SOUTH KOREAN ECONOMY

• 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

Confucian Heritage• Strong emphases on

education• Hard work

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

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 Korea1960s

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 sectorsdependency on US aid

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 

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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

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

Components of the Development Plan

• an “unlimited” but educated labor force

• foreign loans • export in world markets• the government

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

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

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

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

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

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

Seventh Five-Year Plan (1992-1996)

• high technology• greater free marketization

• Kim Young SamGOALS:• develop high technology fields• maintain balance between growth

and stability• achieve more economic

concentration of the chaebol groups

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.