Panel 14: What Can We Learn from Korean Economic Development Experience?Friday, April 21st (9:00-10:00pm)
13th Symposium onDevelopment and Social Transformation
Korea Chaebol Reform Policy in 1998-1999
Jung-Ran Suh
Panel 14: What Can We Learn from Korean Economic Development Experience?
13th Symposium onDevelopment and Social Transformation
Korean Chaebol Reform Policy (1998-1999) Jung-Ran Suh
April 21, 2006
From Growth Engine to Culprit of CrisisChaebol : Too Big To Fail() (* 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 1997Excessive Foreign Debt under Shaky Finance SystemIMF Bailout Program and Structural Reform
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 PrinciplesFive Principles (1998.1.13) - Enhance Transparency - Control Intra-Group Transaction
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
Limits and ImplicationsLimited Success : Corporate GovernanceCombined Financial Statement, External AuditDebt Payment Guarantee RestrictedDebt-Equity Ratio Reduced
Revival of Interventionist State PowerIndirect, Informal Administrative GuidancePolitical Reason for Tangible Results
Balancing the State and Market
Thank you !!!
Leadership in Development Program:Korean Case 1964-1979
Kang Seo
Panel 14: What Can We Learn from Korean Economic Development Experience?
13th Symposium onDevelopment and Social Transformation
Beyond the Myth:Leadership in Korean Development Policy,1962~1979Kang Seo
IntroductionPurpose of research
Historical background
Park, Jung-Hee: personal background
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
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
Economic growth(Source: The Bank of Korea, Economic Statistics Yearbook)
Leadership AssessmentLeadership Typology(Tsurutani,1973) -commitment, intelligence and skill, dominance
Parks case -Effective modernizing vs. Crude modernizing
Beyond the mythShowed people the full commitment of leader to peoples needs for better life brought support from citizens
Failed to transform as his people did - oppressed people to continue authoritarian leadership
ConclusionControversies over the evaluation: committed leader vs. overvalued myth
Overall evaluation
Aid and Development in Korea
Phil-ho Kang
Panel 14: What Can We Learn from Korean Economic Development Experience?
13th Symposium onDevelopment and Social Transformation
Aid and Economic Development in Korea
Pil-ho Kang
April 21, 2006
Major facts about KoreaPoverty-stricken country in 1945 when she gained independence from Japans colonial rule Korean War in 1950Five year Development Plan in 1960Fast economic growth with export driven economic development strategy in the 1960-1970Joined OECD & the 11th largest economy
Aid in the 1945-1953 periodPolitical Motivation by the U.S - establish a free and independent Korea - make the country a showcase of democracyBasic Human Needs - provide sustenance and enable the restoration of basic economic functionThe Commodity Import Program - Import of fertilizer, petroleum, agricultural supplies, leading to increase in agricultural output
Aid in the 1953-1960Aid 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
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
Emerging as a Donor in the early 1990Joined OECD in 1996 and 11th largest economy with properly designed development strategy and the effective use of foreign aidIncreasing demand from international community for sharing her development experience through economic and technical cooperationProviding Grants and Economic Development Cooperation Fund to LDCs with her small amount of ODA
How to SucceedFilling 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
How to SucceedEffective allocation of Aid ResourcesFocus 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
Panel 14: What Can We Learn from Korean Economic Development Experience? Friday, April 21st (9:00-10:00pm)13th Symposium onDevelopment and Social Transformation
Jung-Ran SuhKorea Chaebol Reform Policy in 1998-1999
Kang SeoLeadership in Development Program: Korean Case 1964-1979
Phil-ho KangAid and Development in Korea