Much has been said about the rapid economic growth of the Republic of Korea.
Much has been said about the rapid economic growth of the Republic of Korea.
July 31, 2011
Features of establishing a small business sector in South Korea. Abstract
The rapid growth of South Korea’s economy has been influenced and influenced by a variety of factors – objective and subjective, economic and political, internal and external
For the past three decades, humanity has had the opportunity to observe some developing countries that have demonstrated "economic miracles" to the world. Of course, we are talking about the young most developed countries, which in the 60’s and 70’s stood out and separated into a separate group, called "New Industrializing Countries". This group is constantly replenished, and at this time it includes about a dozen countries and territories. South Korea has a strong place among them.
Much has been said about the rapid economic growth of the Republic of Korea. This "success story" is associated with high GDP growth rates of 8.6% between 1962 and 1988 and the transformation of a country from a traditionally agricultural to a fully industrial one, with a per capita GDP of more than $ 5,000. and 13th place in the list of leading trading countries in the world.
The rapid growth of South Korea’s economy has been influenced by a variety of factors – objective and subjective, economic and political, internal and external, such as:
export-oriented, interaction-oriented development strategy; favorable international economic climate of the 60s-first half of the 70s, which facilitated access to external sources of resources; strong and effective leadership in the face of authoritarian governments that have postponed democratic and political transformations in favor of economic development; relatively low costs for the maintenance of the military-industrial complex (2-3% vs. 60-70% of North Korean costs); attracting foreign investment – both financial and technological: industrial equipment and "now how"; ethnic and cultural homogeneity, as well as the Confucian tradition, which adds special value to hard work, education, success in life and devotion to their nation.
These and many other factors have largely determined the rapid pace of economic development of the Republic of Korea.
Unfortunately, issues related to the economic development of South Korea are currently not widely covered in Ukraine. Due to the lack of modern statistics, the abstract contains digital data up to 1990. But despite the fact that the figures are somewhat outdated, the information available in our country fairly accurately reflects the situation in South Korea.
We can talk a lot about the factors of South Korea’s economic development, but in my essay I would like to dwell on the role of the state, export policy and borrowed technologies (both industrial equipment and "now how") in the economic development of the Republic of Korea.
As for the factor of export policy, it would be fair to consider it the most important factor that served as a driving force for the growth of the Korean economy. About the role of the state as this factor is one of the determining factors of the rapid pace of Korean economic development.
As for the role of borrowed technologies, this factor was not decisive, but the appeal to foreign technologies was a natural consequence of the export model of the Korean economy, so we can not ignore the role of this factor in shaping the modern Korean economy and involving the country in world achievements. … Also, this factor is not widely covered in the Ukrainian literature in comparison with other factors, but in my opinion it is of interest for study, and may be partially applicable (usually in a form adapted to local conditions) in Ukraine.
One of the factors explaining South Korea’s rapid economic growth has been strong and effective leadership, represented by authoritarian governments that have postponed democratic and political transformations in favor of economic development. The government passed new laws and carefully revised existing ones, and took many policy measures to increase savings, expand exports, encourage investment in both domestic and foreign private capital, and attract investment and technology across borders. The government has done everything possible to create social infrastructure: roads, dams, ports, railways and schools.
The government has often been asked to assume the risks associated with the investment activities of private entrepreneurs by providing guarantees for external loans used to cover the costs of large-scale projects. Obviously, in modern conditions of highly developed division of labor at the heart of any regulatory measures is money circulation. In Korea, the achievement of financial and monetary balance was given priority.
Even in the years of significant economic difficulties, money circulation, inflation, and the state budget deficit did not get out of state control. The central role in this was played by the state monopoly in the credit and financial system. Another important area of government regulation in South Korea is in the currency area. In various forms, coercion to keep foreign currency in special accounts with the Central Bank has been in effect in Korea since 1949.
The concentration of financial and monetary resources in the hands of the state influenced the formation of the basic proportions of social production. The main focus was on all sorts of export incentives. The state used subsidies to national exporters who were granted bank benefits. According to the most modest estimates, only in the 70’s they annually absorbed at least 1/10 of GDP.
Government loans of this kind were:
15% of GDP -1962-1966. 39% of GDP – 1932-1936. 46% of GDP – 1977-1981.
It should be noted that loans were concentrated in potentially the most efficient areas of the economy. The effectiveness of loans was also monitored. High activity of state regulation is very clearly manifested in the formation of sectoral proportions.
For example, in carrying out agrarian reform, the most important component was the forced fragmentation of large plots of land into smaller ones – a measure that is impossible without the direct active intervention of the state. In this regard, you need to refer to the program "target development".
Since the 70’s, special laws have identified 7 areas of priority:
mechanical engineering, electronics, textile industry, ferrous metallurgy, non-ferrous metallurgy, petrochemistry, shipbuilding.
These industries showed a clear advantage in the supply of resources, they enjoyed preferential taxes, and so on. benefits. At the same time, the https://123helpme.me/write-my-lab-report/ state tightly regulated competition in priority industries, forcing private companies to merge or withdraw from the market. The state often went to direct compensation for the losses of "selected exporters". It is especially worth noting that the benefits provided by the state have led to the formation of a highly monopolized production, especially export structure. In the first half of the 1980s, the share of the 30 largest South Korean conglomerates in manufacturing reached 1/3, and in exports exceeded 1/2.
Seeing the strong influence of the state on the economy of South Korea, the question arises: whether Korean private firms can be considered as independent units.
This question can be asked on the basis of the following factors:
high dependence of the private sector on borrowing. the state controls the quality of products in the most important export industries. The state ensured that the prices of goods, the import of which was banned or restricted, did not exceed the world average. Export meetings were held every month under the chairmanship of the country’s president, at which tentative export targets for large conglomerates were set. the state tightly controlled the labor movement, which saved entrepreneurs from any serious problems other than "capital-labor."
The state in South Korea is no less tightly controlled by foreign capital. It is important to note that foreign direct investment from 1967-1986. account for less than 2% of total gross investment. South Korea seeks to attract not all foreign investment, but only those that fit into its overall development strategy. Therefore, at least 2/3 of foreign investment is concentrated in such priority areas as chemistry, mechanical engineering and electronics. Thus we have a "tripartite alliance": the state – local capital – foreign capital.
But with the undisputed observance of the interests of all three parties, the state is the only fully independent participant, whose decisions are binding on all others. The merit of the state is also centralized planning with the use of medium and long-term plans and targeted programs, with the establishment of sometimes specific production tasks and deadlines for their implementation, with a strict system of economic control and ruthless economic destruction of losers …
In essence, South Korea’s economy is the most harmonious combination of planned and market ways of doing business. In short, the very formation and skillful use of such a mechanism has allowed South Korea in a relatively short time to overcome the barrier of underdevelopment and take a worthy place in world civilization.
Along with attracting foreign investment, since the 1980s, South Korea’s economic policy has focused on attracting modern technology across the border. Although for various reasons the amount of technology borrowed in the field was not as significant as in the areas of borrowed funds and direct investment, its role in translating the South Korean economy on modern rails and in involving the country in the achievements of the STC was quite high.
For the widespread introduction of modern technological processes it was necessary to purchase appropriate equipment. Among the purchased equipment not directly related to production processes, the predominant place was occupied by transport equipment and rolling stock, electrical appliances and equipment. Under the terms of such contracts, the supply was financed by loans at the rate of 3% per annum with repayment of the debt within three years.