- Backgrounds
- Losing comparative advantage & Needs to Upgrade Industrial & Export Structure
- due to rapidly rising wages
- Catching-up by ASEAN
- Protectionist barriers against NIES’ export
- Non-Economic and Political Reasons
- The Nixon Doctrine (1969)
1970s: Creating Comparative Advantage - Policies Used
- “Carrots and Sticks”
- Government Subsidies and Tax Concession
- Preferential & Policy loans to HCI
- Negative interest rate, combined with higher inflation rate
- Easy excess to foreign capital with government guarantee
- Protection of HCI against import
- 2nd stage import substitution
1970s: Creating Comparative Advantage - Policies Used
- “Carrots and Sticks”
- Export Promotion by promoting large firms
- Created General Trading Companies
- Highly Restrictive export target
- 1975: US$50 million; 1979: US$301 million
- In returns for substantial rewards including cash subsidies for export earnings
- SMEs were discriminated
- Five Year Economic Development changed to Five Year Economic and Social Development
- 6th (1982-1986) & 7th (1986-1991) FYESDP
- Emphasizing Stability, Balance, Efficiency
- Through Stable Prices, Openness, Competition, Social Development, Social Welfare
- Average Growth Rate 1982-1991: 10.2% p.a.
1980s: Quest for Liberalization and Globalization - Backgrounds for Switch Over
- Internal Pressure
- Sectorial Imbalance and Social Inefficiency
- Associated with HCI Drive & Moral Hazard
- Socialization of Private Risk
- Excessive Capacity with Lower Capacity Utilization: 20%
- Political Instability
- Assassination of President & 2nd Military Coup
- Poor Harvest
- High Inflation associated with Rapidly rising international oil and resources prices
- External Pressures
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