Continent Of Asia
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Continent of Asia
East and Southeast Asia
Newly industrialized countries – NICs Japan Asian tigers – South Korea, Hong Kong, Singapore and Taiwan Little tigers – Thailand, Indonesia, Malaysia, Vietnam and others China and India
Economic Development of South Korea and North Korea Tomáš Dudáš
History of the Korean Peninsula
China, Russia and Japan were fighting over the power in Korea, the result was a destruction of Korea and poor conditions for development China was superior to Korea and represented an important source for culture, technology and knowledge. Also China protected Korea and claimed to be it's older brother
History of the Korean Peninsula Periods of relative peace were filled by internal
conflicts between local noble families fighting for more influence and greater power
Poor conditions for farmers- high payments to the government, corrupt administration
Isolation
Korea has been annexed by Japan in 1910 and it regained its independence only in 1948
Dark period of Korean history – strong suppression of the national culture by the Japanese occupants
History of the Korean Peninsula
In 1948 the northern part of the country declared its independence under the leadership of Kim Il-sung Subsequently - Peoples Democratic Republic of Korea invaded the southern part of the peninsula The war ended in standstill – the peninsula is divided along the 38th parallel
Thus begins the story of two Koreas the story of two economic and political systems the story of prosperity and poverty the story of human development and suffering
Republic of Korea (South Korea)
The Korean miracle: 60's
Today
GDP p.c.: 85 USD Export: 30 mil. USD Unemployment: 20% Population below poverty line: 40 %
GDP p.c.: 27,600 USD Export: 433.5 billion USD Unemployment: 3.3 % Population below poverty line: 15%
huge inflation social tensions
Slovakia’s GDP: 21,900 USD
Miracle on River Han
Miracle on River Han
South Korean development went through 6 phases: Classical import substitution (1963-1966) Labor-intensive export-led growth (1967-1972) Heavy industry promotion (1973-1978) Stabilization, liberalization and economic maturity( 1979-1996) Financial crisis (1997–1999) Reform, restoration of growth (1999-present)
Park Chung Hee – the man of the change
In 1961 an peaceful military coup led by Park Chung He was carried out. At the beginning of his rule even Park could enjoy the assistance and generosity of the USA - 70% of the military spending was financed by USA Park managed the country through a group of military officers
He removed the corrupt civil servants and military officers Soon the Parliament was dissolved and any political activity was banned. Censorship and press constrains were introduced
Park Chung Hee - – the man of the change apolitical technocrats were largely involved in
managing the country private businesses largely supported Park. These were implementing Parks export-oriented policy and were rewarded by tax forgiveness, cheap credits, government guarantees on foreign credits, investment incentives An important momentum in gaining support from USA was the war in Vietnam South Korea was the main ally and biggest supporter of USA (sending 300.000 soldiers)
Chaebol – the Key of the Korean Success
Park nationalized all the Korean banks Reinforced the system of chaebol
a few specially selected large companies
encouraged to tailor their growth and production targets to meet government objectives
dependent on those state-owned banks for the credit they needed to operate and grow
Chaebols - the Key of the Korean Success
A 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
Park’s Legacy - A Strong State
state controlled virtually all economic activities in South Korea government approved all bank loans granted licenses for virtually all businesses controlled many prices
copied much of the Japanese model
with a heavier emphasis on political and military influence in running the economy
Export promotion
The administration made exporting into a national campaign, almost a patriotic duty. export producers were given priority in investment decisions, credit allocations, and other benefits strategy of forcing domestic consumers to subsidize exports Korea Traders Association (KOTRA)
Regime change – democracy and free market economy
Democratization Deregulation
land use (1990) import liberalization (1992) open stock market to foreigners (1992) open domestic capital market (1994) deregulate loan financing in foreign market (1994)
Crisis in South Korea 1997
chaebol crisis (bankruptcies) financial crisis credit rating downgraded exchange rate of won stock market
economic crisis economic growth rate and GNP per capita unemployment rate
GDP growth in South Korea between 1995-2008 (%) 12 10 8 6 4 2 0 -2 -4 -6 -8
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008f
Unemployment in South Korea 1995-2007 8 7 6 5 4 3 2 1 0 1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Democratic People's Republic of Korea (North Korea)
Dear Leader and Great Leader
Basic Facts
One of the most secretive, paranoid and isolated regimes in the world Data from North Korea are inaccurate and suspicious Population – approx. 23 million GDP/C - 1,800 USD in 2008 (PPP) GDP growth - 3,7 % in 2007 Population below the poverty line - ????
Economic development
At the end of World War II, the DPRK represented the industrialized part of the Korean peninsula. Under Japanese colonialism, heavy industry, water power, and manufacturing were concentrated in the North, contrasted with the more agrarian South
The new country adopted a classic communist economic regime
After the Korean war the first three year plan was adopted
Economic development
Similar to other communist countries due to heavy industrialization the economy grew rapidly in the 50s and the 60s Juche policy - "spirit of self-reliance" The growth rates began to decline in the 70s, but still in 1976 the GDP p.c. equaled the GDP p.c. in South Korea
but from that year South Korea gained ground rapidly
Collapse of the communist bloc = Collapse of the economy
Main problem – Loss of Russian aid, export markets and cheap oil Technologically outdated and inefficient economy Collapse of central planning Natural disasters – continuing droughts and floods Collapse of agriculture – hunger
Songun - “Military First” policy
Was introduced by Kim-Jong-Il after the death of his father in 1995
“a revolutionary idea of attaching great importance to the army”
Songun emphasizes the military over all other aspects of state and society In line with this policy North Korea spends $5 billion out of a gross domestic product (GDP) of $20.9 billion on the military (estimate) and maintains the 5th largest standing army in the world „What good is this world without North Korea?“
Kim Jong-Il
Famines in the 90s
Main factors
unsuitable terrain (80 % of the land is not suitable for agriculture) economic mismanagement (bad crops selection – rice and maize and over-fertilization) serious fertilizer shortages collapse of the eastern bloc series of natural disasters (due to deforestation and soil erosion)
Results
estimated 1-3 million deaths between 1995-1999 in 2006 studies said that 7 percent of children were severely malnourished and 37 percent were chronically malnourished recent study of the Peterson Institute for International Economics shows that a new famine is highly probable
Reforms announced in 2002 Establishment of special economic
Establishment of special economic zones (Kaesong - near the border with China and close to South Korea) increases in prices and wages changes in foreign investment laws steep currency devaluation limited increases in flexibility and responsibility for economic enterprises
The Two Koreas Comparison
South Korea
Index of economic freedom – 41st position (moderately free) Human development index – 26th position Global Competitiveness Index – 13th
North Korea
Index of economic freedom – 157th position (repressed) Human development index – not included (no data) Global Competitiveness Index – not included
Night Image of the Two Koreas After Five Decades
East and Southeast Asia
Newly industrialized countries – NICs Japan Asian tigers – South Korea, Hong Kong, Singapore and Taiwan Little tigers – Thailand, Indonesia, Malaysia, Vietnam and others China and India
Economic Development of South Korea and North Korea Tomáš Dudáš
History of the Korean Peninsula
China, Russia and Japan were fighting over the power in Korea, the result was a destruction of Korea and poor conditions for development China was superior to Korea and represented an important source for culture, technology and knowledge. Also China protected Korea and claimed to be it's older brother
History of the Korean Peninsula Periods of relative peace were filled by internal
conflicts between local noble families fighting for more influence and greater power
Poor conditions for farmers- high payments to the government, corrupt administration
Isolation
Korea has been annexed by Japan in 1910 and it regained its independence only in 1948
Dark period of Korean history – strong suppression of the national culture by the Japanese occupants
History of the Korean Peninsula
In 1948 the northern part of the country declared its independence under the leadership of Kim Il-sung Subsequently - Peoples Democratic Republic of Korea invaded the southern part of the peninsula The war ended in standstill – the peninsula is divided along the 38th parallel
Thus begins the story of two Koreas the story of two economic and political systems the story of prosperity and poverty the story of human development and suffering
Republic of Korea (South Korea)
The Korean miracle: 60's
Today
GDP p.c.: 85 USD Export: 30 mil. USD Unemployment: 20% Population below poverty line: 40 %
GDP p.c.: 27,600 USD Export: 433.5 billion USD Unemployment: 3.3 % Population below poverty line: 15%
huge inflation social tensions
Slovakia’s GDP: 21,900 USD
Miracle on River Han
Miracle on River Han
South Korean development went through 6 phases: Classical import substitution (1963-1966) Labor-intensive export-led growth (1967-1972) Heavy industry promotion (1973-1978) Stabilization, liberalization and economic maturity( 1979-1996) Financial crisis (1997–1999) Reform, restoration of growth (1999-present)
Park Chung Hee – the man of the change
In 1961 an peaceful military coup led by Park Chung He was carried out. At the beginning of his rule even Park could enjoy the assistance and generosity of the USA - 70% of the military spending was financed by USA Park managed the country through a group of military officers
He removed the corrupt civil servants and military officers Soon the Parliament was dissolved and any political activity was banned. Censorship and press constrains were introduced
Park Chung Hee - – the man of the change apolitical technocrats were largely involved in
managing the country private businesses largely supported Park. These were implementing Parks export-oriented policy and were rewarded by tax forgiveness, cheap credits, government guarantees on foreign credits, investment incentives An important momentum in gaining support from USA was the war in Vietnam South Korea was the main ally and biggest supporter of USA (sending 300.000 soldiers)
Chaebol – the Key of the Korean Success
Park nationalized all the Korean banks Reinforced the system of chaebol
a few specially selected large companies
encouraged to tailor their growth and production targets to meet government objectives
dependent on those state-owned banks for the credit they needed to operate and grow
Chaebols - the Key of the Korean Success
A 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
Park’s Legacy - A Strong State
state controlled virtually all economic activities in South Korea government approved all bank loans granted licenses for virtually all businesses controlled many prices
copied much of the Japanese model
with a heavier emphasis on political and military influence in running the economy
Export promotion
The administration made exporting into a national campaign, almost a patriotic duty. export producers were given priority in investment decisions, credit allocations, and other benefits strategy of forcing domestic consumers to subsidize exports Korea Traders Association (KOTRA)
Regime change – democracy and free market economy
Democratization Deregulation
land use (1990) import liberalization (1992) open stock market to foreigners (1992) open domestic capital market (1994) deregulate loan financing in foreign market (1994)
Crisis in South Korea 1997
chaebol crisis (bankruptcies) financial crisis credit rating downgraded exchange rate of won stock market
economic crisis economic growth rate and GNP per capita unemployment rate
GDP growth in South Korea between 1995-2008 (%) 12 10 8 6 4 2 0 -2 -4 -6 -8
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008f
Unemployment in South Korea 1995-2007 8 7 6 5 4 3 2 1 0 1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Democratic People's Republic of Korea (North Korea)
Dear Leader and Great Leader
Basic Facts
One of the most secretive, paranoid and isolated regimes in the world Data from North Korea are inaccurate and suspicious Population – approx. 23 million GDP/C - 1,800 USD in 2008 (PPP) GDP growth - 3,7 % in 2007 Population below the poverty line - ????
Economic development
At the end of World War II, the DPRK represented the industrialized part of the Korean peninsula. Under Japanese colonialism, heavy industry, water power, and manufacturing were concentrated in the North, contrasted with the more agrarian South
The new country adopted a classic communist economic regime
After the Korean war the first three year plan was adopted
Economic development
Similar to other communist countries due to heavy industrialization the economy grew rapidly in the 50s and the 60s Juche policy - "spirit of self-reliance" The growth rates began to decline in the 70s, but still in 1976 the GDP p.c. equaled the GDP p.c. in South Korea
but from that year South Korea gained ground rapidly
Collapse of the communist bloc = Collapse of the economy
Main problem – Loss of Russian aid, export markets and cheap oil Technologically outdated and inefficient economy Collapse of central planning Natural disasters – continuing droughts and floods Collapse of agriculture – hunger
Songun - “Military First” policy
Was introduced by Kim-Jong-Il after the death of his father in 1995
“a revolutionary idea of attaching great importance to the army”
Songun emphasizes the military over all other aspects of state and society In line with this policy North Korea spends $5 billion out of a gross domestic product (GDP) of $20.9 billion on the military (estimate) and maintains the 5th largest standing army in the world „What good is this world without North Korea?“
Kim Jong-Il
Famines in the 90s
Main factors
unsuitable terrain (80 % of the land is not suitable for agriculture) economic mismanagement (bad crops selection – rice and maize and over-fertilization) serious fertilizer shortages collapse of the eastern bloc series of natural disasters (due to deforestation and soil erosion)
Results
estimated 1-3 million deaths between 1995-1999 in 2006 studies said that 7 percent of children were severely malnourished and 37 percent were chronically malnourished recent study of the Peterson Institute for International Economics shows that a new famine is highly probable
Reforms announced in 2002 Establishment of special economic
Establishment of special economic zones (Kaesong - near the border with China and close to South Korea) increases in prices and wages changes in foreign investment laws steep currency devaluation limited increases in flexibility and responsibility for economic enterprises
The Two Koreas Comparison
South Korea
Index of economic freedom – 41st position (moderately free) Human development index – 26th position Global Competitiveness Index – 13th
North Korea
Index of economic freedom – 157th position (repressed) Human development index – not included (no data) Global Competitiveness Index – not included
Night Image of the Two Koreas After Five Decades
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