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 the top national pr
It can be either a source of political and bureaucratic corruption, but if wisely used, it can be a useful or powerful policy instrument in supporting business operation and government policies. The major contents of fiscal and financial policies as stated in the plan document were largely about the tax, budget, and monetary system, financial market and foreign exchange system. However, this government’s promotion of heavy industries for large-scale economies led to under-investment in light manufacturing industries causing productive gap between small and large firms. Between 1965 and 1973, exports grew at average annual rate of 45%, from $175 million to $3,271 million. He major change in trade policy during the fourth plan period included the expansion of imports related to exports, maintenance of effective exchange rate, expansion of export subsidies, tax benefits and foreign loans to export firms. The first was a favorable international economic environment, which saw total world imports expand from $175 billion in 1965 to $536 billion by 1973. As a example, the price of a 16 MB dynamic random access memory (DRAM) chip fell from more than US $40 in January 1996 to less than US $10 by the end of 1997. Followings are the plans that the Korean government set over time period as a guide for economic growth. Allocation of financial resources is not an easy job, but this would be best time for Korea to consider again about the efficiency of closed relationship between the government and businesses while the country is restructuring its economy system. It was ironic to see that Daewoo was expanding its size when the country was in recession and other chaebols tried to reduce their size and increase efficiency. It raised the interest rate on (one-year) time deposits from 15% per year to 30% per year and general loan rate from 16% to 26%. After two major wars, the country even with a food shortage experienced lack of capital. Government’s Policy Before 1961 As seen above, the Korean government has been focused on import substitution for economic growth during 1953 ~ 65 period and followed by export expansion policy after 1965. They are quite helpful to understand how major government’s policies on financial sector have been varied with given the world economic situations like oil crisis and its own economic recession. It also stresses the importance of reform of finance, government administration, budgets, ethics, etc.
Common topics in this essay:
Development Bank,
Five-Year Plan,
Seventh Republic,
Countries Korea,
Government’s Policy,
Actually Daewoo,
Board EPB,
Minister Finance,
Industrializing Country,
Promotion Policies,
economic growth,
exchange rate,
heavy industries,
export expansion,
five-year plan,
domestic savings,
economic development,
korean economy,
military government,
heavy chemical industries,
– plan,
five – plan,
third five-year plan,
exchange rate system,
change trade policy,
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Acceptance Essays
