Asian economic history
Brief Economic History and Government Policy Korea was one of the poorest countries in world after experiencing two wars. World War II and Korean war (1950 ~ 1953). The country even experienced a food shortage so that it had to heavily rely on the foreign aid. Yearly per capita consumption was a mere $88 as late as 1965. However, since 1965, Korea has been transformed from its underdeveloped agricultural economy to a leading Newly Industrializing Country. Between 1965 and 1981, its gross national product GNP multiplied twenty times from $3 billion to $63 billion and per capita GNP increased sixteen times from $88 to $1,554. There have been many explanations for Korea's successful story. Among those, the strong role of government would be probably the most important one. At the same time, this would be also responsible for current recession. After Koran war, the government in fact had no sense of direction and also due to the unstable political situation, the country didn't have specific economic policy until 1961 when military government came to power and established the major institution guiding its economic planning called Economic Planing Board (EPB). This government set economic development as th
However, this time it doesn't seem happening that way. Actually, this is not the first time Daewoo asked for the government's help. In addition, the financial reform contributed to a massive inflow of foreign loans due to the existence of gap between domestic and international interest rate and since the Korea Development Bank guaranteed to pay back to foreign lender, the inflow of the loans were accelerated. Since foreign aid started to decline later 1960s, the government reformed interest rate. During this period, its main purpose was, however, to expand exports as much as possible by providing export firm with cheap loans, tax benefits, export compensation schemes, and various administrative support. As a result, conglomerates later known as chaebol (family owned conglomerate) have been formed through this expansion of heavy industries. Consequently, export promotion was given the highest policy priority again, so the major change in trade policy included intensive promotion of export goods and market diversification, reform of the export support system, lowing tariff rates to expand importation of good used in manufacturing. The Fourth Five-Year Plan (1977 - 1981) Because of high inflation cause by the first oil crisis, stability was given relatively high policy priority. The Third Five-Year Plan ( 1972 -1976) The third five-year plan put its major emphasis on the promotion of heavy and chemical industries. The Second Five-Year Plan (1967 -1971) During this period, the major reforms include a financial reform assuring positive interest rate in 1965, and exchange rate reform normalizing highly overvalued exchange rate, and trade reform allowing wide imports of parts and machinery used for the production of export goods. London: Cornell Univ. Furthermore, it can increase capital formation in the country if it effects a redistribution of income from consumption to investment activities (Haggard, 23). In addition, due to different emphasis on light and heavy industries, the growth gap increased substantially. In the first three months after reform, saving deposits increased by 50%. This boom in imports of the world reflected the fact that the industrialized had not yet erected import barriers against exports from developing countries and were, on the contrary, quite active importers of cheaper goods from Newly Industrializing Countries such as Korea.
Common topics in this essay:
Development Bank,
Seventh Republic,
Five-Year Plan,
Countries Korea,
Government's Policy,
Five Plan,
Actually Daewoo,
Board EPB,
Minister Finance,
Industrializing Country,
economic growth,
exchange rate,
five plan,
heavy industries,
domestic savings,
export expansion,
korean economy,
economic development,
five-year plan,
military government,
heavy chemical industries,
output price level,
change trade policy,
major change trade,
military government power,
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