South Korea has transitioned through different phases of economic development since the 1960s. Initially under an authoritarian regime in the 1960s-1970s, the economy grew rapidly but sustainability was not a focus. In the 1980s-1990s there was a shift towards stabilization and liberalization with some progress on democracy but imbalances remained. Currently, South Korea pursues balanced development of both politics and economy for structural reforms towards sustainability, but large businesses still exert significant influence and vulnerabilities remain.

1. Sustainable Development
Case Study – South Korea
By Meherunnesha Binte Mannan
28th April, 2011
MGT 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

14. 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

15. 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

16. 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.

17. 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.

18. 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.

19. 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

20. 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.