Please enable JavaScript.

Coggle requires JavaScript to display documents.

Rise of Korean Economy 45 to 90s (Culture (Confusionism (hardwork,…

- - - - Hence, due to the chaebols willingness to keep venturing into a myriad of industries, it has led to the growth of South korea chaebols
        
        However, access to foreign technology was important was it allowed chaebols to just purchase foreign patents or technology instead of developing one, which allowed chaebols to produce the same good at a lower cost. :no_entry:
        
        In addition, it is imperative to note that without the government plan of building infrastructure and developing the chaebols through giving them incentives . from the 1960s to 70s, the government still have hefty restrictions on FDIs coming into the SK economy, so to protect the monopoly interests of local firms.
  - - - Throughb the centralisation of ownership around a single family, it facilitated the government cooperation as assuring cooperation was more efficient and faster, compared to assuring cooperation from wide ranage of cooperate manager
        
        Lead to scandal due to economic concentration and market monopoly. eg. appointment of members of board up to family. Created serious structure imbalance in Korea economy in which large powerful chaebols, supported by govt had monopolised foreign and domestic funds, crowding out efficient small and medium enteprises, as well as foreign firms. :red_cross: During the AFC, 16 out of 30 chaebols bankrupt as they absored the bulk of local and foreign loans to engage in unprofitable businesses, dragging the economy,
- - - - After 78', bank lforeign capital come in the form of oans and bonds. Total 80.2 billion from 62 to 92. (LT)
  - - - In addition, USA provide lucrative contracts to korean overseas construction firms for road, harbour and airport amounting to a billion dollar by 70s.
        
        after economy libersation from 80' to 88', US invested 1.4billliob in korea (FDI).
        
        :no_entry:Korea govt was essential in making effective usage and also it :red_flag: The korean govt did enacted the "Foreign capital inducement promotion act" in 61' which provided tax benefits to foreign investors and guarenteed remittance of their earnings. previously, depend on US aid till 60s, but through this plan, sustaintial foreign capital entered korea. 80% through public and commerical loan, to SHOW THAT GOVT DID INCREASE CAPITAL THROUGH ITS OWN POLICY.
        
        :red_cross:in spite the US financial aid which is the bulk of foreign capital inflow in till the 60s, in the early 60s, SK per capit income still lower than many 3rd world country. Hence, financial aid not that important but rather government. HOWEVER THIS LIMITATION not every strong.
        
        In addition to capital and investment to boost economy, US also played important role in the planning of Export oriented not from the funds but also on expertise. eg. US AID and sent 3000 koreans to learn in USA. Created korea development institute/ health industry development.
        
        with US AID, Korea export shot up from $4 million to 150B in 80s.
  - - - Japanese manufacturerss abtought about capital and tech to Sk, making SK dependent on Japanese imports. SK dependent more on Japan for Tech such as automobiles and computer. eg. Hyundai use mitisubshi engine.ence Japan aid is
        
        Thus export led orientation therefore was linked with japan's economic globalisation of manufacturers and sustained thru import of capital technology from japan.
- - - - Through focusing on EOI, the korea economy emphasized agriculture and infrastructure, the latter were closely tied to construction. Later, the emphasis shifted consecutively to light industry, electronics, and heavy and chemical industries. Using these strategies, an export-driven economy developed.
        
        The annual industrial production growth rate was about 25 percent; there was a fivefold increase in the GNP from 1965 to 1978. In the mid-1970s, exports increased by an average of 45 percent a year.
      - To promote EOI, exporters are exempted from indirect taxes on both imported and domestic purchased intermmediate inputs. Also, there is a 50% tax reduction on foreign exchange earnings from exporting. In addition, imports of capital goods and equipment used in export productions were exempted from tariffsBetween 1963-73, export expansion in relation to import substitution has made a more than threefold contribution + the income per capita of about 100 in 63 grew to 6614 in 1990s this shows the drastic impact of the economy
        
        by shifiting to export oriented industry, the government developed private enterprises, through guided capitalism, the governement supported industries which it expects to do well. The govt allowed firms to acquired capital easily and other forms of benefits like lower tax for exporters. Through this, the govt cultivated businesses leaders as partners. Through this, those who are emerged successful during the first 2 five yea rplan recieved additional capital from state. these grew to become large family owned business conglomerates (Chaebols).
        
        The chaebols was able to have widespread effects of employing a large share of the korean labour force (nearly 12% from the 10 largest chaebols) and also dominate the manufacturing sector, espicially in key areas like heavy and chemical industries. In the 80s, he 5 largest chaebols dominated 40% of all shipment in fabricated metal product, machinaries and equipment. Also, it has long term effect as in the chaebol organisational strucutre has become the mode, for SK businesses due to their economic success
        
        :forbidden: However, as much as it was important, the export oriented subisides and much of the investments on infratuture and the ability to sell the exports was rellliant on the external aid from JPN and USA. whereby during the first 2 decades, the US aid was crucial, as korea's domestic saving was still small till 1980s. * :red_flag: The korean govt did enacted the "Foreign capital inducement promotion act" in 61' which provided tax benefits to foreign investors and guarenteed remittance of their earnings. previously, depend on US aid till 60s, but through this plan, sustaintial foreign capital entered korea. 80% through public and commerical loan.
        
        In addition to shifiting to EOI and developiing private firms, the government was able to respond to various external forces like the oil crisis where the government made ally with the arab countries to make sure there is oil supply to Sk. also, the governemtn turn to thermal and hydro plant after the oil shock to reduce relliance on oil energy. in addition, the government shifted from enrgy heavy dependent injustries like chemical to tech. Also along the way, the government would have policies to curb inflation pressures by overvaluing the exchnage rate. the results were impreesive when in the 83 to 87, inflation was less than 3%
- - - - hence, the chaebols are able to grow and help the economy. Chabels 40% of all shipmen manufacturing