本文是经济学专业的留学生Essay范例，题目是“Government Guided Growth: The Industrialization of South Korea（政府导向型增长:韩国的工业化）”,韩国政府是如何塑造韩国的工业化的?韩国政府实施干涉主义政策和改革，以促进出口导向型工业化。在20世纪初，朝鲜帝国是一个以农业为主的国家。在日本吞并朝鲜(1910-1945年)期间，日本外务省官员小松绿道(Komatsu Midori)描述了他的亲身经历，他说:“真正意义上的商业在(韩国)并不存在。”这个国家仅存的人类活动分支是农业”(Midori)。
How did the South Korean government shape the industrialization of Korea?
The South Korean government implemented interventionist policies and reforms to promote export-oriented industrialization.
In the early 1900s, the Joseon Empire of Korea was deeply agrarian. Komatsu Midori, an official of the Japanese foreign ministry during the Japanese annexation of Korea (1910-1945), described his first hand experiences, stating that "commerce in its true sense did not exist in [Korea]. The only branch of human activity remaining in the country was agriculture" (Midori).
Because South Korean history in the 20th century was one wrought with political strife and warfare that interrupted and destroyed their attempts at development and modernization, South Korea's industrial state remained relatively unchanged after World War ⅠⅠ. Indeed, South Korea was one of the world's poorest countries until the 1960s (Park and Ok 203), lacking both domestic capital and the natural resources necessary to attract foreign investors ("The Korean Economy … "). However, in less than a century, South Korea was able to miraculously transition from a developing state with minimal production and commerce (Cetin and Karadas 93) to the economic powerhouse it is today (Lew and Im).
Surmounting all odds, South Korea grew at an average annual growth rate of 9% between the 1960's - 1990s with a hundredfold increase in per capita income. For this reason, historians call this period of rapid growth and industrialization The Miracle on the Han (Lew and Im). During this time, the South Korean government implemented interventionist policies and reforms to promote export-oriented industrialization that caused South Korea's extraordinary boom in economic growth.
The first important form of government intervention was Land Reform on agricultural land during the early years of the presidency of Syngman Rhee (1948 to 1960). Until then, South Korea had a land tenure system, where in 1930, 77.5% of farmers were tenants who paid up to 60% of their annual crop yields to mostly absentee landlords, or yangban, who controlled around two thirds of total farmland (Shin 14). The tenure system caused the formation of a very small wealthy aristocracy, the yangban, but kept the majority of the population in a cycle of chronic poverty as subsistence farmers, burdened by hefty rent and taxes.
Complete lack of expendable income for most of the population inhibited social mobility and economic diversification, especially since very few rural families could send their children to school or spend money on anything but food and basic necessities. The system also limited agricultural production as there was no incentive for tenant farmers to be more efficient by increasing input supply or improving technology (Shin 15) as only the absentee landlords would reap the benefits. The faulty system persisted during the Japanese occupation because the yangban would inevitably have surplus crops which the Japanese authorities wanted to import.
At the beginning of Rhee's presidency, urgent reforms were called for and procured in the form of the Land Reform Act of 1950. The purpose of the act was, as set forth in its own first article, " to improve the living conditions of farmers [and] to keep the balance of and to develop the national economy by increasing agricultural productivity" (qtd. in Pak 1015). The reforms effectively abolishing tenancy by setting the limit for maximum farm size at 7.35 acres (Pak 1015) causing the redistribution of 577 chungbos of land to 1.6 mil farmers (Shin 14). This had two main impacts.
First, a new commoner class emerged of land-owning farmers who were no longer burdened by high rent costs and were incentivized to increase production (Lew and Im). This increase in agricultural production created a strong foundation for population increases and meant that fewer farmers were needed to sustain the population, allowing for less focus on agriculture.
Second, because the previous landowners could no longer invest their money in land, they invested in businesses and schools. The presence of more schools combined with the ability of families to send children to school meant that modern education increased rapidly after 1953 (Lew and Im) which is why, between 1945-1960, enrollment in higher education increased tenfold (Seth). By 1961, South Korea had a well-educated young workforce which built the foundation for later economic growth ("The Government Role … ").
The combination of increased capital and educated individuals set the stage for economic diversification, so while 61% of the population were farmers in 1961, by 1980 that number had fallen to 38% (Seth). Land reform policies redistributed the wealth of yangban towards education, commerce and industry, helping with the lack of capital for development beyond agriculture.
While some of President Rhee's policies helped set up South Korea for rapid industrial growth, his policies weren't the catalyst for the Miracle on the Han. In 1963, General Park Chung Hee seized power in a coup d'état, launching a new prosperous era through his Japan-inspired developmental state model and commitment to export-oriented industrialization.
A developmental state is a political system where the government, through interventionist economic policies, is the main actor in getting a country past periods of underdevelopment. Export Oriented Industrialization policies are policies that promote the production and exporting of goods in which the nation holds a comparative advantage to develop a country's economy (Lee).
A key goal of the governments of General Park and his successor Chun Doo Hwan was to reform the South Korean economy to be able to compete in international markets (Heo et al. 5) through export oriented industrialization.
General Park's priorities had a significant impact on South Korea's industrial structure. Earlier that decade, 40-50 percent of the total industrial structure in South Korea was based around agriculture and a mere 10-20 percent was manufacturing, but with General Park's guidance, it evened out to approximately 30 percent of the industrial structure each, balancing out the agriculture to manufacturing disparity by the late 1960s (Heo et al. 6).
In previous regimes, especially President Rhee's, corruption hindered growth, so when General Park took power he reformed the bureaucracy to perfect his developmental state. He established the Ministry of Economic Planning Board (EPB) in 1961 to guide the path to rapid industrialization. The EPB was filled with bureaucrats known for their high intellectual capability and educational background in business and economics ("The Government Role … "), especially those with ties to major corporations. This created strong bonds between the government and private sector, enabling the EPB to ascertain better economic policies (Lee).
The EPB analyzed international economic demands and chose key industries of focus (Jeong 16), allocating financial resources, and formulating corresponding policy accordingly ("The Government Role … "). The EPB was responsible for the creation of seven Five Year Economic Plans, series of socioeconomic policies to achieve specific development goals that dictated the structure of the South Korean economy from 1962 to the turn of the 21st century (Park and Ok 203).
The First Plan (1962-1966) was meant to strengthen the foundation of the economy, with a focus on transforming the economy from its foreign aid-dependence amid declining US aid. The government provided assistance to basic industries and invested in the improvement of economic infrastructure (Heo et al. 5), leading to the age of light industrial products like textiles and footwear (Seth) that were produced in small factories ("The Korean Economy … ") Additionally, because a consumption-oriented economy was not self-sufficient, a major government objective was to decrease the dependence on foreign oil, a major import at the time. Thus, the First Plan prioritized the expansion of domestic electrical and coal energy industries ("The Government Role … ").
With the Second Five-Year Economic Development Plan (1967- 71), the government planned on fostering industries specifically for export promotion" (Heo et al. 5). Due to the lack of capital, significant natural resources, and advanced technology, the government initially promoted labor-intensive light industries for export (Heo et al. 6) to take advantage of the countries abundant workforce. The government aided the formation and survival of these new industries in two ways.
在第2个五年经济发展计划(1967- 71年)中，政府计划培育专门用于促进出口的产业”(许等5)。由于缺乏资金、重要自然资源和先进技术，政府最初促进劳动密集型轻工业出口(Heo et al. 6)，以利用国家丰富的劳动力。政府以两种方式帮助这些新产业的形成和生存。
First, new industries were promoted through import substitution (i.e. the government would make the importation of certain goods very difficult to force domestic production). Once the new industries formed, the government would aid and encourage the export of the new manufacturing goods by reducing taxes for exporters and exempting raw materials imported for export production from tariffs ("The Government Role …").
Second, the government used their authoritarian power to crack down on labor unions, preventing labor rights, limits, and safety requirements because South Korea needed low labor costs to reduce production costs to stay competitive internationally. An example of this was on May 18th, 1980, when protestors calling for labor reforms were killed, tortured, and raped during what was later called the Gwangju Massacre (Lee).
The 3rd (1972-1976) and 4th plans (1977-81) were characterized by a shift in government focus from light industries to heavy-chemical industries. (Heo et al. 6). As the economy grew with the increase in exports and there was more available initial capital, the government started pushing for Heavy-Chemical Industrialization (HCI) in order to supply new industries with raw materials and to decrease dependence on foreign funds, appointing iron and steel, transport machinery, household electronics, shipbuilding, and petrochemicals as five strategic fields ("The Government Role ...").
However, at the time, HCI was considered an expensive and risky investment that many enterprises were reluctant to embrace. So, in 1972 when Park declared martial law and assumed dictatorial power, he nationalized all banks, including commercial ones and used corporate dependency on government credit allocation alongside low-interest loans to incentivize the redirection of the economy (Heo et al. 6, Seth).
Although the upfront costs were higher with HCI than with light industries, very favorable export performance internationally made up for it. The upfront costs for HCI were similar globally, but because of South Korea's low wages, the cost of production was uniquely lower in South Korea. Because high-quality, low-cost products could be produced in South Korea, Heavy and Chemical Industries grew by 51.8 percent in 1981 ("The Government Role … ").
South Korea's newfound role as an international competitor would soon be challenged by internal political changes. Park was assassinated in 1979, and his successor Chun Doo-hwan was ousted in 1987 due to popular dissatisfaction. A new constitution and the first free presidential election that year marked South Korea's permanent transition to democracy. Without the authoritarian suppression of labor unions and labor rights, the working classes who were now politically powerful started strikes and protests. These strikes were very effective, and from the 1980s-1990s, wages increased by 18% per year because of labor unions (Seth). This removed the low-wage advantage of South Korean products, as it increased production costs. In order to maintain a competitive advantage with their exports, the government was forced to prioritize the innovation of more creative products (Jeong 25), ultimately causing the government to shift focus to capital and innovation-intensive industry (Seth).
South Korea's 5th and 7th economic plans reflected the shift in emphasis away from HCI to technology-intensive industries, such as precision machinery, electronics, and information. According to "The Government Role … " the South Korean government theorized that unique high-technology products would be in demand on the world market regardless of incremental price increases.
The government developed its high technology industries on two fronts. First, South Korea spent money on education to develop human resources from a young age (Cetin 95), increasing the number of technical colleges and vocational secondary schools (Seth). Compared to other developing nations at the time, South Korea had a very well educated population, which enabled it to achieve rapid growth. In the case of the technology industry, it meant an abundance of trained engineers and entrepreneurs. Second, the government took steps to foster more research and development (R&D). The government allocated funds to research centers which helped increase R&D alongside technology and science expertise (Seth). In fact, after the 1980s most government funding went to large firm R+D (Cetin and Karadas 95) to accelerate the development of science and technology in the capable hands of large conglomerates. The government's goal was to raise the ratio of R&D investment from 2.4 to 3 percent of GNP by 1991 ("The Government Role in Economic Development").
Even as the specific prioritized industries changed, two aspects of government control did not change.
First, the exchange rate was monitored and aggressively managed to minimize fluctuation in the value of the South Korean Won. The only way to keep a stable exchange rate while an economy is growing at fast rates was to lower it artificially. This provided an incentive to export because it ensured that South Korean exports were cheaper and thus in higher demand (Heo et al. 7).
Second, the government aided the rise in the 1960s and growth of family-controlled business conglomerates called chaebols that still control the majority of South Korea's economy today. In the 1960s, General Park used state-controlled credit flow to provide subsidies, favorable loans, and tax breaks to successful enterprises at the time (i.e. the future chaebols) (Lee) to help them meet export targets established by the EPB. If the targets were met, the companies would receive additional government subsidies and more access to the growing domestic markets, but if they weren't, government funds would be withdrawn ("The Government Role…").
More successful chaebols were incentivized to continue to achieve and gain more market control and the government gained significant control over the private sector (Lee). In order to maximize economic efficiency, the state minimized unnecessary competition by limiting export licenses so that a few chaebols dominated each sector (Seth). Because chaebols already had the necessary capital base, the state pushed pre-existing chaebols into new industries instead of allowing new firms to emerge so that chaebols could develop economies of scope and scale.
Chaebols had a few special structural features which aided their success. First, government guided diversification ( i.e. the expansion of production into different industries) meant that chaebols had many affiliates. This benefitted R&D because technology was freely shared across affiliates and group R&D centers were commonplace.
Second, as chaebols grew they could begin vertical integration (i.e. indigenizing inputs for different stages of production) through economies of scale which decreased production times and production costs.
This efficiency made the exports of chaebols very competitive on a world stage (Jeong 6). An example of this is the South Korean steel industry, where production increased 14-fold by 1972. The industry was led by Pohang Iron and Steel who owned the world's largest steel making complex and were a very powerful global competitor. South Korea's prowess in the shipbuilding industry was similar, and they became the second-largest shipbuilder in the world (Seth).
In conclusion, government intervention guided the South Korean economy into a period of rapid growth by making their exports internationally competitive, prioritizing and subsidizing the most advantageous industries, and promoting the growth and supremacy of chaebols, allowing South Korea to achieve growth that took 100 years for western nations in less than 40 years (Cetin and Karadas 94).
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