Transcript North Korea and South Korea:

North Korea and South Korea:
Different Perspectives on
Globalization and Its Effects
Andras Konya
Adam Schlegel
Amanda Baldwin
Introduction
 Compare the effects of
globalization (or lack thereof)
on two comparable countries
with similar culture, history,
and definite point of
separation.
Pinpoint strengths/weaknesses of
globalization
Method, not apples/oranges
History: Korean War
 Soviets and Americans decide to divide Korea
into their own sphere of influence
 North and South (1948)
 Secretary of State Dean Acheson neglected to
include Korea in the US sphere of influence in
Asia.
 Kim Il Sung took initiative to invade the South
(1950)
 not Stalin but Stalinist
 War ends ends in stalemate, 38th parallel, DMZ
 Both countries are ruined in the similar manner
 Ideal comparison
 Each embraces different ideology: totalitarian vs.
authoritarian
Path to Globalization
 Following the Korean War, a decade of political turmoil begins
 First President Syngman Rhee ousted from office (1960)
 rigged elections for vice president cause student riots
 Democracy not initiated
 military coup d’etat, Park Chunghee takes over
 Park Chunghee begins to build South Korea into economic power
 stablity but still not democratic
 tool: chaebol
Chaebol System
Conglomerate
large corporation with many
unrelated subsidiaries
centrally planned though
private
lack of input from minor
shareholders
financial security for all
companies involved
Park’s Economic Plans for
Chaebols
 creation of export-oriented industries
 creation and fostering of heavy
industry
 maintenance of anti-union behavior
 protection of domestic market
 pegging won to dollar
 chaebols are major force in the South
Korean economy
 1960’s to 1990’s
 big enough to utilize limited resources
effectively
 government contracts and subsidies
Top Chaebols in South
Korea
 Hyundai
 Automobiles
 Engineering, construction, shipbuilding and
industrial activity
 Finances
 Samsung
 Electronics
 Petrochemicals
 Construction (Petronas Towers in Malaysia)
 LG
 Home appliances and electronics
 Petrochemicals and chemicals
Emerging Globalization
(Advantages)
 Through the chaebols, South
Korea emerged as an export
leader of the world
 Import raw materials to
manufacture exports
 Industrialization and Service
Economy
 Higher standard of living
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better education
more material possessions
increased leisure time
GDP skyrockets from third
world equivalent to Western
European standards
Emerging Globalization
(Disadvantages)
 Profits appease populace as
long as they are positive
economic downturn leads to civil
disobedience and revolution
no democratic process or
structure to deal with problems
political stability dependent on
economic situation
authoritarian until 1987,
numerous revolutions,
undemocratic
chaebols are undemocratic by
nature
Decline of Chaebols
 Ultimate decline of chaebols
 Too big to manage effectively
 Core competency (unrelated
industries)
 Decline
 rise in labor cost
 standard of living
 competition from other Asian
countries (China)
 cheaper workforce
 Effect
 lower of standard of living to
match competitiveness
 contributed to South Korea’s
economic crisis (1997)
Globalization (Financial
Crisis)
 Convergence of misfortunate
economic events
 banking sector was burdened with
non-performing loans
 excess debt
 lower credit rating
 chaebol oversight and
accountability low
 Democracy swiftly corrected
recession
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1998: GDP: -6.6%
1999: GDP: 10.8%
2000: GDP: 9.2%
allowed for greater input of
populace
South Korea Conclusion
Globalization
started to higher wages
demands for social reforms
South Korea became less competitive
Ironically, the good of globalization caused
the bad
History: North Korea
 After Korean War, Kim Il Sung takes
over
 Nationalization versus Chaebol
 “people’s” property versus the highly
private chaebol
 while abuses in both, higher standard of
living obvious only in one
 Juche (self-reliance)
 closed all capital flow
 "the hermit kingdom”
 Militarization versus Chaebol
 to secure power Kim Il Sung diverted a
third economy for military instead of
economic reform (South Korea, 3%)
 22 million population, 1.2 million military
 wastes the most able-bodied men of
society with unproductive job
 famines every year, starving people
North Korea: Economics
 Refusal to join global markets
through Juche
 lower standard of living
 police state: complete lack of
democratic institutions
 army needed for government’s
lacking legitimacy: massive famines
 Notable exceptions to global
markets
 Drugs
 Arms Trade
 Significant portion of GDP
used for making the military bigger,
not food
Conclusion
North Korea is control group for complete
nonacceptance of globalization
While South Korea experienced problems,
it is now on a democratic path with an
economy that is substantially better in
every aspect