Transcript Panel 4: Implementing Social Policy In India Wednesday, April 19th

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)
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
Korean
“Chaebol”
Policy
(1998-1999)
Jung-Ran Suh
April 21, 2006
Reform
From Growth
Crisis

Engine
to
Culprit
of
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

Chaebol Reform Policy in 1998-1999

(1)
‘Blame Chaebol, Dismantle Chaebol’
against State-controlled Economy, Statecontrolled Finance
 No Economic recovery without Chaebol Reform


‘Five plus Three Principles’
Five Principles (1998.1.13)
- Enhance Transparency
- Control Intra-Group Transaction

Chaebol Reform Policy in 1998-1999
- 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 giftgiving
(2)
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
Thank you !!!
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
Beyond the Myth
:Leadership in Korean
Development
Policy,1962~1979
Kang Seo
Introduction

Purpose 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)
year
GNI per
Capita(US$)
GNI(billion
US$)
Exports(million
US$)
1960
80
1.95
33
1963
100
2.72
87
1970
243
7.99
882
1980
1,597
60.0
17,214
Leadership Assessment
Leadership Typology(Tsurutani,1973)
-commitment, intelligence and skill,
dominance

Park’s case
-”Effective modernizing”
vs. “Crude modernizing”

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
Conclusion


Controversies over the evaluation:
committed leader vs. overvalued myth
Overall evaluation
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
Aid and Economic
Development in Korea
Pil-ho Kang
April 21, 2006
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
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
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
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 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
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
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”
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)
Jung-Ran Suh
Korea Chaebol Reform Policy in 1998-1999
Kang Seo
Leadership in Development Program:
Korean Case 1964-1979
Phil-ho Kang
Aid and Development in Korea