One of the leading economically developed nation of not only Asia, but also of the world is “South Korea”. The nation has already been declared as a force to reckon with, and economist have predicted it to a top nation in the coming decades. The Korean economy is known as a ‘Tiger economy’, and is famous for its rapid acceleration capabilities. The economy of South Korea has faced lots of ups and downs, because of its history, which has been full of conflicts due to its historical relation with imperialists.In the late 19th century, Japan started taking control of Korea, which was then unified, and started the initial economic movement of Korea. By the early 20th century, after the marriage of the Korean prince to a Japanese princess, Japan took control of Korea, and started to utilize the Korean economy for its own use.
The Korean economy, which was primarily considered to be a backward agricultural economy, was played around by the Japanese for boosting its own economy. Japan’s imperialist approach to the Korean economy is cemented from the following;Following the annexation of Korea in 19l0, Japan thrust a modern blend of industrial capitalism onto a feudal agrarian society. By the end of the colonial period, Japan had built an extensive infrastructure of roads, railroads, ports, electrical power, and government buildings that facilitated both the modernization of Korea's economy and Japan's control over the modernization process. The Japanese located various heavy industries--steel, chemicals, and hydroelectric power--across Korea” (Courtesy: Andrea Matles Savada and William Shaw, editors.South Korea: A Country Study.
Washington: GPO for the Library of Congress, 1990) Japan to suffice its every growing need of rice, started to utilize the agricultural economy of Korea to produce massive quantities of rice for Japan and eventually pumped its economy, by boosting industries in the nature of fishing and forestry apart from agriculture. Japan however followed imperialist’s principles, and Korea was molested for its own profits, leaving deep scars on not only the Korean economy but also the minds of people.In the midst of the entire profit taking, Japan boosted the infrastructure of Korea, by emphasizing in education and productivity, and this move by Japan is considered as a prime example for modern South Korea’s industrialization, and it is also said that the principles of high productivity of major companies like LG are based on the Japanese principles and strategies of embarking high production. After the Second World War, South Korea was under the American influence, and North Korea was under the Russian influence.South Korea, followed capitalism in the lines of America and by 1961, when the reins of power shifted to General Park, South Korea started looking at a new development which was mainly aided by the United States of America. The infrastructures begin to change giving ample opportunities for business to develop in the nation.
There was guidance provided to industries which were based on privatization on the lines of monetary and fiscal policies and also by having norms that helped these businesses to flourish by achieving export and production targets.The capital of South Korea, ‘Seoul’ became the epicenter of efficient and qualified work force that contributed for producing high quality goods for exports at very nominal prices. South Korea’s major business boom came with the creation of a movement known as “Chaebol”. Under this, large scale business corporations were formed which made major exports of their low cost high productive units. These companies which are now global leaders in their products include the Samsung group, Daewoo, Hyundai and even the massive Lucky Gold star (LG) group.These companies brought the nation to a new height and globalize their products all over the world, transforming Korea into one of the fast growing nations, with its products namely electronics being exported all over the world.
South Korea did globalize its economy, and from an economy which was highly devastated due to the Japanese rule, and was also considered to be one of the poorest nation shot up due to its policies and high exports, and reached the list of top 50 wealthiest nations by 1974.South Korea to an extent has been successful in globalizing its economy, but has faced major problem due to globalization. The inefficiency of South Korea to globalize can be seen by the following example: “In the late 1980s, South Korea got its first taste of globalization. The country accepted recommendations from the Uruguay Round (which later became the WTO) to open their economy to free trade. These recommendations required South Korea to gradually reduce subsidies to its rice farmers.
In return, the Uruguay Round promised South Korea aid and, even more importantly, entrance to the new world economy. The South Korean government believed it had put its country on the fast track towards development and prosperity and, in many ways, it had. But, the reforms were devastating to South Korea's rice farmers” (Courtesy: Cate Malek,”Globalization”, July 2005, retrieved on March 26, 2008, from site http://www. beyondintractability. org/case_studies/Globalization.
jsp? nid=5102)South Korea from the point that of a nation, to do business in or to invest international funds carries its own set of pros and cons. In the history it has always been evident that a country having or had martial law is prone to have it again. The major risk from political point of view is that, the country can either have political unrest in the near future, war with North Korea can leave the country in distress and also the less likely unification of both the Koreas, can leave an impact on the economy.South Korea’s people to like most parts of nation hand in hand with globalization follow the theory of transcend ideology, and would buy brands of international repute, subject to the brand has to be well recognized all over the world. Companies having lot of name do have a substantial advantage over companies with not much of international brand repute. If Both the Koreas decide to unify like Germany, then South Korea would have to face a loss of $50 billion per year, for a couple of years.
This loss the government would entice definitely from companies of foreign origin, making them pay higher taxes as a compensation for them to do business in South Korea. However, the judicial system of South Korea can be termed as ‘mild rigid’, and is very strict wit the slightest amount of discrepancy. The following example shows such scenario: “Lone Star was delivered a setback on its plans to sell its shares of Korea Exchange Bank to HSB when its local office chief was found guilty of manipulating the share price of KEB's card affiliate in 2003.Given the presented evidence in court, I understand that the Texas company's legal team had been understandably confident of an acquittal.
This is not to say with all the smoke there was no fire, but more likely the flames came from outside of the accused party's control ? not from Lone Star. But it didn't matter. The Korean public wanted ? and finally got ? a guilty verdict”. (Courtesy: Tom Coyner, president of Soft landing Korea,” How risky is it to invest in South Korea”, Korea Times, 15th February 2008. Retrieved on March 26, 2008 from site http://www.
oftlandingkorea. com/How%20Risky%20Is%20It%20to%20Invest%20in%20South%20Korea. htm) South Korea is a country that can actually give its credit for its economic success to the IMF. The massive recession and economic downfall that hit the fast growing Korean economy brought South Korea to a very bad economic phase in 1997.
The IMF helped bail out South Korea with a $20 billion package that brought the economy back on track. Korea after taking the aid, has been more responsible towards its accelerated growth, and has very deeply understood the facets of down ward economy.South Korea in order to repay the loan, which had burdened their economy with started to enhance in cost, quality and product innovation, also started intelligent use of technology with a complete global focus. With the effect of these strategies South Korea decided to repay $3 billion in the year 1998, which is affirmed by the following: “The managing director of the International Monetary Fund, Michel Camdessus, has welcomed a decision by South Korea to start repaying its debt to the IMF, with a payment of almost three-billion dollars.Mr Camdessus said South Korea had met the IMF target for building up its foreign currency reserves forty-one billion dollars by this month and the currency, the won, had strengthened against the dollar. Share prices on the Seoul stock market have doubled in the last few months, with a rise of almost eight per cent on Thursday alone.
Under government pressure, South Korea’s five largest industrial conglomerates this week announced plans to slim down and get rid of unprofitable businesses”. Courtesy: “IMF praises South Korea”, BBC World Service, December 10th 1998. Retrieved on March 26, 2008 from site http://www. hartfordhwp.
com/archives/55a/053. html) South Korea even after the massive comeback, still suffered huge losses, as many of the labor force got evicted from companies because of the melt down. Even though the nation comes under one of the top economies of the world, the debt did push the economy back from a long term point of view, but it bailed the country out from an immediate crisis.
