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13 th Symposium on Development and Social Transformation

13 th Symposium on Development and Social Transformation. Panel 14: What Can We Learn from Korean Economic Development Experience? Friday, April 21 st (9:00-10:00pm). 13th Symposium on Development and Social Transformation.

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13 th Symposium on Development and Social Transformation

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  1. 13th Symposium on Development and Social Transformation Panel 14: What Can We Learn from Korean Economic Development Experience?Friday, April 21st (9:00-10:00pm)

  2. 13th Symposium on Development and Social Transformation Panel 14: What Can We Learn from Korean Economic Development Experience? Korea Chaebol Reform Policy in 1998-1999 Jung-Ran Suh

  3. Korean “Chaebol” Reform Policy (1998-1999) Jung-Ran Suh April 21, 2006

  4. From Growth Engine to Culprit of Crisis • Chaebol : Too Big To Fail(大馬不死) (* Chaebol : Family Owned Conglomerates) • State-led Development and Symbiotic Ties between Government and Business(’60-’80) • Excessive Debt Financing, Overinvestment, Concentration of Control • Korea Economic Crisis in 1997 • Excessive Foreign Debt under Shaky Finance System • IMF Bailout Program and Structural Reform

  5. Chaebol Reform Policy in 1998-1999 (1) • ‘Blame Chaebol, Dismantle Chaebol’ • against State-controlled Economy, State-controlled Finance • No Economic recovery without Chaebol Reform • ‘Five plus Three Principles’ • Five Principles (1998.1.13) - Enhance Transparency - Control Intra-Group Transaction

  6. Chaebol Reform Policy in 1998-1999 (2) - Improve Financial Structure - Streamline Business Activities - Strengthen Accountabilities • Three Principles(1999.8.15) - Limits on Chaebol equity investment - Improve management structure of secondary financial institute - Prevention of irregular inheritance and gift- giving

  7. Limits and Implications • Limited Success : Corporate Governance • Combined Financial Statement, External Audit • Debt Payment Guarantee Restricted • Debt-Equity Ratio Reduced • Revival of Interventionist State Power • Indirect, Informal Administrative Guidance • Political Reason for Tangible Results • Balancing the State and Market

  8. Thank you !!!

  9. 13th Symposium on Development and Social Transformation Panel 14: What Can We Learn from Korean Economic Development Experience? Leadership in Development Program:Korean Case 1964-1979 Kang Seo

  10. Beyond the Myth:Leadership in Korean Development Policy,1962~1979 Kang Seo

  11. Introduction • Purpose of research • Historical background • Park, Jung-Hee: personal background

  12. Five Year Plan(cont.) • First Five Year Plan(1962~1966) -expanded exports for maximum growth -high inflation rate • Second Five Year Plan(1967~1971) -’sound economic growth’ -reforming financial system, exchange rate, fiscal reform -resulted in rapid growth of exports and GNP, stable prices, and higher domestic savings

  13. Five Year Plan(cont.) • Third Five Year Plan(1972~1976) -promoted heavy and chemical industries(HCI) -New Village Movement(NVM): imporve the income and living standards of rural area • Fourth Five Year Plan(1977~1981) -1973 The first oil crisis-stabilization prioritized

  14. Economic growth(Source: The Bank of Korea, Economic Statistics Yearbook)

  15. Leadership Assessment • Leadership Typology(Tsurutani,1973) -commitment, intelligence and skill, dominance • Park’s case -”Effective modernizing” vs. “Crude modernizing”

  16. Beyond the myth • Showed people the full commitment of leader to people’s needs for better life – brought support from citizens • Failed to transform as his people did - oppressed people to continue authoritarian leadership

  17. Conclusion • Controversies over the evaluation: committed leader vs. overvalued myth • Overall evaluation

  18. 13th Symposium on Development and Social Transformation Panel 14: What Can We Learn from Korean Economic Development Experience? Aid and Development in Korea Phil-ho Kang

  19. Aid and Economic Development in Korea Pil-ho Kang April 21, 2006

  20. Major facts about Korea • Poverty-stricken country in 1945 when she gained independence from Japan’s colonial rule • Korean War in 1950 • Five year Development Plan in 1960 • Fast economic growth with export driven economic development strategy in the 1960-1970 • Joined OECD & the 11th largest economy

  21. Aid in the 1945-1953 period • Political Motivation by the U.S - establish a free and independent Korea - make the country a “showcase of democracy” • Basic Human Needs - provide sustenance and enable the restoration of basic economic function • The Commodity Import Program - Import of fertilizer, petroleum, agricultural supplies, leading to increase in agricultural output

  22. Aid in the 1953-1960 • Aid financed major part of commodity imports - 87% of imports and 14% of GNP - imports provide items unavailable and extremely scarce in Korea(100% fertilizer availability, textile, clothing) • Counterpart Fund -Receipt from sale of aid financed-imported goods -53% of Government Revenue -Financing investment projects

  23. Aid in the 1960-1975 period • Five year Development Plan - Strong commitment to national development - Eager to induce foreign capital and assistance to fill the gap between domestic saving and investment • Grants to Loans (Project Assistance) - Development Loan Fund (Commercial and Concessional) - Social Overhead activities - Transfer of new technology

  24. Emerging as a Donor in the early 1990 • Joined OECD in 1996 and 11th largest economy with properly designed development strategy and the effective use of foreign aid • Increasing demand from international community for sharing her development experience through economic and technical cooperation • Providing Grants and Economic Development Cooperation Fund to LDCs with her small amount of ODA

  25. How to Succeed • Filling the saving and investment gap - Foreign savings, in the form of aid, were the main source of resources for capital formation and investment at early stage of economic development • Absorptive Capacity & Economic Leadership - Korea largely initiated, directed, and organized development by setting goals, establishing priorities, and backing them up with resources

  26. How to Succeed • Effective allocation of Aid Resources • Focus on Education after Korean War - Investment in Education enabled Korea to succeed in export-oriented development strategy • Shift focus to Infrastructure with changes from grants to loans in 1960 - Korea could be a exporter with debt free status - Investment in Infrastructure enabled Korea to further develop into “a major exporter”

  27. 13th Symposium on Development and Social Transformation Panel 14: What Can We Learn from Korean Economic Development Experience? Friday, April 21st (9:00-10:00pm)

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