Korean

institutions

Group No. 12:

Anncie
Kinshoo
Prashanth
Sandeep
Tahavar
 Analysis sequence

 Before division
 Korea divided
 Impact on economy
 Now Korea
 North Korea- Analysis & Institutions
 South Korea- Analysis & Institutions
 Conclusion





 Before division…
 Few significant industries before liberation from
Japan's 35-year colonial rule (1910-1945).
 Communist-provoked Korean War (1950-1953)
lead to devastation of economy.
 On top of its extreme poverty, the population
was growing by 3 percent annually. 
 Unemployment prevailed and savings were
negligible. 
 No notable exports.
 Depended on imports for both raw materials and
important manufactured goods
Korea divided….!
 After Japan's surrender at the conclusion of
World War II, the Korean peninsula was
partitioned into two occupation zones,
divided at the 38th parallel.
 The USSR controlled the north, with the U.S.
taking charge of the south.
 In 1948, the division was made permanent
with the establishment of the separate
regimes of North and South Korea.
 Impact on economy
 The physical war damage incurred to the civilian
economy was equivalent to about 85% of South Korea's
1953 GNP.


 During the postwar reconstruction period (1953-1960),

the rate of economic growth was quite low despite the
massive inflow of foreign aid.


 From 1953 to 1996, Korea's gross national product

increased from US$2.3 billion to US$480.2 billion, with
per capita GNP rising from US$67 to US$10,543, at
current prices.



 Source: http://www.asianinfo.org/asianinfo/korea/economy.htm
 Contd…
 The economy that in the past largely depended on agriculture
currently boasts a sizable manufacturing sector, which
accounts for over 25.7% of Korea's GDP in 1997.


 The commodity trade volume reached more than US$274.9

billion in 1996, in contrast to US$477 million in 1962. 


 Movement from command economy to market economy.



 Today Korea is the third largest economy in Asia and the 11th
largest in the world.

Source: http://www.asianinfo.org/asianinfo/korea/economy.htm

 Now Korea…..
 The Republic of Korea has achieved what is widely
acclaimed as "the Economic Miracle on the Han-
gang river." 
 Since Korea embarked on economic development
in earnest in 1962, its economy has grown at
one of the fastest paces in the world. 
 As a result, Korea, long one of the world's poorest
agrarian societies, has emerged as an upper
middle-income, fast industrializing country.
North Korea
 North Korea - Economy

Basic Economic Facts
 GDP: US$40 billion (2008 est.)
GDP per head: US$1,700 (2008 est.)
GDP Real Growth: -2.3% (2008 est.)
GDP Composition: agriculture - 23.3%,
industry – 43.1%, services – 33.6% (2002
est.)

Source: http://www.fco.gov.uk/en/travel-and-living-abroad/travel-advice-by-
country/country-profile/asia-oceania/north-korea?profile=economy
Why not n. Korea..?
 North Korea – a land of flood and
famine
 Nnatural disasters, economic
mismanagement and serious
resource shortages after the
collapse of the Eastern Bloc.

  North Korean authorities announced
that the flood inundated about 2.2
billion ㎡ of farmland, which
accounts for 14 percent of the
country’s farmland.

Source: http://en.wikipedia.org/wiki/North_Korea#cite_note-4
 Formal and informal institutions in n.
Korea

 Democratic people’s republic of Korea

 SIGI
 Hamhŭng University of Education



Source: http://kellogg.nd.edu/publications/workingpapers/WPS/307.pdf

http://en.wikipedia.org/wiki/North_Korea
South Korea
Improving South Korea …..

 In 2004 South Korea joined the trillion dollar club of world

economies.
 According to the 2006 International Monetary Fund list of
countries by gross world product, South Korea now ranks
12th out of 181 countries
  In more recent years the economy of South Korea has
become more robust, leading to low levels of
unemployment at 3.3%.



 South Korea (GDP)

Source: www.google.com/publicdata
South Korean companies include:

 Daewoo
 Hyundai
 KiaMotors
 Korea Aerospace Industries
 LG
 POSCO
 Samsung
 Samsung Techwin Ltd

 Doing business in s .
Korea ..
 Water, energy and related sectors present attractive
opportunities for U.S. equipment manufacturers, engineering
and infrastructure planners.
 Reforms to stabilize the situation.
 The Tripartite Committee consisted of labor leaders, business
leaders, and public officials.
 Measures to cover a wide spectrum of economic structural
reforms, in finance, corporate governance, labor,
liberalization, and the public sector.


 Source: http://www.researchandmarkets.com/reportinfo.asp?report_id=604499
 Financial sector reforms..
 Agreement between the Korean government and the IMF.


 The macroeconomic policy aims to achieve stabilization

by:
- requiring acquisition of sufficient foreign reserves,
- reforming the corporate and the financial sectors, and
- laying a foundation for enhancing the country's long-term
growth potential.



Source: http://www.asianinfo.org/asianinfo/korea/economy.htm#Challenges
and Opportunities
 Formal structure
 Formal institution called liberal democracy
 Shift from state directed economy to market
economy
 Successful Neo- Confucianism ( fusion of new
institutional economy)
 Economy follows pattern of Japan – indicative
planning.
 Reflects familistic groupism.




 Informal framework

Source:http://ristinak.wordpress.com/2008/05/28/comparison-of-students’-
occupation-in-secondary-and-higher-educational-institutions-in-south-korea/
 The relationship between formal and informal
institutions can be complementary,
substitutive, or conflicting (Lauth 2000, 25-26).


 Informal institutions can serve to stabilize and

further democracy, as is the case with informal
bargaining structures within the legislature and
between representatives of the legislative and
the executive branch, but they can also
undermine the democratic process, as is the
case with corruption and political clientelism.
 Conclusion
 South Korea reflect a new institutionalist
outcome
 Reduced transaction cost
 Minimal asymmetric information
 Nature of political system is obviously better
than the North Korea
 The relationship between formal and informal
institutions have been complementary.
 Better place to venture into business.

