due to the content of the different lectures offered bydistinguished South Korean professionals that allowed us to understand and appreciated thedifferent topics of the international community mainly showing us the economic, business andsocio-cultural issues.In this occasion we are going to remark one of the most extraordinary and impressive lecture thatwas given in our International Workshop Class, offering by the invited speaker Doctor Jun KyuLee, one of the most outstanding Economic Development Experts in South Korea. Dr. Lee iscurrently working for the Ministry of Strategy and Finance (MOSFT) which was established inMarch 2008 to supervise the day after day economics of the public, committed to theimprovement of the domestic economy and establishment of growth dynamics through effectivepolicy coordination, international cooperation, competent budget management, fair tax systems,and public enterprise reform. Dr. Lee at the moment is extremely immerse in the project “SouthKorea in the G20” playing a essential role in the different activities, workshops, conferences, etc.leading with the creation of different strategies and policies that will help the United States ofAmerica to recovery from the current economic difficulties. Dr. Lee in his lecture entitled“South Korea’s Resilient Economy & Decisive Measures: Taking a Stand Against the GlobalTurmoil” amazingly explained us the different factors and stages that the South Korea Economyachieved in order to pass from a poor country to a rich country, focusing in the “South KoreanMiracle” most important aspects. In the other hand, Dr. Lee also explain us the reasons whySouth Korea is getting so faster out of global economic chaos and impressed us showing us thedifferent facts that prove how South Korea is facing the crisis. 3
  4. 4. 2. South Korea Economic DevelopmentHistory has showed us how countries make an effort to develop policies, programs, strategiesand mechanisms that allow them to achieve economic develop, with the main objective ofincreasing the welfare of humans in their society as education, health, human security,employment, etc, increasing the different economic indicators as Gross Domestic product (GDP),Gross National Income (GNI), Gross National Products (GNP), Exports Volume, and others.In the first section of the lecture, Dr. Lee explained us how South Korea has developed a numberof policies and strategies that today allowed them to be integrated into the world economy afterbeen one of the world’s poorest economies, achievement that is known as the “Miracle on theHan River” and has transformed South Korea into the 13th largest economy and commercialpartner around the world.Dr. Lee insisted that South Korea’s economy development was possible thanks to the constantefforts that the government made promoting high interest rate for savers and investor, and thehigh incentive on education, what motives younger students to enroll the universitiesaccomplishing one of the highest levels of enrollment in universities around the world. SouthKorea built up an outward-oriented economic development strategy, which used exports as theengine of growth, this issue of developing a model of exports contributed greatly to the radicaleconomic transformation of South Korea. Based on such a strategy, many successfuldevelopments programs were implemented, one of the most important programs was theliberalization process that South Korea’s used as a strategy to expand exports due to the fact thatSouth Korea was importing three hundred millions of dollars and was just exporting thirtymillions of dollars.Between 1960’s and 1090’s South Korea have had to promote exports giving all kinds ofresources as for example: incentives, exemptions, tax reductions, export credit, low interest rate,and others in other words South Korea practically suspended all controls to exports. During thistime South Korea has drastically transformed its industrial structure, due to the issue that theywanted to control imports and the reason of this control on imports was because after liberalizingexports, imports continue increasing at the same level of exports and this was represented in thedifferent economic indicators. 4
  5. 5. In order to reduce imports, South Korea government began to promote heavy and chemicalindustry and rapidly South Korea was able to develop the car industry and more after electronicsindustry representing since 2004 the 30% of products exports.The intervention of the South Korean government in the macroeconomic politic was reallysignificant. The majorities of all principal business organizations were formed by the SouthKorean government or were under the influence of the state. In the greater part of the cases, thegovernment had employed the politic of “association” as the media through which they could“sell” their politics to the industry and obtain their support.As a result, from 1962 to 2008, South Koreas gross domestic product (GDP) increased fromUS$2.3 billion to US$969.9 billion, with its per capita GNI soaring from US$87 to aboutUS$20,045. These impressive figures clearly indicate the magnitude of success the economicprograms have brought about. 1South Korea’s government is involving practices to international standards, enhancing nationalinstitutions efficiency, promoting human capital, and technology development. The governmentremains strongly committed to reform and will continue to implement financial and corporaterestructuring while pursuing flexible macroeconomic policies that are beneficial to economicgrowth. Dr. Lee has grants that South Korea’s government objective is to solve problems andbuild a strong economic structure appropriated for an advanced economy to confront the newchallenges.1 See The World Bank Annual Report 2008. 5
  6. 6. 3. Factors of South Korea Economic DevelopmentDr. Lee pointed out that the incredible economic development that South Korea’s has achievedwas possible thanks to four critical factors. -Human Capital Inversion: This is one of the most central factors for South Korea’sGovernment and can be easily noticed if we look how South Korea invests in education, heritagefrom Confucius’s philosophy for whom was essential the promotion of education. -Exports Strategy (Industrialized): Since the year 60’s the economic developmentprocess of South Korea was basically focused in their policy of exportation, the goal of the SouthKorean Government was to obtain an economic growth of 7% (Galvan, 2008) for this theyapplied the substitution of imports strategy, which until that time had had a positive tendency tolater converted it in negative. South Korea had made a campaign for the promotion ofexportation with the motto “Nation Building by Exports” with the objective to teach the nationthe significant importance of this export strategy, and there after South Korea became a countryincredible industrialized.Dr. Lee mentions some points which we consider significant in order to the improve exports: Attractive Exchange rate for exports. The importance that gives South Korean Government to the Export Sector. All the facilities that the South Korean Government gives to exporters. Energy Cost. Financing facilities offered by the South Korean EXIMBANK -Economy Political Constance (Economy Plans): The impressionist economicdevelopment that South Korea has achieved in less than 50 years was supported by theirquinquennial development programs and the realization of the “Monthly Exports PromotionMeeting” where entrepreneur, governmental officials, and other professionals took place toidentify the different problems and look for the different possible solutions to solve the problems. -Technology Revolution: 6
  7. 7. At this moment South Korea is one of the countries that has accomplished moreInformation and Communication Technologies (ICTs) advancement around the entire world.South Korea has obtained economic growth and social transformation through the developmentof certain policies and programs promoting ICTs thanks to the South Korean government visionconcerning the relevant impact that ICTs represents for economic growth, they saw ICTs as apotential motor to obtain economic development. Dr. Lee commented how South Korea hadtransformed from an analogy country to a digital one, transformation that today allows them tobe the first country in information technology.According with Chadwick (n.d.) the effect of ICTs on national economies such as the SouthKorean economic is fourfold. ICTs and the digital revolution create: • New industries and economic sectors or sub-sectors (e.g. the software industry, cellphones, computers and peripherals) • New ways of doing business (e.g. e-commerce, globally distributed organizations,integrated supply chains) • New tasks and opportunities for government (e.g. e-government, privacy policy legislation,ICT industrial policy) • New issues in economic and political development (e.g. availability of information access,computer literacy, the digital divide)4. South Korea and the G20. 7
  8. 8. In the second section of Dr. Lee’s lecture, he commented how The Ministry of Strategy andFinance (MOSFT) is working through international cooperation policies, together with theUnited States of America and The Group of Twenty (G20) looking for strategies to solve thefinancial turmoil that exploded last September 15th, 2008 with the bankruptcy of the LehmanBrothers.South Korea has learned in a short time a lot of experiences due to its precedent economicproblems and the most recently 1997- 1998 Asia Financial Crisis which allow South Korea todemonstrate the entire world that they have learned important lessons as is the systematicplanning and determination strategy during the financial crisis and also during their developmentprocess. Lessons that today are opening many doors to South Korea in the internationalcommunity.Dr. Lee explained how South Korea see the problem of the Global Financial Crisis, and arguedthat “International Cooperation is the key for the solution of the new economic order”, he alsoillustrated how South Korea is collaborating with the G20 by offering their experience and alsodeveloping supportive policies, finance regulations, reforms and programs which could return tothe United States their economic stability.He explained us how the United States became a problem maker due to the wrong policies thatwere taken not just in the year 2008 moreover those in past years where the stock market wasalready having serious problem, but companies as Standard and Poor’s and Moody’s wereevaluating with false securities and policies. The bankruptcy of Lehman Brothers marked a linebefore and after the fall of Lehman Brothers for the United States’ economic was then when theUnited States recognized that they could not solve this problem alone and when the G20 a groupof twenty developed and developing countries which represent the 85% of the biggest economiesand the 90% of trade activity came into the center and started to play and important role in thisturmoil, been the premier forum where 20 economic leaders are working together to take theworld out of this crisis.5. How is Korea getting out faster of the Crisis? 8
  9. 9. Dr. Lee explained us how Korea is getting out of the crisis by telling us that Korean Governmentis constantly monitoring the situation and is giving to the market the policies and procedures thatthey need to follow, arguing that “Government set the rules, market follow them”. Korea isovercoming this crisis by promoting and supporting exports policies and inverting by injectingmoney in the private sector in order to develop new technological products and services with themain objective of increment exports of Korean Products around the world. He also mention theemphasis that Korea is giving to the investment sector by offering investor significant attractionsand giving priority to the construction area what he identified as “hardest hit in Korea” after thefinancial crisis.To finish his speech he insisted that Korea is a country without natural resources but Koreanperformance is thanks to three factors: Human Capital, International Cooperation and ExportModel. 9
  10. 10. 6. ConclusionIt was such a great opportunity to listen to Dr. Jun Kyu Lee’s speech about “South Korea’sresilient economy & decisive measures: Taking a stand against the global turmoil”, where he ina magnificent and enthusiastic manner try to explain us how South Korea accomplishedeconomic development and how South Korea is managing the actual situation in order tocontinue its growth and maintain apart of the chaos.Came to South Korea to study a Master in International Business has been one of the mostwonderful experience of my life, that today give me the opportunity to see how “economicmiracles” are projects of nations that are taken with a great passion. It was marvelous to see howthis official of the Korean government Dr. Lee expressed in his face the emotion of telling us thehistory of how Korea become what it is today. This speech certainly convince me that if everysingle nation assume the promotion of exports as a national priority, accompanied with thedevelopment of long and short term program, and always giving constantly monitoring to ifimplementation in few years is possible to accomplish a country with economic and socialdevelopment.Korea is a country that has impacted me with their strong organization and work force and afterparticipating in this international workshop class and have the opportunity to be in contact withdifferent authorities from various governmental institutions, I could see the coordination throughthe different governmental institutions with the view to achieve the objectives that are proposedas a nation.Korea economic development was possible thanks to the prudent and systematic managementwith long-term strategies and a different conduct of the government and with well organizedinstitutions in order to generate different results.Korea has demonstrated that in order to help the market of any country is needed to study themore convenient manners to intervene with a definitive strategy. 10
  11. 11. ReferencesGalván, Héctor. 2008. El Rostro de la Esperanza. Santo Domingo, República Dominicana: Editora Centenario.Korea. Ministry of Culture, Sports and Tourism. 2008. Korea Impossible to Possible. Seoul, Korea: Korean Culture and Information Service.The Organization for Economic Co-operation and Development (OECD). 2009. Annual Report 2009. Paris: OECD.The World Bank. 2008. Annual Report 2008. Washington: The World Bank.Seongta, Lee. 2007. Annual Report 2007. Seoul, Korea: The Bank of Korea. ISSN 0067-3706. 11