IPE of Korea <Lecture Note 1 > 13.03.08
IPE of Korea: Introduction
* Some parts of this note are summary of the references for teaching purpose only.
Semester: Spring 2013
Time: Friday 2-5 pm
Classroom: 331
Professor: Yoo Soo Hong
Office Room: By appointment)
Mobile: 010-4001-8060
E-mail: yshong123@gmail.com
Home P.: http://yoosoohong.weebly.com
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Study Method and Approach
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Introduction
 Purpose of the Study
− To learn the implications and characteristics of the Korean development
and its international relations in the context of international political
economy.
− To learn the structural development of and the issues related to trade and
foreign direct investment (FDI) of Korea in terms of economic and
business activities and international relations.
− To learn theories of IPE and related economic schools, economic
development and industrial strategies and policies, interactions between
governments and private sectors in international context.
 Approach to the Subject
− International political economy
− Evolutionary economics, etc.
− Theories, empirical studies, case analysis, etc.
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International Political Economy
 What Is International Political Economy (IPE)?
− International political economy is an analytical effort to break down the
barriers that separate and isolate the disciplines of politics, economics,
and sociology and their methods of analysis, seeking a comprehensive
understanding of mainly international issues and events.
− IPE employs elements of economics, politics, and sociology to describe
and explain international and global problems and issues in a way that
cannot adequately be addressed by each of those disciplines alone.
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 The Essence of IPE
− IPE is international in scope, meaning that it deals with issues that cross
national borders and with relations between and among nation-states.
Increasingly today, people talk about a global political economy because
more and more problems and issues affect the whole world, not just a few
nations, and require a universal perspective and understanding.
− IPE involves a political dimension in that it usually focuses on the use of
state power to make decisions about who gets what, when, and how in a
society.
• Politics is a process of collective choice, drawing in competing and
often conflicting interests and values of different actors, including
individuals, nation-states on a bilateral and multilateral basis,
conflicts between states and international organizations, regional
alliances, nongovernmental organizations and transnational
corporations.
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− IPE is about the economy or economics, which means that it deals with how
scarce resources are allocated for different uses and distributed among
individuals, groups, and nation-states through the market process, which is
sometimes decentralized and other times quite centralized or controlled by
state officials.
• Economic analysis focuses less on issues of state power and national
interests and more on issues of income, wealth, and individual interests.
− IPE attempts to understand the complex interaction of real people in the real
world, along with their attitudes, emotions, and beliefs.
• The social forces associated with class, ethnic, religious, and other
cultural groups, along with their different beliefs and values, must also be
considered in the IPE analytical formula. Likewise, the state, economy,
and society are also affected by the historical development of important
events and issues.
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 Why Study International Political Economy?
− (Important) IPE is crucial in today’s world, in which events and conditions in
one part can strongly affect conditions in other parts, that we analyze these
conditions so as to understand what caused them and how they might be
managed.
− (Useful) In a global political economy and society in which so many things
influence and affect one another, employers and government officials seek
out those who can understand the international and global context of human
activity.
− (Interesting) IPE is all about life and the many actions and interactions that
connect human beings around the globe.
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Analytical Building Blocks:
States, Markets, and Societies
− Much of the study of IPE focuses on the interaction of three highly
important institutions -states, markets, and societies- and how their
relationship to one another affects the behavior of a variety of different
actors.
 The State
− The state is a legal entity, or a relatively coherent and autonomous
system of institutions that governs for a specific geographic territory and
population.
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 The Market
− A market can represent a geographic location where goods and services
are exchanged. However, what defines a market is not the physical
characteristic but its function as the institution for exchange of goods and
services.
− Under pure market conditions (the absence of state intervention or social
influences), people are assumed to behave rationally. They will naturally
seek to maximize their gains and limit losses by producing and
exchanging things. This desire to exchange is a strong motive behind
their behavior, along with pressure to generate wealth by competing with
others for sales in local and international markets.
− A value many people strongly hold that is reflected in market activity is
economic efficiency, the ability to use and distribute resources effectively
and with little waste.
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− Markets exist within some form of political arrangement or bargain whereby
states or some other form of political unit helps maintain their existence and
ultimately decides their primary function.
− In “mixed economies” among others market forces influence a great many
resource allocation and distribution decisions, but not all of them. In many
nations, people prefer more state control or regulation over market activity in
an effort to guide outcomes in directions that favor certain people or groups.
− In many cases, such as with some of developing countries and also China,
shifting to a market economy and to a democratic government that will
supposedly limit the state’s role in the economy is not an easy process.
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 Society
− Society adds another element of tension to the state, market, and
society
mix, because different societal groups usually want to preserve and promote
the history, culture, and values of their social system.
− In an age of increasingly growing globalization, market systems link people
and their different values and interests with one another when they make
products better, cheaper, or more attractive to people in other nations.
Relatively unregulated markets can perform a social “coordinating without a
coordinator” function, whereas, in more authoritarian systems, markets serve
as a “cruel and harsh coordinator.”
− The standards used to judge the effectiveness or efficiency of markets and
market systems always reflect the dominant ideas about society’s values and
beliefs. Markets are a force but not one that is easily separated from social
and political forces that give them purpose and provide them with different
functions.
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− We are interested in the patterns of interaction between the state, society,
and markets that change over time and that shape local, national, and
international institutions as well as individual behavior patterns in dynamic
ways.
− At times, the market may dominate more than the state or society,
resulting in a shifting configuration of group and actor interests and values.
This seems to have been the pattern of the 1990s when globalization
became so prevalent.
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 Nature of Political Economy
− Because states, markets and society embrace different basic values and
prefer to work in different ways to achieve different ends, sharp tensions
and conflicts often result within and between different nation-states and
their societies.
− Most people live simultaneously in a state that exhibits certain types of
political institutions, national market arrangements and a distinct social
system that differs from other nation-states that have their own political,
market and social arrangements and institutions.
− How well the collective choices of the state reflect the general will and the
public interest depends on a large number of factors, such as voting
rights, rules about representation, and the nature of political institutions in
a country.
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 Four Global Structures
− The Security Structure: When one person, state, or international
organization contributes to or provides security for states and other
organizations, a security network is created. The nature of this security
structure depends on the kind of bargain that is struck among its
participants.
− The Production and Trade Structure: Producing things is one element of
generating value and wealth, and wealth is nearly always linked to power.
The issue of who produces what for whom on what terms, therefore, lies
at the heart of international political economy. Structural changes affect
trade and the distribution of wealth and power in the world and the other
IPE structures.
− The Finance and Monetary Structure: One way to describe the finance
and monetary structure is to say that it is the pattern of money flows
among nations. This structure is, then, really a description of how certain
resources are allocated and distributed between and among nations.
Financial bargains create obligations, which join the interests of different
nations.
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− The Knowledge and Technology Structure: Who has knowledge and how
it is used is an important factor in IPE. Nations with poor access to
knowledge in the form of industrial technology, scientific discoveries,
medical procedures, or instant communications, for example, find
themselves at a disadvantage relative to others. Increasingly, the
bargains made in the security, production and trade, and finance and
monetary structures depend on access to knowledge in its several forms.
− Take together, these four IPE structures form the international system
within the interdependent relations of individuals and states occur. The
international systems therefore composed of a set of bargains and
relationships that condition how states and individuals behave and
determine in part the mix of values that result in IPE is that they are multidimension.
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Basic Feature of Korea
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Map of Altaic Language
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Korean History in Brief
•
•
•
•
Old Choson (2333-108 BC)
Three Kingdoms (57 BC-936 AD)
Koryo (918-1392)
Choson (1392-1910)
- Colonialization (1910-1945)
• Modern Korea (1945-today)
•
Long history of Independence
•
Noticeable Factors
- Homogeneity (Nation, language)
- Diplomatic survival
- Cultural excellence
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Cultural Influence
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Refugees Fleeing from the Korean War
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Korea: From Ash to a G20 Country
- Korea was one of the least developed countries in terms of industrial
development in the early 1960s. It has been transformed into one of
leading industrial countries in the world during the last 50 years.
•
-•
-•
-•
•
•
-
1960
2010
Pop: 25 million
GNP(1960):
GNP (1960):US
US$1.1
$1.1 billion
billion
GNP per
per capita
GNP
capita (1960):
(1960):$82
$82
Exports (1960): $33
$33 million
Exports(1960):
million
Industry: Plywood and wigs
Industry: Plywood and wigs
Diplomacy: No member in
Diplomacy:
member in
major intern’lNo
organizations
major international
organization
• Pop: 50 million
• GDP (2010f): US$1,012.4 billion
(14th)
• GDP per capita (2010f): $20,450
• Exports (2010f): $459,803 million
(12th), (In 2012, 8th in world trade)
• Industry: Semi-conductor, Smart
phone, TV, Auto, Shipbuilding, etc.
• Diplomacy: UN, OECD, G20, etc.
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Growth in the Korean Economy
GNP Per Capita Growth Trend
$20,045 in 2007
13th largest economy in the world
25,000
20,000
Financial
Crisis
15,000
Around 8%
10,307
10,000
Above 10%
6,742
5,000
5-Year Economic Development Plan
0
Source: KDI
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Changes in Dominant Industries and Top Exports
Textile
Home
electronics
Iron & Steel
Overseas
construction
Home
Electronics
Semi-conductors
Iron & Steel
Automobile
Shipbuilding
Semi-conductors
IT
Automobile
Shipbuilding
Textile
Petro-chemicals
Semi-conductors
Mobile
communications
Digital home
electronics
E-commerce
Bio products
Fine parts
Food
Plywood
Wig
1960
1970
1980
1990
2000
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Development Stages in the Korean Economy
Stages of Development
1950s
Aid,
Labor
intensive
production
1960s
Imitation
Simple tech.
Import of old
plant/
machinery
1970s
Heavy industry
Assimilation
Minor
innovations
Traditional
Imitative Catch-up
Agricultural
Economy
Factor-driven Economy
“Extensive Growth”
Outward-looking
1980s
R&D
New product
development
1990s
R&D intensive
increase
in science
New product
innovation
Innovative Catch-up
Transition to
Invesment-driven
Innovation-driven
Economy
Economy Outward“Extensive Growth”
looking
2000s
Innovation
frontier
Innovative
Economy
“Intensive
Growth”
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Focus of Economic Development Strategy in
Each Administration
Found the Country
(Lee Seung Man’s
Administration)
• Establish the
Country
Democratization
(Roh Tae Woo’s
Administration)
• Private-Driven
Economic Operation
• Promote
Deregulation
Rapid Growth
(Park Chung Hee’s
Administration)
• Income Substitution
Industry
• Export-led Economy
• Develop HeavyChemical Industry
Internationalization
(Kim Young Sam’s
Administration)
• Opening
• Competition
• Step forward to
Internationalization
Stable Growth
(Chun Doo Hwan’s
Administration)
• Economic
Stabilization
• Adjust HeavyChemical Industry
Market & Open
Economy
(Kim Dae Jung’s
Administration)
• Overcome Financial
Crisis
• Knowledge-based
Economy
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Korean Electronics Leading the World Market
(% in the world)
Memory
(45.0%)
CP
(28.8%)
TFTLCD
(41.3%)
DTV
(13%)
MP3
(20%)
Contribution to the Korean economy by share:
GDP (14%) and Export (30%)
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Seoul, a City of 12 Million
21ST CENTURY KOREA
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Han River
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Villages
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Location: Traditional Korean Houses, Seoul
Source: KOREA TOURISM ORGANIZATION
Location: Gyeonghwaeroo at Gyeongbokgung Palace, Seoul
Source: KOREA TOURISM ORGANIZATION
Location: Haeinsa Temple, Hapcheon
Source: KOREA TOURISM ORGANIZATION
Seokguram, UNESCO World Heritage
Source: KOREA TOURISM ORGANIZATION
Location: God’s Playground at Seorak Mountain
Source: KOREA TOURISM ORGANIZATION
Location: Sol Island, Kangwon Province
Source: KOREA TOURISM ORGANIZATION
Location: Jeju Island
Source: KOREA TOURISM ORGANIZATION
References
Association of Korean History Teachers. 2010. Korean History for
International Readers.
Bahk, Byongwon and Gi-Wook Shin. (eds.) 2012. South Korea and the
Global Economy in Transition. Walter H. Shorenstein Asia-Pacific
Research Center.
Balaam, David N.and Michael Veseth. 2008. Introduction to International
Political Economy (4th Ed.). Pearson.
Lee, Jong Won. 2004. The Korean Economy and Its Prospects. Seoul:
Haenam.
Ministry of Foreign Affairs, ROK. 2011. Foreign Diplomacy White Paper
2011. (In Korean)
 OECD. 2012. OECD Economic Surveys of Korea. (Google)
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Sakong, Il. 1993. Korea in the World Economy. Institute for
International Economics.
Soh, Changrok. 1997. From Investment to Innovation?: The
Korean Political Economy and Changes in Industrial
Competitiveness. International Trade and Business Institute.
Song, Byung Nak. 1990. The Rise of the Korean Economy. Oxford
University Press.
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Reference
Korea: Dynamics of Change
Mr. Monroe
World History CP
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Early Traditions
 In ancient times, small bands
of nomadic hunters migrated
to Korea from Central Asia.
 100 A.D. – 668 A.D.: Three
separate kingdoms
dominated Korea.
◦ Koguryo (north)
◦ Paekche (southwest)
◦ Silla (southeast)
 668 A.D.: Silla kingdom united
all of Korea.
 Korea remained a single,
unified state until 1945.
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Early Traditions
 Korea absorbed many ideas
and customs from China.
◦ Buddhism, Confucianism,
Chinese writing
 Chinese culture spread to
Korea in several ways.
◦ China ruled parts of Korea
◦ Chinese refugees fled to
Korea
◦ Buddhist missionaries
◦ Koreans who went to China
to study
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Invasions and Isolation
 1592:A powerful Japanese ruler
tried to attack China through
Korea.
 Attacks lasted 6 years
 With Chinese help, Koreans
drove out the Japanese.
 War destroyed much of
Korea
 Early 1600s: Manchus from the
north invaded.
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Invasions and Isolation
 To secure peace, Koreans
paid tribute to the Manchu.
 In response to the invasion,
Korea turned to isolationism.
◦ A policy of avoiding foreign
involvements and contacts.
◦ Lasted almost 200 years
◦ Also banned Christianity.
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Imperialism and Nationalism
 Mid-1800s: Western powers
wanted Korea to open its
ports to foreign trade.
 With the Korean dynasty in
decline, they couldn’t resist.
 Imperialist powers forced
Korea to sign “unequal
treaties.”
◦ Gave trading rights and
special privileges to foreign
countries.
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Imperialism and Nationalism
 Japan competed with Russia
for power in Korea.
 1905: Japan won control of
Korea.
 1910: Ousted the Choson
dynasty, which was in power,
and annexed Korea.
◦ Annex: to add territory to
one’s own country.
◦ Japanese imposed harsh rule
on Korea.
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Imperialism and Nationalism
 Koreans bitterly resented
Japanese rule.
 Nationalists campaigned to
win freedom.
 March 1, 1919: Korean
nationalists held a huge,
peaceful demonstration to
demand independence.
◦ Japanese response: Killed
2,000 Koreas and jailed
19,000 others.
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Imperialism and Nationalism
 During the years that
followed, Japanese hunted
down leaders of the March
1st Movement.
 Many fled to the U.S., China,
and the Soviet Union.
 1930s-40s: Japan expanded
its empire across much of
Asia.
 WWII: Forced Koreas to fight
and used their resources
 Suppress culture: Couldn’t
speak Korean and had to take
on Japanese names.
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A Divided Land
 1945: Koreans celebrated
Japanese defeat in WWII.
 Agreed to give Korea
independence
 Soviet Union and United
Statses sent troops to Korea
to accept the Japanese
surrender.
 Soviets occupied the north
and the U.S. occupied the
south.
 38th Parallel: Geographical
line that split north and south
Korea.
 Occupation was to last only
until elections could be held.
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A Divided Land
 Cold War rivalries led to a
permanent division of Korea.
 Korean nationalists split into
communist and non-communist
factions.
 1945: Soviet Union helped Korean
communists take power in the
north.
 At the same time, U.S. backed
non-communist Koreans in the
south.
 1948: Korea officially split.
 Democratic People’s Republic
of Korea (North Korea)
 Republic of Korea (South
Korea)
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War in Korea
• 1950: Beginning of Korean
War
• U.S. backed South Korea,
fearing spread of communism.
• Soviets backed the north.
 The war ended in a stalemate
in 1953.
 Both sides agreed to an
armistice, or end to fighting.
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War in Korea
 The truce agreement left
Korea divided at the 38th
parallel, with a demilitarized
zone (DMZ) along both sides
of the line.
 Costs of War:
 Almost 4 million people
died during the Korean War.
 Many people became
refugees.
 Fighting destroyed factories
and farms.
 Many cities were left in
ruins.
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South Korea Today
 Maintain a solid army
 It has also built a thriving
economy.
 After the split, South Koreans
accepted authoritarian rule of
Rhee Sing Man, later Park
Chung Hee.
 Today: After 60 years, South
Korea is now an economic
power with a strong defense
capacity
 A fully democratized society
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South Korea Today
 South Korea has a free
market economy, but the
government has kept a tight
control over it.
 They stress manufacturing for
export.
 Automobiles, textiles, and
electronics.
 South Korea is closely tied
with the global economy.
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North Korea Today
 North Korea is a closed
society under a communist
dictatorship.
 1948-1994: Kim Il Sung built
a totalitarian state.
 Through propaganda,
North Koreans were
taught complete
obedience to the man
they called “Great Leader.”
 Preached self-reliance and
developed a policy of
isolationism.
 North Korea built heavy
industry for their own use
only. Plants and infrastructure
are detieriorating.
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North Korea Today
 Today, North Korea exports and imports very little.
 When Kim died, his son, Kim Jong Il, then Kim Jong Eun
became ruler and continued similar policies.
 Quality of life lags far behind that in the south.
 1995: Progress was halted after floods and droughts.
 China has been assisting a half of rice and oil that North
Korea to survive.
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Outlook for the Future
• Most Koreans hope to reunite someday.
• Since 1990s, both Koreas have held talks.
• They signed a nonaggression pact and set up meetings for
some families separated during the Korean War.
• South Korea has also sent food aid to the north.
 Still, they face many obstacles.
 Each government thinks the other wants to overthrow
them.
 North Korea has developed nuclear weapons and tested
long-range missiles.
 North Korea has sold missiles and other weapons to
international terrorist groups.
 U.S., South Korea, and other allies fear that North Korea
will be tempted to use their weapons.
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