challenges and tasks faced by the korean economy in-ho kim (republic of korea) in-ho kim (republic...
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Challenges and Tasks Faced by the Korean EconomyChallenges and Tasks Faced by the Korean Economy
Challenges and Tasks Faced by Korean EconomyChallenges and Tasks Faced by Korean EconomyImplications for Madagascar’s Development EffortsImplications for Madagascar’s Development Efforts
In-Ho Kim(Republic of Korea)
In-Ho Kim(Republic of Korea)
Challenges and Tasks Faced by the Korean EconomyChallenges and Tasks Faced by the Korean Economy
The History of the Korean Economy’s Crises and ChallengesThe History of the Korean Economy’s Crises and Challenges
1
The Korean War (1950) First Oil Crisis (1971) Second Oil Crisis and Political Instability (1980) Democratization and Labor-Management Conflicts (1987) Finacial Crisis (1997)
But faced many hardship along the way:But faced many hardship along the way:
Korean Economy achieved great success under government-led expor
t-oriented industrialization during the 60s and 70s.
Korean Economy achieved great success under government-led expor
t-oriented industrialization during the 60s and 70s.
History of the Korean Economic development is series of challenges and efforts to overcome them
History of the Korean Economic development is series of challenges and efforts to overcome them
II
Challenges and Tasks Faced by the Korean EconomyChallenges and Tasks Faced by the Korean Economy
Shortcomings of Korean Development ModelShortcomings of Korean Development Model
2
IIII
Market Intervention Through Industrial & Financial Policies Market Intervention Through Industrial & Financial Policies
Government Decided Investment Priority and Selected Winners Government Decided Investment Priority and Selected Winners
Need to Reassess Government’s Role & Function in the Changing Economic Environment
Need to Reassess Government’s Role & Function in the Changing Economic Environment
Inability to adjust to New Global Economic Order( i.e WTO) Inability to adjust to New Global Economic Order( i.e WTO)
Government-led Investment Decision & Resource AllocationGovernment-led Investment Decision & Resource Allocation
Unhealthy relationship between gevernment and business Unhealthy relationship between gevernment and business
Challenges and Tasks Faced by the Korean EconomyChallenges and Tasks Faced by the Korean Economy
3
Chronic Trade (BOP) Deficit Chronic Trade (BOP) Deficit
Ecnonomic & Business Management Overly enthusiastic for growth Ecnonomic & Business Management Overly enthusiastic for growth
Decreased Profitability weakened business balance sheet Decreased Profitability weakened business balance sheet
Relying heavily on External Debt and External Demand resulted in Current Account Deficit
Relying heavily on External Debt and External Demand resulted in Current Account Deficit
Over-investment in Heavy and Chemical IndustriesOver-investment in Heavy and Chemical Industries
Uneven Development among sectors and industries Uneven Development among sectors and industries
Challenges and Tasks Faced by the Korean EconomyChallenges and Tasks Faced by the Korean Economy
4
Corruption & Crony Capitalism impeded transition toward market-based economy
Corruption & Crony Capitalism impeded transition toward market-based economy
Government Over-Involvement and “Korea, Inc.” Government Over-Involvement and “Korea, Inc.”
Political System Unmatched Economic Development: which resulted in decrease of Economic Efficiency
Political System Unmatched Economic Development: which resulted in decrease of Economic Efficiency
Negative impact of government’s over-involvement in the market Negative impact of government’s over-involvement in the market
Corruption and Crony Capitalism Corruption and Crony Capitalism
Low level of trasparency decreased confidence of foreigh investors Low level of trasparency decreased confidence of foreigh investors
Challenges and Tasks Faced by the Korean EconomyChallenges and Tasks Faced by the Korean Economy
Issues to be Resolved for Continued Economic DevelopmentIssues to be Resolved for Continued Economic Development
5
IIIIII
Need to open non-competitive industries such as agricultureNeed to open non-competitive industries such as agriculture
World-class manufacturing and information industries vs. traditional industries
Need for continued opening and fundamental restructuring of traditional industries
Difficulties in nurturing domestic social cohesion
Resultant Conflicts with international community
Need for economic management consistent with global standards
Challenges and Tasks Faced by the Korean EconomyChallenges and Tasks Faced by the Korean Economy
6
Financial Reforms Financial Reforms
Significance of finance in achieving further economic development
Launching financial reform before and after the ‘97 Financial Crisis
Continued reforms in the financial industry increased profitability
Lack of market mechanism and unhealthy relationship between government and finacial industry
Need to restructure the financial market to increase competitiveness
Challenges and Tasks Faced by the Korean EconomyChallenges and Tasks Faced by the Korean Economy
7
Consistency between Economic and other related policiesConsistency between Economic and other related policies
Most pressing issue: Reconciling the principles of the economy with operational principles of non-economic sectors
Inefficiency due to Discord with labor-management relations, social welfare, healthcare, and education
Improvement impeded by poor leadership and opposing interest groups
Dialogue with citizenry and sound political leadership needed
Challenges and Tasks Faced by the Korean EconomyChallenges and Tasks Faced by the Korean Economy
8
Globalization and Adopting Global StandardsGlobalization and Adopting Global Standards
Need to actively adopt global economic standards
Stabilizing the principles of the Market Economy – Essential for Continuous Development
True competitiveness Attainable only under competitive market structure
Changes Required: shift in public perception, reform of government’s role, and political leadership
Challenges and Tasks Faced by the Korean EconomyChallenges and Tasks Faced by the Korean Economy
9
The Role and Function of the GovernmentThe Role and Function of the Government
The government’s role during the early stages of development no longer sustainable
Such a role would hinder efforts for globalization and market economy stabilization
Government reform must start with the questions of what to do and what not to do
Despite efforts made after the financial crisis, need for fundamental reforms still remains
Challenges and Tasks Faced by the Korean EconomyChallenges and Tasks Faced by the Korean Economy
How Madagascar’s Development Efforts Can Gain from Korea’
s Experience
How Madagascar’s Development Efforts Can Gain from Korea’
s Experience
10
IVIV
The Government simultaneously a problem-solving entity and p
roblem itself
The Government simultaneously a problem-solving entity and p
roblem itself
Role of government is to evolve according to the pace of development
Strong government forces weaken the market and the economy’s structure of competition
Need to reflect on the government’s role and its relationship to the market
Trade-off between Corruption and Government-driven economic development
Strong leadership by example necessary for eradicating corruption
Challenges and Tasks Faced by the Korean EconomyChallenges and Tasks Faced by the Korean Economy
11
Market Economy Structure and National LeadershipMarket Economy Structure and National Leadership
Adopting a market economy essential for economic success
Determined national leadership necessary for economic success
Specific program development needed to change the perception of political leaders, media, intellectuals, and the citizens
Challenges and Tasks Faced by the Korean EconomyChallenges and Tasks Faced by the Korean Economy
12
The importance of globalization and the necessary national lea
dership
The importance of globalization and the necessary national lea
dership
Appropriate economic system as well as cooperation and assistance from the international community needed for efficient economic development
External competition is necessary to strengthen the economy’s competitiveness; however, may cause internal problems
Implementation of advanced policy reform by a strong national leadership needed in pursuit of globalization
Challenges and Tasks Faced by the Korean EconomyChallenges and Tasks Faced by the Korean Economy
13
Relationship between strong administration and Congress Relationship between strong administration and Congress
Political democratization required for adoption of market economy and international cooperation
Powerful administration (President) may result in conflict with Congress during early stages of development
In the case of Korea, policy implementation driven by the administration was effective after the military coup, but often resulted in dictatorial rule
Desire for democratization along with the economic development caused economic instability and slow-down of development
Democratization and sound relationship with Congress required since it is not feasible for the administration to act alone
Understanding and cooperation from politicians, including Congress, needed for smooth policy implementation