Koreas Developmental Policy: Past, Present and Future

Koreas Economic ModernizationYong Yoon, PhD30 Jan. 2013Talk at Masters Program in Korean Studies, Graduate School of Chulalongkorn University.Course: 2024653 Foreign Direct Investment12Korea

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https://www.cia.gov/library/publications/the-world-factbook/geos/ks.html23NASA Satellite Picture

4Korea Economic Development Policy ExperienceThe Korean government has set explicit goals for national development in which the private sector has been instrumental.1960s: Export-promotion strategy1970s: HCI Drive, and Saemaul Undong1980s: Automobile/electronics/household appliances, etc. (adv. Technology)1990s: IT & Communication Leader, Cinema2000s: Cultural leader (Hallyu)

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The First Five-Year Economic Development Plan (1962 1966)The first plan sought to benefit the textile industry and make Korea self-sufficient. At the time, Koreas status was as a capital poor, inadequate saving, and predominantly U.S.-financed state, in need of independence.6The Second Five-Year Economic Development Plan (1967 1971)The second five year plan sought to modernize the industrial structure to make Korea more competitive in the world market, which was incorporated into all future five year plans.Fears also prevailed that the U.S. would no longer provide military defense for Korea. Plan promoted self-sustaining economic development (encourage import-substituting industries).

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The Third Five-Year Economic Development Plan (1972 1976)Pres. Park implemented the third five-year plan which was referred to as the Heavy Chemical Industrialization Plan (HCI Plan) and, also, the "Big Push". To fund the HCI, the government borrowed heavily from foreign countries (not foreign direct investment, so that it could direct its project).Plan aimed at building an export-oriented industrial structure.8

The Fourth Five-Year Economic Development Plan (1977 1981)Development of industries that can effectively compete internationally in industrial export markets (promote technology and improve efficiency. )Plan to achieve self-sustaining economy. Promote equity through social development.9

The Fifth Five-Year Economic Development Plan (1982 1986)Establish foundation for price stability, improve quality of life, restructure governments functions and improve technology.Move concentration from the heavy and chemical industries, to technology-intensive industries.10The Sixth Five-Year Economic Development Plan (1987 1991)Emphases were placed on Research and Development and Manpower Training.Establish socio-economic systems, promote creative potential and initiative.Industrial restructuring and technological improvement.Improve national welfare through balanced growth and income distribution.

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The Seventh Five-Year Economic Development Plan (1992 1996)Promote high-technology fields, such as microelectronics, new materials, fine chemicals, bioengineering, optics and aerospace.Promote economy through self-regulation and orderly competition.Management innovation and establishment of sound work and civic ethics.Five-Year Development Plans replaced by New Economy FYP (1993-97)

1112Seoul 2003

Korea War (1953)In 50 yrs!121313Changes in Employment StructureManufacturing

1960Service Sector

Service SectorAgriculture / FisheriesManufacturingAgriculture / Fisheries2002

Service SectorAgriculture /FisheriesManufacturing36.815.947.3ManufacturingAgriculture /Fisheries Service SectorChanges in GDP Structure Changes in Industrial Structure1414Agriculture to Manufacturing / Light Industry to Heavy and Chemical Industry1960197019901999 1980HCI ProductAgricultural ProductLight Industry Product50%WigAutomobile

Semiconductor

Textile2003Semiconductor, Mobile Phone, DTV, Display, Automobile, Ship-building, etc.84.8%12.4%2.8%(ICT, 27.6%)Changes in Export Commodity Profile15

16Leaders of the pastSome history1617King Sejong the Great (, )South Korea's national language is Hangeul introduced in 1446 under King Sejong of the Choson dynasty.

17Sejong the Great (1397 1450) was the fourth king of the Joseon Dynasty of Korea.During his regency, he reinforced Korean Confucian policies and executed major legal amendments.Although most government officials and aristocrats opposed usage of hangeul, lower classes embraced it, became literate, and were able to communicate with one another in writing.

1718The Song of the Dragon Flying to Heaven (, )A tree whose roots are deep: in the wind does not shake; its flowers have luminance; its fruit, fragrance.

Water whose fountainhead is far away; in drought does not dry; it flows and becomes a stream; and to the sea it surely reaches

1819Shin Saimdang (, )On June 23, 2009, the Bank of Korea released the 50,000 Won note.19

- Shin Saimdang (15041551) was a prominent 16th-century Korean artist, calligraphist, noted poet, and the mother of the Korean Confucian scholar Yulgok (also known as Yi I, who is on the 5,000 Won note.)- Having had no brothers, she received an education that would have only been bequeathed to a son, and this background greatly influenced the way she educated her children.1920Yulgok (, )20

Yi I (December 26, 15361584) was one of the two most prominent Korean Confucian scholars of the Joseon Dynasty, the other being his older contemporary, Yi Hwang (Toegye).He is not only known as a scholar but also as a revered politician and reformer.Yi I is often referred to by his pen name Yulgok ("Chestnut valley").2021Yi Hwang (, )21

Yi Hwang (1501-1570) is one of the two most prominent Korean Confucian scholars of the Joseon Dynasty, the other being his younger contemporary Yi I (Yulgok).A key figure of the Neo-Confucian literati, he established the Yeongnam School and set up the Dosan Seowon, a private Confucian academy.Yi Hwang is often referred to by his pen name Toegye ("Retreating Creek").2122Coins (up till 2006)22

- Yi Sun-sin is remembered for his numerous victories fighting the Japanese during the Japanese invasions of Korea (15921598). Among his twenty-three victories, the Battle of the Battle of Hansan Island are the most famous battles.2223Japanese Rule ()In January 1876, following the Meiji Restoration, Japan employed gunboat diplomacy to pressure Korea to sign the Treaty of Ganghwa [], an unequal treaty, which opened three Korean ports to Japanese trade and granted extraterritorial rights to Japanese citizens.Korea was under Japanese rule as part of Japan's 35-year imperialist expansion (29 Aug. 1910 to 15 Aug. 1945).23

24North and South KoreaThe unconditional surrender of Japan, combined with fundamental shifts in global politics and ideology, led to the division of Korea into two occupation zones effectively starting on September 8, 1945, with the United States administering the southern half of the peninsula and the Soviet Union taking over the area north of the 38th parallel.The Korean War (25 June 1950 27 July 1953) was a war between the Republic of Korea (supported primarily by the USA, with contributions from allied nations under the aegis of the United Nations) and the Democratic People's Republic of Korea (supported by the People's Republic of China, with military and material aid from the Soviet Union).24- 1950-53 Korean War. A total of 15,708 Thai soldiers participated in the war and peacekeeping efforts thereafter, and 136 of them were killed and 1,160 wounded.2425

Crossing the 38th parallel. United Nations forces withdraw from Pyongyang, 195026Presidents of KoreaRecent leaders262727

28Yi Seungman (, )Yi Seungman or Syngman Rhee (18751965) was the first president of South Korea. His presidency, from August 1948 to April 1960.28

Rhee on a 1959 issued 100 hwan coin.Francesca Maria Barbara Donner (1900-1992) was the second wife of Syngman Rhee, and thus was the first First Lady of South Korea from 1948 to 1960.http://en.wikipedia.org/wiki/Syngman_Rhee2829Kim Gu (, )What if?29

A Korean politician, educator, leader of Korean independence movement against the Japanese occupation of Korea that lasted from 1910 to 1945, and reunification activist who had struggled for the independent reunification of Korea since its national division in 1945.On November 5, 2007, the Bank of Korea, the national central bank of the Republic of Korea, announced the new 100,000 Korean won bill would feature Kim's portrait. However, the issuing of the new bill was delayed indefinitely for an unknown reason.2930Park Chung-hee (, )Park Chung-hee (19171979) was a Republic of Korea Army general and the President of South Korea from 1961 to 1979.He has been credited with the industrialization and rapid economic growth of South Korea through export-oriented industrialization.30

Heo Jeong (Acting President: April 26, 1960 August 14, 1960) then Yun Bo-seon (a Korean former independence activist and politician, and the President of South Korea from 1960 to 1962).Park Chung-hee seized power in a military-led coup d'tat and held the office until his assassination on October 26, 1979.Yuk Young-soo (November 29, 1925 August 15, 1974; She was shot and killed by Mun Segwang , a Japanese-born North Korean sympathizer) was the wife of the former president Park Chung-hee and the mother of Korean politician, Park Geun-hye . The Yusin Constitution of 1972 was widely interpreted as Park's intention to rule South Korea as a dictator for life.

3031The Economic Policy of Park Chung-heePark had seen the development of Manchukuo based on Japanese investment in infrastructure and heavy industries when he was an officer in the Manchukuo imperial army.Intending to acquire money and technology for South Korea via Japanese grants and soft loans, Park normalized diplomatic relations with Japan in 1965 (Treaty on Basic Relations between Japan and the Republic of Korea).Beginning of Chaebols (Korean conglomerates).31At the request of the US, Park Chung-hee sent approximately 320,000 South Korean troops to fight alongside the United States and South Vietnam during the Vietnam War, primarily to strengthen the military alliance with the United States.There were also financial incentives for South Korea's participation in the war. In return for troop commitments, South Korea received tens of billions of dollars in grants, loans, subsidies, technology transfers, and preferential markets, all provided by the Johnson and Nixon administrations.

3132Koreas Economic Take-off(The Miracle on the Han River)"(When visiting Korea), I recall seeing a billboard in the Korean language (near the airport) that was roughly translated to me by my taxi driver as 'export or die.'..."I heard from the bureaucrats that the president would never cancel a meeting with the business community to receive a visiting dignitary. He knew early on that Korean success would depend on unleashing the potential of the private sector." 32http://koreatimes.co.kr/www/news/nation/2009/10/116_54174.html3233Export-Promotion Strategy (1960s)Export contests!Monthly/Annual Meetings led by Pres. with ministry officials, business leaders, scholarsEvaluation/Coordination/Re-alignment/SignalingIncentives: Tax benefits (lower rates, exemption); Credit allocation (policy loans, low interest rates); Entry barriers (licensing, FX); etc.Rise of the Chaebol (Korean large corporations, e.g. Samsung, Hyundai, LG, etc).Annual Export Growth jumps from 3% (1950s) +> 30% (1960s) +> 40% (1970s)333334Institution BuildingCreation of economic development agenciesEconomic Planning Board (EPB)Ministry of Trade and Industry (MTI)Ministry of Finance (MoF)34

foreign aid195319733435Economic Planning Board (EPB)EPB (1961-94)Super ministry modeled after Japanese MITI in charge of both planning and budgeting..Preparing Five-year EDPs and annual EMPsCoordinating economic policesHead of EPB holding the post of Deputy Prime Minister and chairing Economic Ministerial MeetingsAllocating domestic and external resources for economic development.36Other InstitutionsMinistry of Finance (1948-94)Financial market, monetary policy, tax policy, treasury.Ministry of Finance and Economy (1995-)EPB and MOF merged to produce MOFE.Planning effectively abandoned .In 1998, transferred budgeting, prudential regulation, and monetary policy to MPB, FSC, and BoK, respectively.Still in charge of coordinating economic policies.Ministry of Planning and Budget (1998-)Responsible for central government budgeting.Increasing its role in long-term planning and policy coordination with the introduction of MTEF.3737Economic Growth in 1970sPromotion of Heavy and Chemical Industries (73-79)

Gradual weakening of competitiveness of labor-intensive light industries:Protectionism and world-wide stagnation caused by the first oil crisis.Rapid wage increase and fierce competition from other developing countries.Fast-forward petrochemical industry development in the aftermath of the fall of Vietnam and U.S. pullout.Transform industry to become more capital-intensive and reduce C/A deficit.National-defense related industries also encouraged.Successful firms in 1960s selected to lead HCI industries.38Chun Doo-hwan (, )President from 1980-1988After his inauguration, Chun clamped down on out-of-school tutoring and banned individual instruction or tutoring.In 1981, Chun enacted the "Care and Custody" legislation. In the winter of 1984, before declaring a moratorium on the Korean economy, Chun visited Japan and requested a loan for $6 billion.Later he passed the 3S Policy (Sex, Screen, Sports). Chun tried to appeal to the citizens in order to ensure the success of the 1988 Seoul Olympics preparations : e.g. forming a pro-baseball and pro-soccer team, starting the broadcast of color TV throughout the nation, lessening censorship on sexually suggestive dramas and movies making school uniforms voluntary, etc.In 1981, Chun held a large-scale festival called "Korean Breeze", but it was largely ignored by the population.

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Choi Kyu-hah (1919 2006) (also spelled Choi Kyu-ha) was the President of South Korea between 1979 and 1980. He served as foreign minister from 1967 to 1971 and as prime minister from 1975 to 1979.Chun Doo-hwan (born January 18, 1931) was a ROK Army general and the dictator of South Korea from 1980 to 1988. Chun was sentenced to death in 1996 for his heavy-handed response to the Gwangju Democratization Movement, but later pardoned by President Kim Young-sam with the advice of then President-elect Kim Dae-jung, whom Chun himself had sentenced to death some 20 years earlier.The Rangoon bombing of October 9, 1983, was an assassination attempt against Chun Doo-hwan, the then-President of South Korea, allegedly orchestrated by North Korea. Two of the bombers were captured, one of whom confessed to being a North Korean military officer.Korean Air Flight 858 was a scheduled international passenger flight between Baghdad, Iraq, and Seoul, South Korea that exploded in mid-air on 29 November 1987 after two North Korean agents planted a bomb in the passenger cabin. All 104 passengers and 11 crew members aboard were killed.

3839DemocratizationSustained economic growth and stability enabled people to pay more attention to human rights, to care for individual freedom, and to demand a full-fledged democracy. Demands for freedom from every corner of Korean society culminated in a democratization movement in 1987.One of the first reform movements was the free labor movement. Yet it was translated into incessant labor disputes, a reaction to the oppressed labor movement in the 1960s and 1970s.Koreas declaration of democratization in June 1987 paved the way for accelerated political democracy and market liberalization during the Roh Tae-woo regime (1988-1992).

39http://www.youtube.com/watch?v=1w1gyVlVCPUJeon Tae-Il (1948-1970)40

"We are not machines, enforce the labor code". 4041wages

42Roh Tae-woo (, ) Roh Tae-woo (born December 4, 1932) is a former ROK Army general and politician.He was President of South Korea from 19881993.

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Both Roh and Chun were convicted in August 1996 of treason, mutiny and corruption; Chun was sentenced to death, later commuted to life imprisonment, while Roh's 22-year jail sentence was reduced to 17 years on appeal. Both were released from prison in December 1997, pardoned by then-President Kim Dae-jung.

4243Slowdown in Economic Growth : 1989-1993The late 1980s saw Koreas export competitiveness deteriorate due to rising labor costs, rising domestic interest rates, and a sharply appreciating won (the won rose against the US dollar by 18% in 1988 alone).The trade surplus of the later 1980s dwindled to practically nothing in 1989 and was followed by progressively larger deficits in the 1990s.Labor policy helped strengthen unions influence and favored wage increases: tremendous wage hikes (11% annually during 1989-91) far exceeded the rise in productivity.Increased financial costs, excessive administrative regulations on business activities, and low social overhead capital investment were typical of the period, which gradually afflicted industrial and firm competitiveness and entrepreneurship.

Governments order to build two million houses in Bundang and Ilsan helped create a notorious bubble, which together with the increase in real wage brought inflation to around 10% at the turn of the decade.44Kim Young-sam (, )Served as Koreas (first civilian) President from 1993 to 1998.He presided over a massive anti-corruption campaign, the arrest of his two predecessors, and initiated an internationalization policy called Segyehwa ( lit. Globalization).Acceleration of liberalization!44

From 1961, he spent thirty years as South Korea's leader of the opposition, and one of Park Chung-hee's most powerful rivals.Reform measures introduced include the forced disclosure of private assets of the public officeholders, expulsion of corrupt officials, enactment of a law on officeholders ethics, removal of high ranking military personnel identified with the past regimes, reduced size and role of the Agency for National Security Planning and the Defense Intelligence Command, and introduction of the real name financial account system to mitigate widespread corruption.Samsung, Daewoo, Hyundai, Dong yang and Jeil jae dang entered the movie industry in mid-90s after deregulation but only Jeiljae dang [now CJ Chiel Jedang] has succeeded, and helped the industry to take off.During early 1995, Cheil Jedang invested in the upstart film company DreamWorks SKG, and in June of the same year, Cheil Jedang established its own entertainment division. 4445Economic DeregulationDeregulationland use (1990)import liberalization (1992)open stock market to foreigners (1992)open domestic capital market (1994)deregulate loan financing in foreign market (1994)

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Phenomenal Growth4647Integration into the World47

importsexports48

1997/8 Financial Crisis48

3-YR Moving Average4849Kim Dae-jung ()Kim Dae-jung (1925-2009) was President of South Korea from 1998 to 2003, and the 2000 Nobel Peace Prize recipient (for the Sunshine policy)He successfully shepherded South Korea's economic recovery from the 1997/8 economic crisis; brought in a new era of economic transparency ; and fostered a greater role of South Korea in the world stage (including the FIFA World Cup 2002, jointly hosted by Korea and Japan).49

50Sunshine policy

- 2000 Nobel Peace Prize recipient.5051Roh Moo-hyeon (, )Roh Moo-hyeaon (1 September 1946 23 May 2009) was President of South Korea 20062008."I will root the method of discussion inside the government. discussion should be familiarized until we are called 'Republic of discussion'.Dubbed Participatory Government.Achievements include: the expansion of social welfare, the pursuit of "balanced national development" to help underdeveloped areas, the eradication of corruption, reform of education and tax systems, reform of labor-management relations, reform of mass media, and a recasting of the relationship with the United States and Japan.

51- Roh Moo-Hyun died on 23 May 2009 after apparently jumping from a 45-meter cliff known as Bueong'i Bawi (lit. Owl's Rock) behind his rural home in his home village of Bongha.5152Lee Myung-bak (, )Lee won the presidential election in December 2007 with 48.7% of the vote which was considered to be a landslide.52

In 1965, Lee started to work at Hyundai Construction which was awarded Korea's first-ever overseas construction, a $5.2 million contract to build the Pattani-Narathiwat Highway in Thailand. Lee became a company director at the age of 29 just five years after he joined the company and CEO at age 35, becoming Korea's youngest CEO ever. In 1988, he was named the chairman of Hyundai Construction at the age of 47. In 2002, Lee ran for mayor of Seoul and won. During his tenure as mayor, he was noted for the restoration of the Cheonggyecheon, a popular stream in Seoul.

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The beginning of the Cheonggyecheon () Stream at nightIn 1968, during the presidency of Park Chung-hee, an elevated highway was built over it.In July 2003, then-Seoul mayor, Lee Myung-bak initiated a project to remove the elevated highway and restore the stream.The $900 million project initially attracted much public criticism but, after opening in 2005, has become popular among city residents and tourists.5354

Trade between South Korea and Thailand reached an all-time high of $13.9 billion in 2011 (Target: US$30 billion by 2016)The number of people visiting each other's nation topped 1.3 million in 2011.Pres. Lee visit Friday 9 Nov. 2012 Sunday 11 Nov.

5455Private companiesKorean Chaebols5556ChaebolA conglomerate of many companies.Companies hold shares in each other.Concentration of national economy.Does not have own financial institution.Spreads across industries.Has centralized structure and control.Tends to be family-based.

57ChaebolsFamily-oriented Korean conglomerates57

When the military took over the government in 1961, some leading industrialists were arrested and charged with corruption, but the new government immediately realized that it would need the help of the entrepreneurs if the government's ambitious plans to modernize the economy were to be fulfilled. A compromise was reached, under which many of the accused corporate leaders paid fines to the government. Subsequently, there was increased cooperation between corporate and government leaders in modernizing the economy.575858

Calculation of growth of USD 1 invested in 1980 (PhD thesis Yong Yoon). In 2007 (15% of Koreas GDP).5859Founded in 1938 (by Lee Byung Chull)exporter of dried/pickled seaweed and fish, vegetables, and fruitsflour mill and confectionery machines1950s Economic StabilizationKorean War - Samsung lost all assetsaimed to help rebuild Korean economy; entered the manufacturing industry (sugar, fabrics 1954: Cheil Industry)became a leader in modern business practices (recruiting from outside; 1st HR dept.)1960s Expansion of Key Industriesentered electronics and chemical industries1969 established Samsung Electronics Co.59

Lee Byung Chull died 1987; Lee Kun-hee (youngest of 3 sons takes over.)596060

distributionhotelsamusement theme parkstradingconstructiontextileadvertisingbaseball teamsecuritycamerasaircraftshipsdump trucksoil truckspolymerized compoundsplasticsspecialty chemicalslife insurancecredit card servicessecurities tradingfinance and trust management serviceshome applianceswireless communicationsemiconductors2001: 53 affiliates including Samsung Life Insurance; Samsung Construction and Trading (engineering and construction); Samsung Heavy Industry (shipbuilding), etc.6061 Samsung ElectronicsSAMSUNG ELECTRONICS: established in January, 19691970s: Bet the future on electronicslaid the groundwork for electronics in Koreahelped the domestic economy growpaved the way for exports1980s: A more comprehensive electronics companyestablished plants in Portugal and USestablished Semiconductor and Communication corporationbegan memory chip business (DRAM)Early 90s: Integration and GlobalizationMid-Late 90s: Implementing new management strategies2000s: Digital Vision -- A Company that leads the digital convergence revolution61

Started with fans, B/W TVs, 1974 Microwaves (worlds largest producer); 1974 entered Chip market. Early 1980s enter 64-kb chip then upgrade to 256-kb chip (Samsung sole producer by 1987-88). By 2003: Largest electronics co. (beating Sony in sales).616262

Home Multimedia

Mobile Multimedia

Personal Multimedia

Core Components

Samsung Electronics

Invested heavily in LCD (away from cathode-ray); By 1993, entered big screen market.6263Lee Kun-hee: "Change everything except your wife and kids: 1993As of 2010, his son Lee Jae-yong is President and COO of Samsung Electronics. Lee Boo-jin, his eldest daughter is President and CEO of Hotel Shilla, a luxury hotel chain, as well as President of Samsung Everland, a theme park and resort operatorHis eldest brother's son is currently chairman of the CJ Group, a company holding businesses in food, beverages and entertainmentHis second eldest brother's sons ran Saehan Media, one of the largest blank media producers. His older sister is the owner of Hansol Group, the country's largest paper manufacturer and producer of electronics and telecommunications. One of his sisters is married to Koo Ja-hak, brother of former chairman of the LG Group and himself a former chairman of LG Semiconductor. He is currently running one of the largest food services firms in Korea. His younger sister, Lee Myung Hee is currently the chairman of the Shinsegae Group, the largest retail company in Korea, with major holdings such as the Shinsegae Department Stores and E-Mart.63

Lee Byung Chull died 1987; Lee Kun-hee (youngest of 3 sons takes over.) His other daughter, Lee Yoon-hyung, committed suicide in 2005 because he had forbidden her to marry her Korean boyfriend; he did not attend her funeral.6364LG Corp. is the second-largest South Korean chaebol following Samsung.LG produces electronics, chemicals, and telecommunications products and operates subsidiaries like LG Electronics, LG Display, LG Telecom and LG Chem in over 80 countries.LG Corp. founder Koo In-Hwoi established Lak-Hui Chemical Industrial Corp. in 1947. As the company expanded its plastics business, it established Goldstar Co., Ltd., (currently LG Electronics Inc.) in 1958. 64

Koo In-Hwoi always stressed harmony between people as the path to success. One of Lak-Huis main products was the comb (face cream, tooth paste etc). Goldstar started with plastic radios in 1958. In 1995, to better compete in the Western market, the Lucky-Goldstar Corporation was renamed "LG", the abbreviation of "Lucky-Goldstar".646565

LG headquarters / Microwave / Girls Generation advertisement (Brand image is important for LG).6566Chung Ju-yung (1915 - 2001)66

Chung Ju-yung (November 25, 1915 - March 21, 2001) was a South Korean entrepreneur, businessman and the founder of Hyundai Group.Build Kyungbu express way in Feb.1968 June.1970 (2 yrs 2 mnths) and outbidding Japanese co. at a fraction of cost. Tangjae tunnel was a huge challenge.Chung is credited with successfully lobbying for South Korea to host the 1988 Summer Olympics.Hyundai acquired rival Kia Motors in 1999.The Hyundai brand power continues to rise as it was ranked 65th in the 2007 Best Global Brands by Interbrand and BusinessWeek survey.6667Pony (1975-1980)67

Hyundai produced (in Ulsan in 1976) and began exporting the Pony to Argentina, Colombia, Ecuador and Egypt from 1976 until 1988.Sales in the United Kingdom began in January 1976, making it the first Korean car to be sold there with further exports to Europe from 1978 to Belgium and the Netherlands. Later on, the Pony was exported to Greece.6768Diversified Businesses

69Daewoo was founded on 22 March 1967 (by Kim Woo-jung) as Daewoo Industrial and was dismantled by the Korean government in 1999.The group was reorganized into three separate parts: Daewoo Corporation (a.k.a Daewoo Electronics), Daewoo Engineering & Construction and Daewoo International Corporation.69

By 1970s Daewoo was producing GM car kits in its Korean factories.

70Park Tae-joon (1927-Dec 2011): retied 1993Began production in 1972, just four years after the company's inauguration in April 1968 with thirty-nine employees (initially funded by Japan.)By the late 1980s POSCO's growth had been immense. It was the fifth biggest steel company in the world, with an annual production approaching 12 million tons worth 3 trillion won.Listed in NYSE 1994.In 2000, full privatization of POSCO was completed.70

IMF had refused to give loans in the early 1970s.It had an output of 35.4 million tonnes of crude steel in 2010, making it the world's fifth-largest steelmaker by this measure. In the same year, it was the world's largest steel mill by market value.

7071RankChaebolBillions of USDComparable economy1Samsung Group174.2Malaysia2Hyundai Kia Automotive Group109.8New Zealand3LG Group94.8Peru4SK Group88.0Vietnam5POSCO34.0Syria6Korea Electric Power31.4Tunisia7GS Group29.5Guatemala8Shinhan Financial Group28.7Kenya9Woori Financial Group28.6Costa Rica10STX Corporation24.5Uruguay

RankChaebolBillions of USDComparable economy11Hanwha Group24.4North Korea12Hyundai Heavy Industries22.5Uzbekistan13Kumho Asiana Group22.2Yemen14KT21.7Cameroon15Kookmin Bank20.2Ethiopia16Doosan Group19.8Jordan17Hyundai Department Store Group19.8Ghana18Hanjin Group18.7Burma19LG Display15.4Bolivia20Shinsegae10.8Paraguay21Lotte10.4GeorgiaLargest Chaebols by revenue 2007Source: IMF List of countries by GDP (nominal) & CIA World Fact bookhttp://www.google.co.kr/url?sa=t&rct=j&q=chaebol%20imitation%20ppt&source=web&cd=1&ved=0CCgQFjAA&url=http%3A%2F%2Facro.snu.ac.kr%2Fsk_board%2Fboards%2Fdownload.jsp%3Fid%3D160909&ei=7PDhT-SeHNHPrQejs9ipAw&usg=AFQjCNHK-kDac_SxAH2QsguUAs1uNVPTlw&cad= This is a list of the largest chaebols by revenue, which exceeds 10 billion USD. All figures are given in 2007 unless otherwise stated and converted to USD using the year's last exchange rate. In 31 December 2007, 938.20 South Korean Won = 1 U.S. Dollar. Comparisons with countries are made using the year's IMF List of countries by GDP (nominal). GDP value for North Korea derived from the CIA World Factbook.71721973 Oil-crisisEconomic Episodes7273The First Oil Crisis (1973)Before the crisis, Korea was able to achieve a remarkable economic growth. It was growing at the rate of 9.6 percent each year. Under the environment of free trade and global economic boom, export-driven economic development plans had paid off. The first oil crisis in 1973 dealt a deadly blow to a country without any oil fields.Severe stagflation set in: prices of oil and raw materials soared, while production and income fell. Yet when the second oil crisis hit, the Korean government and the public were prepared and managed to get around it.

74The Three LowsEconomic Episodes747575Increased exports leading to a balance of payments surplus A record US$8.8 billion trade surplus in 1988 or 8% of GDP Rapid rise in real GDP growthAverage annual GDP growth recorded 10.7% in 1986-88The 1985 Plaza Accord lowered the relative value of US dollars and Korean won vis--vis the Japanese yen thereby helping Korean exports.World oil price fell, helping Koreas balance-of-payments situation and profitability.World interest rates dropped, thereby favoring countries with large foreign debt like Korea.Economic performance during the so-called 'three lows' period (1986-88):76In the era of Three Lows (low exchange rates, low interest rates, and low raw material prices), income grew continuously at a high rate, but the inflation rates remained low.From 1988, however, CPI inflation began to rise (7.1, 8.6, and 9.3% in 1988, 1990, and 1991 respectively) accelerated largely by increasing labor costs and increased money supply helped on by the mounting current account surplus.

771997/8 Financial CrisisEconomic Episodes777878

Deteriorating environment for corporations including policy bias against large corporations as well as widespread moral hazard caused corporate profits to drop drastically and minor chaebols including Hanbo, Sammi, Jinro, Haitai, Halla, New Core and Kia to experience serious problems, yet they were continuously maintained with the governments help, which led to loss in government credibility and a fall in Koreas credit rating.7979

An overvalued real exchange rate, which helped mask inflationary pressure, together with high interest rates adversely affected export competitiveness.

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Too fast and wrong sequencing of capital account liberalization increased the probability of default from creditors refusing to roll over debt: Specifically, short term capital flow was liberalized prior to long term Capital flow, which left domestic banks increasingly vulnerable to foreign interest spikes, domestic currency depreciation and/or a creditors panic.

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Insufficient foreign reserves base of 3-months worth of imports was maintained following IMF estimates that were based on a rigid exchange rate system and non-liberalized capital accounts.

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A too narrow and immature financial system under pervasive government control coupled by prudential regulations not strictly abided by, upon accelerated liberalization of the countrys financial sector, exacerbated the sectors weaknesses and vulnerabilities.

8383Economic impact of the crisisAn immediate effect of the crisis was the depreciation of the won to the US dollarat the end of September 1997, one US dollar bought 915 won, but by the end of the year, the won had fallen to a record low of 1,965.Depletion of foreign reserves to US$8.9 billion by end of 1997.The depreciation of the won exerted inflationary pressure, which shot up to an average of 7.5% in 1998 (compared to 4.4% in 1997 and 0.8% in 1999).Increasing rate of bankruptcy (more than 17,000 firms were bankrupt in 1997 alone).Non-performing loans exceed 20% of their total loan portfolio at some banks and total irrecoverable loans were estimated at 32 trillion won (about US$20 billion)Korean stock price index dropped to 366 point in December 1997 from about 750 in mid-1997.Social disruption increased as the unemployment rate more than doubled from 2.6% in 1997 to 6.8% in 1998.84RecoveryIMF announced a bailout package of $58.4 billion(13% of Korean GDP).IMF Loans required:Higher interest rates*Further deregulation; liberalizationReform/rejuvenate dormant bankruptcy lawAllow foreign investment in financial sectorIFIs: Dont try to export your way out!Korean response: Export, export, exportRepay IMF loans ()Rationalize Chaebol (Big Deal program)Adjust to new structural realitiesMore liberal financial systemGreater foreign presenceMore rights-oriented society

- Stiglitz denounced IMFs high interest policy852008/9 Global RecessionEconomic Episodes8586Not again!Korea depends on exports, but somehow Korea was a little better off (better prepared) than in 1997/8.In Nov. 2008, government poured $120 billion into financial markets to support the won.In Dec. BOK executed $30 billion currency swap with U.S Fed. (increase liquidity in credit market & prop up the economy.)Koreas national debt was 33% of GDP (OECD average was 75%).Strong safety nets established (e.g job-training programs like JUMP). Job-sharing.Long-term contracts (like ship-building increased market share to 33% in 2008.)Cheaper won (Toyota start to purchase Korean steel in 2009).87JapanNeighbors8788Japan RelationsRivalry (World baseball classic 2009, football).Dokdo island ().Koreans in Japan (Zainichi) 600,000Comfort women

- The term "comfort women" was a euphemism used to describe women forced into sexual slavery by the Japanese military during World War II.89ChinaNeighbors8990China RelationsYellow cloud ( [] )Choseonjok (): Korean ethnicities living in China (2 million).

Economic and environmental damage of $5 billion annually.

91U.SInternational Relations9192The U.STrade: From ginseng () to SUVs.The Republic of Korea-United States Free Trade Agreement (also known as KORUS FTA) is a trade agreement between the US and Korea (April 1, 2007).Main issues were food, cars, and services.Beef crisis! (Downer in 2003).Koreatowns.

The treaty was first signed on June 30, 2007, with a renegotiated version signed in early December 2010. The agreement was passed by the United States on October 12, 2011 with the Senate passing it 83-15 and the House 278-151. It was ratified by the National Assembly of South Korea on November 22, 2011, with a vote of 151-7, with 12 abstentions.Ban on US beef lifted in April 2008 (under Lee Myung-bak administration).

93Technological NirvanaEconomic Leader9394Koreas Technological Edge

The Turtle ship () participated against Japanese naval forces that supported Toyotomi Hideyoshi's attempts to conquer Korea from 1592-1598. Korean admiral Yi Sun-sin is credited with designing the ship.Hwacha or Hwach'a (; ) (fire cart) was a multiple rocket launcher developed and used in Korea during the Joseon Dynasty (13921897). It had the ability to fire up to 100 Singijeon, a type of fire arrow rocket, at one time. The hwacha consisted of a two-wheeled cart carrying a board filled with holes into which the singijeon were inserted.

951990s: US took up dial-up access, while Korea chose DSL.By 2000, 90% of Korean homes had braodband connection.Koreas IT exports grew from $20 billion in 1997 to $78 billion in 2005.In 2004, govt announced the IT 839 policy (8 services, 3 infrastructures, 9 products).There have been successes (chose CDMA over GSM for coding wireless signal) as well as failures (DMB).A nation of gamers: Korean video game produced more than $2 billion in revenue in 2008 (1/4 from exports). This is double the countrys movie industry.I.T8 services: iBro (2.3GHz Portable Internet), DMB, Home network, Telematics, RFID, W-CDMA, Terrestrial DTV and VoIP.3 infra: BcN, USN, IPv6.9 growth engines: NG Mobile communications, Digital TV, Home networks, IT SoC, NG PC, Embedded S/W, DC & S/W solution, Telematics and Intelligent robot.

Samsung again!96

97Korean WaveEntertainment9798Hallyu (, )Korean Wave (Hallyu) refers to the spread of South Korean culture around the world.The term was coined in China in mid-1999 by Beijing journalists surprised by the fast growing popularity of Korean entertainment and culture in China.The Korean wave is responsible for achieving over one billion dollars in revenue annually for South Korea through cultural exports.For example, in 2011 based on international activity the Korean wave added approximately $3.8 billion dollars of revenue to the Korean economy.98http://www.thiscenturysreview.com/HALLYU_THE_KOREAN_WAV.hallyu.0.html99K-PopEntertainment99100S.M. EntertainmentS.M. Entertainment is an independent Korean record label, talent agency, producer, and publisher of pop music, founded by Lee Soo-man in South Korea.

100

Lee started his career as a singer while attending Seoul National University in 1972.He co-founded the agency in 1989, and it has taken an extremely important position within the South Korean entertainment industry.SM is now the largest record label in South Korea, due to the success of artists such as H.O.T, S.E.S., Shinhwa, BoA, TVXQ, Super Junior, Girls' Generation, SHINee, and f(x).In 1989, with 200,000,000 won for capital, he founded SM Entertainment. And in 1995, SM Entertainment became a public company.

100101S.M. Entertainment (cont.d)101

Girls' Generation 102S.M. Entertainment (cont.d)

Super Junior 103J.Y.P EntertainmentJYP Entertainment is a Korean music record label, founded in South Korea in 1997 by Park Jin-young.

103

- Park Jin-young founded the company in 1997 as "Tae-Hong Planning Corporation", which eventually became "JYP Entertainment" in 2001.103104J.Y.P Entertainment (cont.d)104Wonder Girls

105105

106Others DSP EntertainmentYG Entertainment106

Big Bang

107SeriesEntertainment107107108Winter Sonata108

It stars Choi Jiwoo and Bae Yong Joon.Winter Sonata ( Gyeoul Yeonga) is a South Korean television drama series broadcast by KBS in 2002.The first Korean drama to gain widespread popularity in Japan was Winter Sonata, which was broadcast on the NHK satellite channel NHK BS2 in 2003.

108109Dae Jang Geum 109

When the popular drama of Dae Jang Geum was on the air in Thailand, Korean food started gaining wide popularity in Thailand.Dae Jang Geum (; lit. The Great Jang Geum) is a 2003 epic South Korean television series directed by Lee Byung Hoon and produced by MBC. Starring Lee Young Ae, it tells the tale of an orphaned kitchen cook who went on to become the king's first female physician. In a time when women held little influence in society, young apprentice cook Jang Geum strives to learn the secrets of Korean cooking and medicine in order to cure the King of his various ailments.Produced for $15 million, the show received as much as 57% of viewers in South Korea and has pulled in $40 million worldwide since it first aired in 2003.

109110Full House110

Full House (, Pul-hauseu) is a 16-episode South Korean television drama series broadcast by KBS in 2004. It based on the manhwa of the same name by Woon Soo-yoon.110111CinemaEntertainment111111112Evolution Early period (until 1926) :"Motion pictures have finally been introduced into Joseon beginning of October 1897,The Golden Era of Silent Films (1926-1930): Na's film, Arirang () (1926) considered the start of the era of silent film in Korea.Early sound era (1935-1945): Korea's first sound film was Lee Myeong-woo's 1935 Chunhyang-jeonLiberty (1945-1950) and War (1950-1953) eras: Choi In-gyu's Viva Freedom! ) about Korean freedom-fighters during the waning days of the colonial period, is considered the major film of this era.Golden Age (1953-1973): With the ascension of Park Chung Hee in 1962, government control over the film industry increased substantially. Under the Motion Picture Law of 1963, a series of increasingly restrictive measures were placed on the film industry. The number of films produced and imported were limited under a strict quota system (domestic film-production companies dropped from 71 to 16 within a year.) Government censorship at this time also became very strict, focusing mainly on any hint of pro-communist messages or obscenity.112112113Evolution (cont.d.)"Revitalizing Government" era (1973-1979) :Governmental control reached its height in the mid- and late-1970s, nearly destroying the vibrant film culture that had been established in the preceding decade and a half. Also, the Korean Motion Picture Promotion Corporation () was created in April 1973.(1980-1996): the government's relaxation of censorship and control.Current (1997 through present): This government-enforced screen quota system has stood since 1967, which limits the number of days per year non-domestic movies can be shown on any one movie screen in South Korea.There are three important dates in new wave Korean films: 1992, Marriage Story was financed by Samsung, marking the first non-government funded film. 1999, Shiri was released and led to Korean films taking over 50% of the local market.Ultimately, My Sassy Girl became the most popular and exportable Korean film in history.

113113114114

1999: Shiri (), an action film, written and directed by Kang Je-gyu, sold more than 6 million tickets, breaking all records at the time, and achieving more ticket sales than Titanic 2 years earlier. In 2007, CJ Entertainments invested in 36 films. Only five made profits.

115Growth of Creative Industry115

116Is Hallyu sustainable?

- Christopher Booker, a noted English journalist and author, said in his ``The Seven Basic Plots'' published in 2005 that stories are created based on seven basic plots overcoming the monster, rags to riches, the quest (pursuit of fame and an ideal dream job), voyage and return, comedy, tragedy and rebirth.117Tourism

118CURRENT PERSONALITIESPeople to Watch118118119Psy

(Release on July 15) Each day, Gangnam Style is still being watched between 7 and 10 million times

119120Jung Ji-Hoon (RAIN)120

"In fact, I was told after one audition that my singing and dancing was great but I did not make it because I did not have double eyelids."120121Park Ji Sung121

121122Pak Se-Ri122

123Ban Ki-moon 123

- The eighth and current Secretary-General of the United Nations, after succeeding Kofi Annan in 2007.123124Jim Yong Kim124

On March 2, 2009, Kim was named as the 17th president of Dartmouth College, a position he formally assumed on July 1, 2009, becoming the first Asian-American president of an Ivy League institution.On March 23, 2012, President Barack Obama announced that the United States would nominate Kim as the next president of the World Bank. On April 16, Kim was elected to head the World Bank and will take office on July 1.124125Concluding REMARKS125125126Main Lesson from Koreas Developmental Policy ExperienceMarriage of government-private sectorPolicy Cycle (Selection, Support, Evaluation)Set up of Institutions for government-controlExamples: Export-led growth (Formation of chaebol)Science and TechnologySaemaul undong (rural developmet)126126127127Saemaul Undong ( )Stage of Villages1973 (%)1974 (%)1975 (%)Kicho-Maul(Primary village)18,415 (53.1)10,656 (29.1)6,165 (17.8)Jajo-Maul(Self-helping village)13,943 (40.2)19,763 (67.1)21,500 (62.0)Jarib-Maul(Self-supporting vi.)2,307 (6.7)4,246 (12.2)7,000 (20.0)Total34,665 (100)34,665 (100)34,665 (100)Number of Villages by Saemaul Stage and YearSource: Tae-Yeung You (1986), The Patterns of Rural Development in Korea, The Institute of Saemaul, Kon-kuk University, Seoul, p.65.128The future?128

Software entrepreneur-turned-professor Ahn Cheol-soo for Mayor, President? Park Geun-hye next president?

128129SocietyThe Korean childhood (over-protection).In 2007, Korean families spent $13.6 billion on private schooling.English!SKY universities.Korean women.Foreign-wives (and multi-culturalism).Aging society.129

129130

131Challenges aheadKoreas energy challenge.The greening of Korea.From centralized planning to dispersed leadership.Opening the networking system.132And, of course, N. Korea

133Thank you

ReferencesAmsden, Alice (1989) Asias Next Giant: South Korea and Late Industrialization, New York: Oxford University Press.Chang, Se-Jin (2003) Financial Crisis and Transformation of Korean Big Business Groups: The Rise and Fall of Chaebols, Cambridge: Cambridge University Press.Kim, Myung Oak and Sam Jaffee (2010) The New Korea New York: AMACOM.Song, Byung-Nak (2003) The Rise of the Korean Economy 3rd ed.. Oxford: Oxford University Press.

134135youtubeKorea Advertisements http://www.youtube.com/watch?v=IXtTsYIwmD8&feature=fvwp&NR=1http://www.youtube.com/watch?v=Cy24S8Rb1Ek&feature=related

History channel: A Nation to Watchhttp://www.youtube.com/watch?v=W3_zsVijn2Yhttp://www.youtube.com/watch?v=qH2krIpqBXQhttp://www.youtube.com/watch?v=dDFlSRZ1n-8http://www.youtube.com/watch?v=Kt52a5gZufohttp://www.youtube.com/watch?v=4BbOwupqAyUhttp://www.youtube.com/watch?v=vyGfQHxAl00http://www.youtube.com/watch?v=jaWVxgGu5tchttp://www.youtube.com/watch?v=3961ODlntiM

Whole programhttp://www.youtube.com/watch?v=YKA5TwcxMm0http://v.youku.com/v_show/id_XMjk1OTkzMTc2.html

Extender (wave)http://www.youtube.com/watch?v=INZ9mKpH9UA136youtubeK-pophttp://www.youtube.com/watch?v=UUEsjO_83OY&feature=related

Seoulhttp://www.youtube.com/watch?v=Oaa92oFv-NQ&feature=related

Unravel travel Korea & Seoul Gourmet http://www.youtube.com/watch?v=4K6AKp1bE6A&feature=related

K-pophttp://www.youtube.com/watch?v=8tyEsOtV0FY&feature=related

Caught in the webhttp://www.youtube.com/watch?v=Yfm-2rEoDg4&feature=relmfu

137International Championship Host