Economic Development of Korea

1980s: Quest for Liberalization and Globalization

• General Policy Stance
• To correct excesses and imbalances
• From export earnings to enhanced international competitiveness
• By giving more private initiatives
• Continuing liberalization
• Unilateral Import Liberalization
• Privatization of banks by selling government shares(1981 & 1983)
• Retained the gov’t right to appoint CEOs of commercial banks
• Privatization of Interest rate (1988)
• Introduction of a negative list system for Inward FDI (1984)

1980s: Quest for Liberalization and Globalization

• Political Liberalization
• June 29 Declaration of Democratization (1987)
• 1st Democratic Change of Government
• Accompanied Massive Industrial Dispute & Outward FDI
• Hyper Economic Growth (1985-1988): 11% p.a.
• Due to favourable external conditions: “3 Lows” or “3 Blessings”
• Low International Interest Rate
• Low Currency Value
• Low International Oil and Resource Prices

1990s: Crisis and Reforms

• 8th FYESDP (19912-1996)
• Crisis Hit the Korean Economy (1997-1998) & Massive Economic and Social Reforms were Conducted
• Average Growth Rate (1992-1996): 7.2% p.a.
• Background
• International Competitiveness Eroded
• Due to fast rising wages
• Growth of Nominal Wages: over 19% p.a.
• Revaluation of Currency by 8.65% (1987-1989)

1990s: Crisis and Reforms

• 8th FYESDP (1992-1996)
• Background
• Slowdown of the Economy
• Consumption-led Growth
• Current Account turned in deficit again
• Further Acceleration of Globalization
• Capital Account Liberalization
• Korea Joined OECD in 1996