Korea’s Economic Modernization
Yong Yoon, PhD
30 Jan. 2013
Korea
2
NASA Satellite Picture
3
Korea Economic Development Policy
Experience
• The Korean government has set explicit goals
for national development in which the private
sector has been instrumental.
– 1960s: Export-promotion strategy
– 1970s: HCI Drive, and Saemaul Undong
– 1980s: Automobile/electronics/household
appliances, etc. (adv. Technology)
– 1990s: IT & Communication Leader, Cinema
– 2000s: Cultural leader (‘Hallyu’)
4
The First Five-Year Economic
Development Plan (1962 – 1966)
• The first plan sought to benefit the textile industry
and make Korea self-sufficient. At the time, Korea’s
status was as a capital poor, inadequate saving, and
predominantly U.S.-financed state, in need of
independence.
5
The Second Five-Year Economic
Development Plan (1967 – 1971)
• The second five year plan sought to modernize the industrial structure to
make Korea more competitive in the world market, which was
incorporated into all future five year plans.
• Fears also prevailed that the U.S. would no longer provide military defense
for Korea. Plan promoted self-sustaining economic development
(encourage import-substituting industries).
6
The Third Five-Year Economic
Development Plan (1972 – 1976)
• Pres. Park implemented the third five-year plan which was
referred to as the Heavy Chemical Industrialization Plan (HCI
Plan) and, also, the "Big Push". To fund the HCI, the
government borrowed heavily from foreign countries (not
foreign direct investment, so that it could direct its project).
• Plan aimed at building an export-oriented industrial structure.
7
The Fourth Five-Year Economic
Development Plan (1977 – 1981)
• Development of industries that can effectively compete
internationally in industrial export markets (promote
technology and improve efficiency. )
• Plan to achieve self-sustaining economy.
• Promote equity through social development.
8
The Fifth Five-Year Economic
Development Plan (1982 – 1986)
• Establish foundation for price stability, improve quality of life,
restructure government’s functions and improve technology.
• Move concentration from the heavy and chemical industries,
to technology-intensive industries.
9
The Sixth Five-Year Economic
Development Plan (1987 – 1991)
• Emphases were placed on Research and Development and Manpower
Training.
• Establish socio-economic systems, promote creative potential and
initiative.
• Industrial restructuring and technological improvement.
• Improve national welfare through balanced growth and income
distribution.
10
The Seventh Five-Year Economic
Development Plan (1992 – 1996)
• Promote high-technology fields, such as microelectronics, new materials,
fine chemicals, bioengineering, optics and aerospace.
• Promote economy through self-regulation and orderly competition.
• Management innovation and establishment of sound work and civic
ethics.
11
Korea
War
(1953)
Seoul
2003
12
Changes in Industrial Structure
Changes in Employment Structure
Service
Sector
28.3
Changes in GDP Structure
Service Sector
Agriculture /
Fisheries
1960
Agriculture /
Fisheries
36.8
47.3
63.0
7.9
15.9
Manufacturing
Manufacturing
Agriculture /
Fisheries
9.3
19.2
71.5
Service
Sector
Manufacturing
Agriculture /
Fisheries
4.3
2002
63.2
32.5
Manufacturing
Service
Sector
13
13
Agriculture to Manufacturing /
Light Industry to Heavy and Chemical Industry
Changes in Export Commodity Profile
Textile
Wig
Automobile
Semiconductor, Mobile Phone,
DTV, Display, Automobile,
Semiconductor Ship-building, etc.
84.8% HCI Product
(ICT, 27.6%)
50%
12.4%
Light
Industry
Product
2.8% Agricultural
Product
1960
1970
1980
1990
1999
2003
14
14
15
Some history
LEADERS OF THE PAST
16
King Sejong the Great (世宗大王,
세종대왕)
• South Korea's national language is Hangeul
introduced in 1446 under King Sejong of the
Choson dynasty.
17
The Song of the Dragon Flying to
Heaven (龍飛御天歌, 용비어천가)
A tree whose roots are
deep: in the wind does not
shake; its flowers have
luminance; its fruit,
fragrance.
Water whose fountainhead
is far away; in drought
does not dry; it flows and
becomes a stream; and to
the sea it surely reaches
18
Shin Saimdang (申師任堂, 신사임당)
• On June 23, 2009, the Bank of Korea released
the 50,000 Won note.
19
Yulgok (李珥, 이이)
20
Yi Hwang (李滉, 이황)
21
Coins (up till 2006)
무궁화
거북선
이순신
22
Japanese Rule (일제시대)
• In January 1876, following the Meiji Restoration, Japan
employed gunboat diplomacy to pressure Korea to sign
the Treaty of Ganghwa [강화도조약], an unequal treaty,
which opened three Korean ports to Japanese trade and
granted extraterritorial rights to Japanese citizens.
• Korea was under Japanese rule as part of Japan's 35-year
imperialist expansion (29 Aug. 1910 to 15 Aug. 1945).
23
North and South Korea
• The unconditional surrender of Japan, combined with
fundamental shifts in global politics and ideology, led to the
division of Korea into two occupation zones effectively
starting on September 8, 1945, with the United States
administering the southern half of the peninsula and the
Soviet Union taking over the area north of the 38th parallel.
• The Korean War (25 June 1950 – 27 July 1953) was a war
between the Republic of Korea (supported primarily by the
USA, with contributions from allied nations under the aegis
of the United Nations) and the Democratic People's
Republic of Korea (supported by the People's Republic of
China, with military and material aid from the Soviet
Union).
24
25
Recent leaders
PRESIDENTS OF KOREA
26
27
Yi Seungman (李承晩, 이승만)
• Yi Seungman or Syngman Rhee (1875–1965)
was the first president of South Korea. His
presidency, from August 1948 to April 1960.
28
Kim Gu (金九, 김구)
• What if?
29
Park Chung-hee (朴正熙, 박정희)
• Park Chung-hee (1917–1979)
was a Republic of Korea Army
general and the President of
South Korea from 1961 to 1979.
• He has been credited with the
industrialization and rapid
economic growth of South
Korea through export-oriented
industrialization.
30
The Economic Policy of
Park Chung-hee
• Park had seen the development of Manchukuo
based on Japanese investment in infrastructure
and heavy industries when he was an officer in
the Manchukuo imperial army.
• Intending to acquire money and technology for
South Korea via Japanese grants and soft loans,
Park normalized diplomatic relations with Japan
in 1965 (Treaty on Basic Relations between
Japan and the Republic of Korea).
• Beginning of Chaebols (Korean conglomerates).
31
Korea’s Economic Take-off
(The Miracle on the Han River)
• "(When visiting Korea), I recall seeing a billboard
in the Korean language (near the airport) that
was roughly translated to me by my taxi driver as
'export or die.'...”
• "I heard from the bureaucrats that the president
would never cancel a meeting with the business
community to receive a visiting dignitary. He
knew early on that Korean success would depend
on unleashing the potential of the private sector."
32
Export-Promotion Strategy (1960’s)
• “Export contests!”
• Monthly/Annual Meetings led by Pres. with ministry
officials, business leaders, scholars
• Evaluation/Coordination/Re-alignment/Signaling
• Incentives: Tax benefits (lower rates, exemption);
Credit allocation (“policy loans”, low interest rates);
Entry barriers (licensing, FX); etc.
• Rise of the Chaebol (Korean large corporations, e.g.
Samsung, Hyundai, LG, etc).
• Annual Export Growth jumps from 3% (1950s) +> 30%
(1960s) +> 40% (1970s)
33
Institution Building
• Creation of economic development agencies
• Economic Planning Board (EPB)
• Ministry of Trade and Industry (MTI)
• Ministry of Finance (MoF)
foreign aid
1953
1973
34
Economic Planning Board (EPB)
• EPB (1961-94)
– “Super ministry” modeled after Japanese MITI in
charge of both planning and budgeting..
– Preparing Five-year EDPs and annual EMPs
– Coordinating economic polices
• Head of EPB holding the post of Deputy Prime Minister
and chairing Economic Ministerial Meetings
– Allocating domestic and external resources for
economic development.
35
Other Institutions
• Ministry of Finance (1948-94)
– Financial market, monetary policy, tax policy, treasury.
• Ministry of Finance and Economy (1995-)
– EPB and MOF merged to produce MOFE.
– “Planning” effectively abandoned .
– In 1998, transferred budgeting, prudential regulation, and
monetary policy to MPB, FSC, and BoK, respectively.
– Still in charge of coordinating economic policies.
• Ministry of Planning and Budget (1998-)
– Responsible for central government budgeting.
– Increasing its role in long-term planning and policy
coordination with the introduction of MTEF.
36
Economic Growth in 1970’s
Promotion of Heavy and Chemical Industries (‘73-‘79) <Shipbuilding, steel,
automobiles, machinery and petrochemicals>
• Gradual weakening of competitiveness of labor-intensive light industries:
– Protectionism and world-wide stagnation caused by the first oil crisis.
– Rapid wage increase and fierce competition from other developing
countries.
• Fast-forward petrochemical industry development in the aftermath of the
fall of Vietnam and U.S. pullout.
• Transform industry to become more capital-intensive and reduce C/A
deficit.
• National-defense related industries also encouraged.
• Successful firms in 1960s “selected” to lead HCI industries.
37 37
Chun Doo-hwan (全斗煥, 전두환)
• President from 1980-1988
• After his inauguration, Chun clamped down on out-of-school tutoring and
banned individual instruction or tutoring.
• In 1981, Chun enacted the "Care and Custody" legislation.
• In the winter of 1984, before declaring a moratorium on
the Korean economy, Chun visited Japan and requested
a loan for $6 billion.
• Later he passed the 3S Policy (Sex, Screen, Sports).
Chun tried to appeal to the citizens in order to ensure
the success of the 1988 Seoul Olympics preparations :
e.g. forming a pro-baseball and pro-soccer team,
starting the broadcast of color TV throughout the nation,
lessening censorship on sexually suggestive dramas and movies
making school uniforms voluntary, etc.
• In 1981, Chun held a large-scale festival called "Korean Breeze", but it was
largely ignored by the population.
38
Democratization
• Sustained economic growth and stability enabled people to
pay more attention to human rights, to care for individual
freedom, and to demand a full-fledged democracy. Demands
for freedom from every corner of Korean society culminated
in a democratization movement in 1987.
• One of the first reform movements was the free labor
movement. Yet it was translated into incessant labor disputes,
a reaction to the oppressed labor movement in the 1960’s and
1970’s.
• Korea’s declaration of democratization in June 1987 paved the
way for accelerated political democracy and market
liberalization during the Roh Tae-woo regime (1988-1992).
39
Jeon Tae-Il (1948-1970)
40
wages
41
Roh Tae-woo (盧泰愚, 노태우)
• Roh Tae-woo (born December 4, 1932) is a
former ROK Army general and politician.
• He was President of South Korea from 1988–
1993.
42
Slowdown in Economic Growth :
1989-1993
• The late 1980s saw Korea’s export competitiveness
deteriorate due to rising labor costs, rising domestic interest
rates, and a sharply appreciating won (the won rose against
the US dollar by 18% in 1988 alone).
• The trade surplus of the later 1980’s dwindled to practically
nothing in 1989 and was followed by progressively larger
deficits in the 1990’s.
• Labor policy helped strengthen union’s influence and favored
wage increases: tremendous wage hikes (11% annually during
1989-91) far exceeded the rise in productivity.
• Increased financial costs, excessive administrative regulations
on business activities, and low social overhead capital
investment were typical of the period, which gradually
afflicted industrial and firm competitiveness and
entrepreneurship.
43
Kim Young-sam (金泳三, 김영삼)
• Served as Korea’s (first civilian) President from
1993 to 1998.
• He presided over a massive anti-corruption
campaign, the arrest of his two predecessors,
and initiated an internationalization policy
called Segyehwa 세계화
( lit. Globalization).
• Acceleration of liberalization!
44
Economic Deregulation
• 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)
45
Phenomenal Growth
46
Integration into the World
imports
exports
47
1997/8 Financial Crisis
48
Kim Dae-jung (김대중)
• Kim Dae-jung (1925-2009) was President of South
Korea from 1998 to 2003, and the 2000 Nobel
Peace Prize recipient (for the Sunshine policy)
• He successfully shepherded South Korea's
economic recovery from the 1997/8 economic
crisis; brought in a new era of economic
transparency ;
and fostered a greater role of
South Korea in the world stage
(including the FIFA World Cup 2002,
jointly hosted by Korea and Japan).
49
Sunshine policy
50
Roh Moo-hyeon (盧武鉉, 노무현)
• Roh Moo-hyeaon (1 September 1946 – 23 May 2009) was
President of South Korea 2006–2008.
• "I will root the method of discussion inside the government.
… discussion should be familiarized until we are called
'Republic of discussion'.“
• Dubbed “Participatory Government”.
• Achievements include: the expansion of social welfare, the
pursuit of "balanced national development" to help
underdeveloped areas, the eradication of corruption,
reform of education and tax systems, reform of labormanagement relations, reform of mass media, and a
recasting of the relationship with the United States and
Japan.
51
Lee Myung-bak (李明博, 이명박)
• Lee won the presidential
election in December
2007 with 48.7% of the
vote which was
considered to be a
landslide.
52
53
54
Korean Chaebols
PRIVATE COMPANIES
55
Chaebol
•
•
•
•
•
•
•
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.
56
Chaebols
• Family-oriented Korean conglomerates
57
58
• Founded in 1938 (by Lee Byung Chull)
– exporter of dried/pickled seaweed and fish, vegetables, and fruits
– flour mill and confectionery machines
• 1950’s Economic Stabilization
– Korean War - Samsung lost all assets
– aimed to help rebuild Korean economy; entered the manufacturing
industry (sugar, fabrics 1954: Cheil Industry)
– became a leader in modern business practices (recruiting from
outside; 1st HR dept.)
• 1960’s Expansion of Key Industries
– entered electronics and chemical industries
– 1969 established Samsung Electronics Co.
59
% of Sales ($72B)
•distribution
•hotels
•amusement
theme parks
•trading
•construction
•textile
•advertising
•baseball team
•security
Electronics
28%
•home appliances
•wireless
communication
•semiconductors
Other
38%
Machinery
& Heavy
Equipment
6%
•cameras
•aircraft
•ships
•dump trucks
•oil trucks
Chemicals
2%
•life insurance
•credit card services
•securities trading
•finance and trust
management services
Financial
Services
26%
•polymerized compounds
•plastics
•specialty chemicals
60
Samsung Electronics
• SAMSUNG ELECTRONICS: established in January, 1969
• 1970’s: Bet the future on electronics
– laid the groundwork for electronics in Korea
– helped the domestic economy grow
– paved the way for exports
• 1980’s: A more comprehensive electronics company
– established plants in Portugal and US
– established Semiconductor and Communication corporation
– began memory chip business (DRAM)
• Early 90’s: Integration and Globalization
• Mid-Late 90’s: Implementing new management strategies
• 2000’s: Digital Vision -- “A Company that leads the digital convergence
revolution”
61
Samsung Electronics
Home Multimedia
Mobile Multimedia
Personal Multimedia
Core Components
62
• Lee Kun-hee: "Change everything except your wife and kids“: 1993
•
•
•
•
•
•
•
As of 2010, his son Lee Jae-yong is President and COO of Samsung Electronics.
Lee Boo-jin, his eldest daughter is President and CEO of Hotel Shilla, a luxury
hotel chain, as well as President of Samsung Everland, a theme park and resort
operator
His eldest brother's son is currently chairman of the CJ Group, a company
holding businesses in food, beverages and entertainment
His second eldest brother's sons ran Saehan Media, one of the largest blank
media producers.
His older sister is the owner of Hansol Group, the country's largest paper
manufacturer and producer of electronics and telecommunications.
One of his sisters is married to Koo Ja-hak, brother of former chairman of the
LG Group and himself a former chairman of LG Semiconductor. He is currently
running one of the largest food services firms in Korea.
His younger sister, Lee Myung Hee is currently the chairman of the Shinsegae
Group, the largest retail company in Korea, with major holdings such as the
Shinsegae Department Stores and E-Mart.
63
• LG Corp. is the second-largest South Korean
chaebol following Samsung.
• LG produces electronics, chemicals, and
telecommunications products and operates
subsidiaries like LG Electronics, LG Display, LG
Telecom and LG Chem in over 80 countries.
• LG Corp. founder Koo In-Hwoi established Lak-Hui
Chemical Industrial Corp. in 1947. As the
company expanded its plastics business, it
established Goldstar Co., Ltd., (currently LG
Electronics Inc.) in 1958.
64
65
• Chung Ju-yung (1915 - 2001)
66
• Pony (1975-1980)
67
Diversified Businesses
68
• Daewoo was founded on 22
March 1967 (by Kim Woojung) as Daewoo Industrial
and was dismantled by the
Korean government in 1999.
• The group was reorganized
into three separate parts:
Daewoo Corporation (a.k.a
Daewoo Electronics), Daewoo
Engineering & Construction
and Daewoo International
Corporation.
69
• Park Tae-joon (1927-Dec 2011): retied 1993
• Began production in 1972, just four years after
the company's inauguration in April 1968 with
thirty-nine employees (initially funded by Japan.)
• By the late 1980s POSCO's growth had been
immense. It was the fifth biggest steel company
in the world, with an annual production
approaching 12 million tons worth 3 trillion won.
• Listed in NYSE 1994.
• In 2000, full privatization of POSCO was
completed.
70
Largest Chaebols by revenue 2007
Rank Chaebol
Billions
of USD
Comparable
economy
Rank Chaebol
Billions of Comparable
USD
economy
1
Samsung Group
174.2
Malaysia
11
Hanwha Group
24.4
North Korea
2
Hyundai Kia
Automotive Group
109.8
New
Zealand
12
Hyundai Heavy
Industries
22.5
Uzbekistan
3
4
5
LG Group
SK Group
POSCO
94.8
88.0
34.0
Peru
Vietnam
Syria
13
Kumho Asiana
Group
22.2
Yemen
14
KT
21.7
Cameroon
6
Korea Electric
Power
31.4
Tunisia
15
Kookmin Bank
20.2
Ethiopia
7
GS Group
29.5
Guatemala
16
Doosan Group
19.8
Jordan
17
Hyundai
Department Store
Group
19.8
Ghana
18
Hanjin Group
18.7
Burma
19
20
LG Display
Shinsegae
15.4
10.8
Bolivia
Paraguay
21
Lotte
10.4
Georgia
8
Shinhan Financial
Group
9
Woori Financial
Group
28.6
Costa Rica
10
STX Corporation
24.5
Uruguay
28.7
Kenya
71
Source: IMF List of countries by GDP (nominal) & CIA World Fact book
Economic Episodes
1973 Oil-crisis
72
The First Oil Crisis (1973)
• Before the crisis, Korea was able to achieve a remarkable
economic growth. It was growing at the rate of 9.6 percent
each year. Under the environment of free trade and global
economic boom, export-driven economic development plans
had paid off.
• The first oil crisis in 1973 dealt a deadly blow to a country
without any oil fields.
• Severe stagflation set in: prices of oil and raw materials
soared, while production and income fell. Yet when the
second oil crisis hit, the Korean government and the public
were prepared and managed to get around it.
73
Economic Episodes
The “Three Lows”
74
• The 1985 Plaza Accord lowered the relative value of
US dollars and Korean won vis-à-vis the Japanese yen
thereby helping Korean exports.
• World oil price fell, helping Korea’s balance-ofpayments situation and profitability.
• World interest rates dropped, thereby favoring
countries with large foreign debt like Korea.
• Economic performance during the so-called 'three
lows' period (1986-88):
Increased exports leading to a
balance of payments surplus
Rapid rise in
real GDP
growth
A record US$8.8 billion
trade surplus in 1988 or 8%
of GDP
Average annual GDP growth
recorded 10.7% in 1986-88
75 75
• In the era of “Three Lows” (low exchange rates, low
interest rates, and low raw material prices), income
grew continuously at a high rate, but the inflation
rates remained low.
• From 1988, however, CPI inflation began to rise (7.1,
8.6, and 9.3% in 1988, 1990, and 1991 respectively)
accelerated largely by increasing labor costs and
increased money supply helped on by the mounting
current account surplus.
76
Economic Episodes
1997/8 Financial Crisis
77
Deteriorating environment for corporations including policy
bias against large corporations as well as widespread moral
hazard caused corporate profits to drop drastically and minor
chaebols including Hanbo, Sammi, Jinro, Haitai, Halla, New
Core and Kia to experience serious problems, yet they were
continuously maintained with the government’s help, which
led to loss in government credibility and a fall in Korea’s
credit rating.
78 78
An overvalued real exchange rate, which helped mask
inflationary pressure, together with high interest rates
adversely affected export competitiveness.
79 79
Too fast and wrong sequencing of capital account
liberalization increased the probability of default from
creditors refusing to roll over debt: Specifically, short term
capital flow was liberalized prior to long term Capital flow,
which left domestic banks increasingly vulnerable to foreign
interest spikes, domestic currency depreciation and/or a
creditors panic.
80 80
Insufficient foreign reserves base of 3-months worth of
imports was maintained following IMF estimates that were
based on a rigid exchange rate system and non-liberalized
capital accounts.
81 81
A too narrow and immature financial system under pervasive
government control coupled by prudential regulations not
strictly abided by, upon accelerated liberalization of the
country’s financial sector, exacerbated the sector’s
weaknesses and vulnerabilities.
82 82
Economic impact of the crisis
• An immediate effect of the crisis was the depreciation of the won to the
US dollar—at the end of September 1997, one US dollar bought 915 won,
but by the end of the year, the won had fallen to a record low of 1,965.
• Depletion of foreign reserves to US$8.9 billion by end of 1997.
• The depreciation of the won exerted inflationary pressure, which shot up
to an average of 7.5% in 1998 (compared to 4.4% in 1997 and 0.8% in
1999).
• Increasing rate of bankruptcy (more than 17,000 firms were bankrupt in
1997 alone).
• Non-performing loans exceed 20% of their total loan portfolio at some
banks and total irrecoverable loans were estimated at 32 trillion won
(about US$20 billion)
• Korean stock price index dropped to 366 point in December 1997 from
about 750 in mid-1997.
• Social disruption increased as the unemployment rate more than doubled
from 2.6% in 1997 to 6.8% in 1998.
83 83
Recovery
• IMF announced a bailout package of $58.4 billion(13% of
Korean GDP).
• IMF Loans required:
– Higher interest rates*
– Further deregulation; liberalization
– Reform/rejuvenate dormant bankruptcy law
– Allow foreign investment in financial sector
• IFIs: “Don’t try to export your way out!”
• Korean response: Export, export, export
• Repay IMF loans ()
• Rationalize Chaebol (“Big Deal” program)
• Adjust to new structural realities
– More liberal financial system
– Greater foreign presence
– More rights-oriented society
84
Economic Episodes
2008/9 Global Recession
85
Not again!
• Korea depends on exports, but somehow Korea was a little
better off (better prepared) than in 1997/8.
• In Nov. 2008, government poured $120 billion into financial
markets to support the won.
• In Dec. BOK executed $30 billion currency swap with U.S Fed.
(increase liquidity in credit market & prop up the economy.)
• Korea’s national debt was 33% of GDP (OECD average was
75%).
• Strong safety nets established (e.g job-training programs like
JUMP). Job-sharing.
• Long-term contracts (like ship-building increased market share
to 33% in 2008.)
• Cheaper won (Toyota start to purchase Korean steel in 2009).
86
Neighbors
Japan
87
Japan Relations
•
•
•
•
Rivalry (World baseball classic 2009, football).
Dokdo island (독도).
Koreans in Japan (Zainichi) 600,000
‘Comfort women’
88
Neighbors
China
89
China Relations
• Yellow cloud
(황사 [黃砂] )
• Choseonjok
(조선족): Korean
ethnicities living
in China (2
million).
90
International Relations
U.S
91
The U.S
• Trade: From ginseng (인삼)
to SUV’s.
• The Republic of Korea-United States Free
Trade Agreement (also known as KORUS FTA)
is a trade agreement between the US and
Korea (April 1, 2007).
• Main issues were food, cars, and services.
• Beef crisis! (Downer in 2003).
• Koreatowns.
92
Economic Leader
Technological Nirvana
93
Korea’s Technological Edge
94
I.T
• 1990’s: US took up dial-up access, while Korea chose
DSL.
• By 2000, 90% of Korean homes had braodband
connection.
• Korea’s IT exports grew from $20 billion in 1997 to
$78 billion in 2005.
• In 2004, gov’t announced the IT 839 policy (8
services, 3 infrastructures, 9 products).
• There have been successes (chose CDMA over GSM
for coding wireless signal) as well as failures (DMB).
• A nation of gamers: Korean video game produced
more than $2 billion in revenue in 2008 (1/4 from
exports). This is double the country’s movie industry.
95
Samsung again!
96
Entertainment
Korean Wave
97
Hallyu (韓流, 한류)
• Korean Wave (Hallyu) refers to the spread of South
Korean culture around the world.
• The term was coined in China in mid-1999 by Beijing
journalists surprised by the fast growing popularity
of Korean entertainment and culture in China.
• The Korean wave is responsible for achieving over
one billion dollars in revenue annually for South
Korea through cultural exports.
• For example, in 2011 based on international activity
the Korean wave added approximately $3.8 billion
dollars of revenue to the Korean economy.
98
Entertainment
K-POP
99
S.M. Entertainment
• S.M. Entertainment is an independent Korean
record label, talent agency, producer, and
publisher of pop music, founded by Lee Sooman in South Korea.
100
S.M. Entertainment (cont.d)
Girls' Generation
101
S.M. Entertainment (cont.d)
Super Junior
102
J.Y.P Entertainment
• JYP Entertainment is a Korean music record
label, founded in South Korea in 1997 by Park
Jin-young.
103
J.Y.P Entertainment (cont.d)
Wonder Girls
104
105
Others …
• DSP Entertainment
• YG Entertainment
Big Bang
106
Entertainment
SERIES
107
Winter Sonata
108
Dae Jang Geum
109
Full House
110
Entertainment
CINEMA
111
Evolution
•
•
•
•
•
•
Early period (until 1926) :"Motion pictures have finally been introduced into
Joseon … beginning of October 1897”,
The Golden Era of Silent Films (1926-1930): Na's film, Arirang (아리랑) (1926)
considered the start of the era of silent film in Korea.
Early sound era (1935-1945): Korea's first sound film was Lee Myeong-woo's 1935
Chunhyang-jeon
Liberty (1945-1950) and War (1950-1953) eras: Choi In-gyu's Viva Freedom! 자유
만세) about Korean freedom-fighters during the waning days of the colonial
period, is considered the major film of this era.
Golden Age (1953-1973): With the ascension of Park Chung Hee in 1962,
government control over the film industry increased substantially.
Under the Motion Picture Law of 1963, a series of increasingly restrictive
measures were placed on the film industry. The number of films produced and
imported were limited under a strict quota system (domestic film-production
companies dropped from 71 to 16 within a year.) Government censorship at this
time also became very strict, focusing mainly on any hint of pro-communist
messages or obscenity.
112
Evolution (cont.d.)
• "Revitalizing Government" era (1973-1979) :Governmental control
reached its height in the mid- and late-1970s, nearly destroying the
vibrant film culture that had been established in the preceding decade and
a half. Also, the Korean Motion Picture Promotion Corporation
(영화진흥위원회) was created in April 1973.
• (1980-1996): the government's relaxation of censorship and control.
• Current (1997 through present): This government-enforced screen quota
system has stood since 1967, which limits the number of days per year
non-domestic movies can be shown on any one movie screen in South
Korea.
• There are three important dates in new wave Korean films:
– 1992, Marriage Story was financed by Samsung, marking the first non-government
funded film.
– 1999, Shiri was released and led to Korean films taking over 50% of the local market.
– Ultimately, My Sassy Girl became the most popular and exportable Korean film in
history.
113
114
Growth of Creative Industry
115
Is Hallyu sustainable?
116
Tourism
117
People to Watch
CURRENT PERSONALITIES
118
Psy
119
Jung Ji-Hoon (RAIN)
120
Park Ji Sung
121
Pak Se-Ri
122
Ban Ki-moon
123
Jim Yong Kim
124
CONCLUDING REMARKS
125
Main Lesson from Korea’s
Developmental Policy Experience
•
•
•
•
Marriage of government-private sector
Policy Cycle (Selection, Support, Evaluation)
Set up of Institutions for government-control
Examples:
– Export-led growth (Formation of chaebol)
– Science and Technology
– Saemaul undong (rural developmet)
126
Saemaul Undong (새마을운동 )
Number of Villages by Saemaul Stage and Year
Stage of Villages
1973 (%)
1974 (%)
1975 (%)
Kicho-Maul
18,415 (53.1)
10,656 (29.1) 6,165 (17.8)
13,943 (40.2)
19,763 (67.1) 21,500 (62.0)
2,307 (6.7)
4,246 (12.2)
7,000 (20.0)
34,665 (100)
34,665 (100)
34,665 (100)
(Primary village)
Jajo-Maul
(Self-helping village)
Jarib-Maul
(Self-supporting vi.)
Total
Source: Tae-Yeung You (1986), “The Patterns of Rural Development in Korea,”
The Institute of Saemaul, Kon-kuk University, Seoul, p.65.
127
The future?
128
Society
• The Korean childhood (over-protection).
• In 2007, Korean families spent $13.6 billion on
private schooling.
• English!
• SKY universities.
• Korean women.
• Foreign-wives (and multi-culturalism).
• Aging society.
129
130
Challenges ahead
• Korea’s energy challenge.
• The greening of Korea.
• From centralized planning to dispersed
leadership.
• Opening the networking system.
131
And, of course, N. Korea
132
Thank you
133
References
• Amsden, Alice (1989) “Asia’s Next Giant: South Korea
and Late Industrialization”, New York: Oxford University
Press.
• Chang, Se-Jin (2003) “Financial Crisis and
Transformation of Korean Big Business Groups: The
Rise and Fall of Chaebols”, Cambridge: Cambridge
University Press.
• Kim, Myung Oak and Sam Jaffee (2010) “The New
Korea” New York: AMACOM.
• Song, Byung-Nak (2003) “The Rise of the Korean
Economy” 3rd ed.. Oxford: Oxford University Press.
134
youtube
•
•
•
Korea Advertisements
http://www.youtube.com/watch?v=IXtTsYIwmD8&feature=fvwp&NR=1
http://www.youtube.com/watch?v=Cy24S8Rb1Ek&feature=related
•
•
•
•
•
•
•
•
•
History channel: A Nation to Watch
http://www.youtube.com/watch?v=W3_zsVijn2Y
http://www.youtube.com/watch?v=qH2krIpqBXQ
http://www.youtube.com/watch?v=dDFlSRZ1n-8
http://www.youtube.com/watch?v=Kt52a5gZufo
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http://www.youtube.com/watch?v=jaWVxgGu5tc
http://www.youtube.com/watch?v=3961ODlntiM
•
•
•
Whole program
http://www.youtube.com/watch?v=YKA5TwcxMm0
http://v.youku.com/v_show/id_XMjk1OTkzMTc2.html
•
•
Extender (wave)
http://www.youtube.com/watch?v=INZ9mKpH9UA
135
youtube
• K-pop
• http://www.youtube.com/watch?v=UUEsjO_83OY&feature=related
• Seoul
• http://www.youtube.com/watch?v=Oaa92oFv-NQ&feature=related
• Unravel travel Korea & Seoul Gourmet
• http://www.youtube.com/watch?v=4K6AKp1bE6A&feature=related
• K-pop
• http://www.youtube.com/watch?v=8tyEsOtV0FY&feature=related
• Caught in the web
• http://www.youtube.com/watch?v=Yfm-2rEoDg4&feature=relmfu
136
International Championship Host
137