Korea: Growth Korea: Growth without Natural without Natural

ResourcesResources

Chapter 2Chapter 2

Beyond the Beyond the Aggregate Production Aggregate Production

FunctionFunction PeoplePeople

Geopolitical locationGeopolitical location

ClimateClimate

Natural resourcesNatural resources

LandLand

The Korean PeopleThe Korean People

The most racially The most racially homogenoushomogenous

Korea is a (very) Confucian countryKorea is a (very) Confucian country

Korea is a (very) Christian countryKorea is a (very) Christian country

Korea may be a dangerous place to live (the North)Korea may be a dangerous place to live (the North)

Koreans aspire for educationKoreans aspire for education

Koreans like to take risksKoreans like to take risks

Korea vs Japan: Korea vs Japan: Natural DisadvantagesNatural Disadvantages

Korea has less land per capitaKorea has less land per capita

(South) Korea is only ¼ the size of Japan(South) Korea is only ¼ the size of Japan

Korea is a peninsula (maritime conditions)Korea is a peninsula (maritime conditions)

Korea needs more energy because of a harsher Korea needs more energy because of a harsher climateclimate

Korea has less fishery and forestry resourcesKorea has less fishery and forestry resources

Korea versus Japan: Korea versus Japan: Natural AdvantagesNatural Advantages

Korea has larger rivers and greater hydroelectric Korea has larger rivers and greater hydroelectric power potentialpower potential

Higher proportion of arable land: 20% vs 13% in JHigher proportion of arable land: 20% vs 13% in Japan (of total land)apan (of total land)

Better endowed with:Better endowed with: Limestone (crucial for the production of cement)Limestone (crucial for the production of cement) TungstenTungsten LeadLead

Major Agricultural Indicators for Korea Major Agricultural Indicators for Korea and Japanand Japan

1955 1960 1970 1980 1994 2000

Agricultural population in millions

Korea 13.3 14.6 14.4 10.8 5.2 4.0

Japan 36.6 34.4 26.6 21.4 12.8 10.5

Share of agriculture in GNP (%)

Korea 61.9 58.3 45.8 28.9 11.6 8.7

Japan 41.0 36.8 25.4 18.3 10.3 8.2

Share of agriculture in total employment

Korea 50.4 34.0 13.6 10.5

Japan 36.2 30.0 17.9 9.8 5.2 4.6

Percentage of non-farm income

Korea 24.2 34.8 37.5 52.8

Japan 29.5 45.0 63.5 78.9 82.3 82.1

Koreans and AgricultureKoreans and Agriculture

Koreans’ share of agriculture in GNP is lower than that of JapanKoreans’ share of agriculture in GNP is lower than that of Japan

Share of non-agricultural income is roughly 50% in Korea Share of non-agricultural income is roughly 50% in Korea versus 80% in Japanversus 80% in Japan

Households cultivate very small plots of land in both countriesHouseholds cultivate very small plots of land in both countries

Korea heavily depends on imports of foodKorea heavily depends on imports of food

Koreans import 70% of the grain they consume, but they are Koreans import 70% of the grain they consume, but they are self-sufficient in the production of riceself-sufficient in the production of rice

Nature itself forces Koreans to cultivate their land efficiently by Nature itself forces Koreans to cultivate their land efficiently by enhancing land productivityenhancing land productivity

Korea’s Policy to Deal with Korea’s Policy to Deal with the Dearth of Landthe Dearth of Land

Efficient use of land is extremely importantEfficient use of land is extremely important

Preventing transfer of non-arable land into non-agricultural Preventing transfer of non-arable land into non-agricultural usesuses Serious land shortage in urban areas (e.g. green belt around Seoul Serious land shortage in urban areas (e.g. green belt around Seoul

since 1973)since 1973) Adverse consequences: price of land and housing surge, also Adverse consequences: price of land and housing surge, also

congestioncongestion

Transferring arable land into business uses might be a good Transferring arable land into business uses might be a good ideaidea

The natural solution to the problem: the population growth The natural solution to the problem: the population growth rate declinerate decline

Key Point: long-term growth strategy must be non-Key Point: long-term growth strategy must be non-agriculture orientedagriculture oriented

Land Use in Korea, 1970 and Land Use in Korea, 1970 and 20002000

1970 2000

Sq. Km. % Sq. Km. %

Entire country (sq. km.)

98480 100 99460 100

Arable 22980 23.3 20507 20.6

Rice paddies 12730 12.9 12447 12.5

Dry field 10250 10.4 8060 8.1

Forest 66114 67.1 65139 65.5

Other 9386 9.6 13814 13.9

Urban areas 8412 100 50287 100

Residential 601 7.1 1766 3.5

Agricultural 2511 29.9 11159 22.2

Forest 4307 51.2 30340 60.3

Why is Land Scarce Why is Land Scarce in Large Cities?in Large Cities?

Natural reasonsNatural reasons

Low priority to housing and environment policyLow priority to housing and environment policy

Incorrect use-of-land policy (self-sufficiency in rice Incorrect use-of-land policy (self-sufficiency in rice was key objective since 1960-s)was key objective since 1960-s) Expand rice paddies through reclamation, land clearing, Expand rice paddies through reclamation, land clearing,

conversion of dry fieldsconversion of dry fields Prohibit shift of arable land to urban use by designating Prohibit shift of arable land to urban use by designating

‘absolute arable’ and ‘relative arable’ land‘absolute arable’ and ‘relative arable’ land Absolute arable land can never be transferredAbsolute arable land can never be transferred Relative arable land can be transferred, but bureaucratic Relative arable land can be transferred, but bureaucratic

barriers are highbarriers are high

Regions and Population Regions and Population DistributionDistribution

Seoul has a special city statusSeoul has a special city status

9 Provinces9 Provinces

6 metropolitan cities6 metropolitan cities

7 major cities have the status of a province7 major cities have the status of a province

Seoul and Busan regions are two most important onesSeoul and Busan regions are two most important ones Seoul is the heart of the countrySeoul is the heart of the country Busan region: Pohang (iron and steel), Ulsan (automobiles, shipbuilding, Busan region: Pohang (iron and steel), Ulsan (automobiles, shipbuilding,

petrochemicals), Changwon (heavy manufacturing)petrochemicals), Changwon (heavy manufacturing)

The Population of Main Regions (th)The Population of Main Regions (th)1966 1970 1980 1990 1995 2000

Total Population

29193 31466 37436 43411 45187 46136

Seoul Capital Region

Seoul Special City 3803 5536 8364 10613 10229 9895

Incheon City 1818 2308 2475

Gyonggi Province 3108 3358 4934 6156 7650 8984

Total 6911 8894 13298 18587 20187 21354

Share % 23.7 28.3 35.5 42.8 44.7 46.3

Busan-Gyongnam Region

Busan City 1430 1880 3160 3798 3814 3663

Ulsan City 1014

Gyongsan Nam Province

3176 3120 3322 3672 3846 2979

Total 4606 5000 6482 7470 7660 7656

Share % 15.8 15.9 17.3 17.2 17.0 16.6

The Problem of SeoulThe Problem of Seoul

Seoul population and industries have been growing Seoul population and industries have been growing high since the early 1960shigh since the early 1960s

Dispersal plans by the governmentDispersal plans by the government Industrial relocation planIndustrial relocation plan New capital city planNew capital city plan Plan for relocating head offices of major public enterprisesPlan for relocating head offices of major public enterprises Rural resettlement planRural resettlement plan

However, the dispersal plans were rather However, the dispersal plans were rather command and controlcommand and control rather than rather than market orientedmarket oriented

Two Lagging RegionsTwo Lagging Regions Gwangju and Jeonju regions lie in the South-Western part Gwangju and Jeonju regions lie in the South-Western part

of the countryof the country

These two regions were neglected in investment and devThese two regions were neglected in investment and development planselopment plans

Population of the two regions was on the decrease since Population of the two regions was on the decrease since 19661966

Strong anti-government sentiment (remember the GwangjStrong anti-government sentiment (remember the Gwangju nightmare)u nightmare)

Large-scale manufacturing is hardly possible for lack of gLarge-scale manufacturing is hardly possible for lack of good natural harborsood natural harbors

Urban (Over) Urban (Over) ConcentrationConcentration

95% of Korean GNP is generated by urban, 95% of Korean GNP is generated by urban, non-agricultural activitiesnon-agricultural activities

92% population live in Korea’s 74 cities 92% population live in Korea’s 74 cities and 202 urbanized townsand 202 urbanized towns

89% live in urban areas89% live in urban areas

Korea’s urbanization level much exceeds Korea’s urbanization level much exceeds that of countries with similar level of that of countries with similar level of income per capitaincome per capita

Urban Population by SizeUrban Population by SizePopulation of Cities (thsd)

1960 1980 2000

% # Cities % # Cities % # Cities

Over 1000 40.0 2 57.0 4 53.3 7

500-1000 6.6 1 5.5 2 15.6 10

200-500 9.9 3 12.9 11 17.1 24

100-200 7.4 5 9.8 18 10.0 30

50-100 14.4 20 5.1 21 1.6 9

20-50 21.7 74 9.7 115 2.4 36

Total 100 105 100 171 100 116

Urban Population (thsd)

Cities over 50000

7121 13550 22470 32255 35046 41383

Cities over 20000

8950 15683 24940 34622 37033 42399

Disparity in Urban Disparity in Urban GrowthGrowth

Since 1960s the number of urban areas Since 1960s the number of urban areas has increased substantiallyhas increased substantially

Cities of different sizes grew at different Cities of different sizes grew at different rates (1960-2000)rates (1960-2000) Over 1 million: most rapidly (40% to 53%)Over 1 million: most rapidly (40% to 53%) Below 50000: dwindled from 22% to 2%Below 50000: dwindled from 22% to 2%

Seoul: 2.4 million in 1960 to 10 million in Seoul: 2.4 million in 1960 to 10 million in 19961996

Government Policies Government Policies toward Seoultoward Seoul

Overc-oncentrated and vulnerable to North KoreaOverc-oncentrated and vulnerable to North Korean artillery so the Government designed policies:n artillery so the Government designed policies:

Green belt system (limits the spatial expansion of Seoul)Green belt system (limits the spatial expansion of Seoul) New capital-city plan to relocate government offices to around DaNew capital-city plan to relocate government offices to around Da

ejon Cityejon City Plans to move central offices of public enterprises away from SeoPlans to move central offices of public enterprises away from Seo

ulul

However, waste of resources and not successfulHowever, waste of resources and not successful

The Quest for Urban The Quest for Urban PolicyPolicy

Stage of development and urban growth:Stage of development and urban growth: Large cities grow fastest in the early stage of Large cities grow fastest in the early stage of

developmentdevelopment

Middle-sized cities grow fastest in the middle Middle-sized cities grow fastest in the middle stagesstages

Small cities grow fastest in the late stagesSmall cities grow fastest in the late stages

Investment according to size and stage Investment according to size and stage relationshiprelationship

Population North/South Population North/South KoreaKorea

North Korea South Korea

Millions Average Growth Rate (%)

Millions Average Growth Rate (%)

Density (persons/ sq.km.)

Urban (%)

1920 17.3 79 3.3

1940 23.5 1.2 107 11.6

1960 10.0 2.1 25.0 3.0 254 28.3

1980 18.0 2.4 37.4 1.5 378 57.3

1990 22.0 1.7 43.4 1.1 432 74.1

2000 22.2 -1.5 47.0 0.8 464 89.7

2002 47.6 0.7 479 90.2

Poverty and Population Poverty and Population GrowthGrowth

Why do poor families have more children? (Africa)Why do poor families have more children? (Africa)

Why would wealthier families prefer to have Why would wealthier families prefer to have fewer children? (Western Europe)fewer children? (Western Europe)

Ever since 1962, the Korean Government’s Ever since 1962, the Korean Government’s objective was to curb the growth of populationobjective was to curb the growth of population

At present growth rate of population is 0.7%At present growth rate of population is 0.7% Birth control measures by the GovernmentBirth control measures by the Government Increase in employment opportunitiesIncrease in employment opportunities

Demographic ProblemsDemographic Problems Emphasis on education and the average Emphasis on education and the average

number of schooling in:number of schooling in: 1965: 5 years1965: 5 years 1985: 8.6 years1985: 8.6 years 2000: 11 years2000: 11 years

Pensioners and social welfare systemPensioners and social welfare system Almost no welfare system in Korea (strong Almost no welfare system in Korea (strong

family ties)family ties) Increasing number of dependentsIncreasing number of dependents