A People and History in Harmony
Introduction
In the past two decades,
Korea has been one of the fastest developing nations in the world -
both in
economic and social terms. Rapid industrial and economic growth has
seen the
Republic nearly reach developed nation status in a remarkably short
time. The
Korean people also find themselves in the midst of a new era of
democratic
development following the birth of the civilian Administration of
President Kim
Young Sam on February 25,1993. This wiped out the negative legacy of
decades of
military-backed authoritarian rule. The country has since been
implementing
bold political and economic reforms to eradicate corruption and
revitalise and
restructure the economy with the goal of building a New Korea - a
mature and
vibrant industrial democracy.
This rapid economic and
social development has brought Korea increased international exposure
and
recognition, as the Republic begins to expand its role on the
international
stage. Testifying to this was the successful hosting of the 1988 Seoul
Olympics, the largest held in history up to that time. This was
following by
the 1993 hosting of an international exposition, the Taejon Expo
‘93. Both the
Seoul Olympics and the Taejon Expo played an important role in
deepening ties
between Korea and countries all over the world and gave an impetus to
the
Korean economy.
This era of stability and
expanding international ties represents the most exciting period in the
country’s history - and yet, in retrospect, Korea has, in its
5,000-year
history, quite an enviable record for governments of longevity and
stability.
The country’s last dynasty, the Yi Dynasty of the Choson
Kingdom, lasted 500
years.
The Koreans of today, while
enormously proud of their country’s past, look at
Korea’s role and reputation
from a more recent historical perspective; but, in order to understand
today’s
Korea - its land, people, culture, history, and recent economic and
political
transitions - it is necessary to look at both the past and the present.
“Korea
In Focus” aims to give you a brief overview to help in your
general awareness
of Korea today. More detailed information can be obtained from
individual
organisations or government offices.
Land
The Korean Peninsula,
located in Northeast Asia, is bordered on the north by China and Russia
and
juts towards Japan to the south-east. Since 1948, the 221,487 square
kilometres
which make up the entire Peninsula have been divided, roughly along the
38th
parallel, into the Republic of Korea in the south and the Democratic
People’s
Republic of Korea in the north. The Republic of Korea covers 99,221
square
kilometres, a land area a little more than twice the size of
Switzerland.
Seoul is the capital of the
country which is made up of nine provinces; other major cities include
Pusan,
Taegu, Inch’on, Kwangju, and Taejon.
The landscape is
spectacular in its variations and about 70 percent of it is
mountainous. The
oceans around the Peninsula are a major source of livelihood and
recreation for
Koreans. The shoreline is dotted by more than 3,000 islands.
The Peninsula’s longest
river is the Amnokkang (790 km) in the North. One of the
South’s major
waterways is the Han-gang River, which flows through Seoul to the West
Sea
(Yellow Sea) .
History
A look back at the 5,000
years of Korean history reveals triumphs and tragedies, successes and
struggles
which have been instrumental in shaping the Korea and Koreans of today.
One
remarkable fact that emerges from such a historical examination is that
Korea has
largely been ruled by long-term, stable governments. Korea’s
kingdoms and
dynasties generally lasted about 500 years or more.
Although Korea’s traceable
history began considerably earlier that the seventh century, it was the
Shilla
Unification in 668 that Korea, as a historical entity with a cohesive
culture
and society, came to occupy most of the Peninsula as it exists today.
It was almost a decade
after the end of the war before the Republic of Korea had recovered
sufficiently to establish stability and start the momentum for its now
remarkable recovery and development. The three decades since then have
been a
time of spectacular progress which has seen the creation of a modern,
industrialised nation.
People
Korea is homogeneous
society, although there have been historic and prehistoric migrations
of
Chinese, Mongols and Japanese. Koreans are very conscious of the ethnic
differences and cultural distinctions which give them their unique
identity.
The population of the
Republic of Korea was estimated at 44.1 million in 1993. Its population
density
is among the world’s highest and Seoul, the capital, has more
than 10 million
inhabitants. The annual population growth in the Republic has dropped
from an
average of 2.7 percent in the 1960-66 period to only 0.90 percent in
1993. The
slowdown is also partly the result of the increasing number of young
working
women.
The country’s rapid
industrialisation is responsible for today’s concentration of
population in
urban centres. The proportion of Koreans living in cities has jumped
from only
28 percent in 1960 to 74.4 percent as of 1990 - very similar to the 73
to 76
percent levels in the United States, Japan and France.
Language
The Korean
language is spoken by some 60 million people living on the Peninsula
and its
outlying islands as well as some 1.5 million Koreans living in other
parts of
the world.
Korean belongs to the
Ural-Altaic language group, which is found in an narrow band from Korea
and
Japan across Mongolia and central Asia to Turkey. Korean is a non-tonal
language, with agglutinative and polysynthetic elements.
Religion
Religion in
today’s Korea covers a broad spectrum of faiths and beliefs.
Buddhism,
Christianity, Confucianism, Islam and numerous other indigenous
religions exist
in Korea. Although none of them dominates, they all influence
contemporary
culture.
Education
Education has been at the
heart of Korea’s growth by training and supplying the
manpower needed for rapid
industrial and economic expansion.
A multi-tiered educational system
is currently in use, encompassing elementary school (six years) ,
middle school
(three years) , high school (three years) , and college (four years) ,
as well
as various graduate and professional programs.
The government has eased
regulations on overseas study. This new policy also encourages those in
the
teaching profession to take advantage of opportunities for training
abroad.
Transportation
The
tremendous pace of domestic economic growth in the past two decades has
been
reflected in the expansion of transportation facilities and the
increases in
Korea’s annual passenger and cargo volumes. The annual volume
of passenger
transportation rose from 1.6 billion persons in 1996 to 14.24 billion
in 1993.
Seoul has a well-developed
mass transit system of subways, buses, and taxis. Airport shuttles or
city
buses are conveniently available and operate throughout the city. The
subway
system is the eighth longest in the world, carrying 1,388 million
people in
1993. Its four lines reach most major locations in the city.
Korea has three
international airports in Seoul (Kimpo) , Pusan (Kimhae) and Cheju
(Cheju) ,
all of which are equipped with modern air traffic control facilities
and
support systems. Korean Air’s world-wide network serves 43
cities in 24 nations,
including recently inaugurated flights to Rome. The newly launched
Asiana
Airlines recently started international flights with regular service to
fourteen cities in Japan, the U. S., Singapore, Hong Kong, Taipei and
Bangkok.
All expressway system also
connects Seoul with provincial cities and towns, putting any place in
mainland
South Korea within a one-day round trip of the capital. Express buses
transport
passengers to and from all principal cities and resorts in the country.
The railway also serve the
entire country through an efficient and extensive network. The
super-express
train, Saemaul, runs 444.5 kilometres from Seoul to Pusan in four hours
and 10
minutes. There are also ordinary express and local trains.
Ocean liners, cruise ships,
and passenger-carrying freighters visit Korean ports. A ferry service
links
Pusan with Chejudo Island and the Japanese ports of Shimonoseki, Kobe
and
Hakada. Another ferry service recently started between
Inch’on and Tianjin
China.
Telecommunications
Telephone
services have rapidly expanded during the last decade, particularly
during the
last 5 Years (1988-” 92) . During these years, with the
investment of US$2.64
billion in communications annually, 1.76 million new telephone circuits
were
installed each year, increasing the total number of telephone lines to
10.14
million as of 1993. Virtually every home in the country now has its own
telephone and all the telephone circuits are connected by automatic
switching
systems.
Also, through the launch of
KOREASAT scheduled in 1995, Korea will be able to provide satellite
communication services by using its own satellite from October 1995.
THE ECONOMY
Looking Ahead to the 21st Century
In the last quarter century, Korea’s economic growth
has been among the
fastest in the world. The country has overcome obstacles and challenges
to
transform itself from a subsistence-level economy into one of the
world’s
leading newly industrialised countries. Today, however, the Korean
economy
faces the new challenges of internationalisation and globalisation in
an
increasingly complex global economic environment.
Past Performance and Policies
Since Korea launched its
First Five-Year Economic Development Plan in 1962, the
country’s real GNP has
expanded by an average of more than 8 percent per year. As a result,
Korea’s
GNP has grown from US$2.3 billion in 1962 to US$328.7 billion in 1993;
per
capita GNP has increased from a meager US$82 in 1962 to US$7,466 in
1993 at
current price levels.
The industrial structure of
the Korean economy has also been completely transformed. The
agricultural
sector’s share of GNP declined from 37.0 percent in 1962 to
7.1 percent in
1993. The manufacturing sector’s share has increased from
14.4 percent to 27.1
percent in the same period. The service sector accounted for only 24.1
percent
of GNP in 1962 but grew to 40.0 percent in 1993.
Korea’s merchandise trade
volume increased from US$500 million in 1962 to US$166 billion in 1993.
The
nation continuously posted trade deficits until 1985 when its foreign
debt
reached US$46.8 billion, the fourth largest in the world. From 1986 to
1989,
Korea recorded current account surpluses and its debt declined.
Trends of Major Economic Indicators
|
Unit |
‘62 |
‘70 |
‘80 |
‘85 |
‘90 |
‘92 |
‘93 |
GNP |
US$ bil. |
2.3 |
8.1 |
60.5 |
91.1 |
251.8 |
305.7 |
328.7 |
Per Capita GNP |
US$ |
8.2 |
242 |
2,194 |
2,242 |
5,883 |
7,007 |
7,466 |
GNP Growth Rate |
% |
2.2 |
7.6 |
7.0 |
7.0 |
9.6 |
5.0 |
5.6 |
Domestic Savings |
% |
3.3 |
17.9 |
29.1 |
29.8 |
35.9 |
34.9 |
34.9 |
Ratio |
|
|
|
|
|
|
|
|
Trade Volume |
US$ bil. |
0.5 |
2.8 |
39.8 |
61.4 |
134.9 |
158.4 |
166.0 |
Producer Price |
% |
9.4 |
9.2 |
38.9 |
0.9 |
4.2 |
2.2 |
1.5 |
Consumer Price |
% |
8.3 |
15.9 |
28.8 |
2.4 |
8.6 |
6.2 |
4.8 |
Inflation in Korea was one
of the major economic problems in the 70s and early 80s, during which
consumer
prices rose at annual rates of 10-20 percent. Since 1982, Korea has
managed to
keep inflation down to a single digit. The ratio of domestic savings to
GNP
grew from 3.3 percent in 1962 to 34.9 percent in 1993.
Recent Challenges
Beginning in 1989, the
Korean economy began experiencing slower growth, high inflation and a
deterioration in the balance of payments. The GNP growth rate fell to
6.7
percent in 1989 from the 12 percent level of previous years. A slump in
the
growth of the manufacturing sector, from 18.8 percent in 1987 and 13.4
percent
in 1988 to 13.7 percent in 1989, contributed largely to this decline in
GNP
growth rate. The export growth rate on a customs clearance basis, which
was
36.2 percent in 1987 and 28.4 percent in 1988, fell to just 2.8 percent
in
1989. Reflecting this fall in the export growth rate, the current
account
surplus lowered to around US$5.1 billion, a significant drop from the
1988
surplus of US$14.2 billion.
In 1991, the economic
growth rate showed signs of recovery. The GNP grew during the year 9.1
percent.
However, most of this growth was attributed to an increase in domestic
demand,
particularly domestic consumption. Exports increased 10.3 percent
compared to
1990, while the growth rate of imports increased 17.7 percent. The
trade
balance deteriorate rapidly to a US$7.0 billion deficit in 1991 from
the US$4.6
billion surplus in 1989. In addition, price stability, which had served
to
boost Korea’s competitiveness, weakened. Consumer prices,
which had risen on an
annual average of 2-3 percent between 1984 and 1987, rose 9.3 percent
in 1991.
Recent Economic Trends
|
|
‘91 |
‘92 |
‘93 |
‘94.1 ~ 6 |
GNP |
|
|
|
|
|
GNP |
Growth Rate in % |
9.1 |
5.0 |
5.6 |
8.5 |
Manufacturing Sector |
Growth Rate in % |
9.1 |
5.1 |
5.0 |
10.0 |
Private Consumption |
Growth Rate in % |
9.5 |
6.6 |
5.7 |
7.2 |
Investment |
Growth Rate in % |
12.6 |
0.8 |
3.6 |
10.3 |
Equipment |
Growth Rate in % |
12.1 |
1.1 |
0.2 |
17.7 |
Prices |
|
|
|
|
|
Producer Price |
% |
4.7 |
2.2 |
1.5 |
2.2 |
Consumer Price |
% |
9.3 |
6.2 |
4.8 |
6.2 |
Balance of Payments |
|
7.0 |
2.2 |
1.9 |
1.6 |
Export |
US$ bil. |
69.6 |
75.1 |
81.0 |
43.1 |
Imports |
US$ bil. |
76.6 |
77.3 |
79.1 |
44.7 |
Current Account |
|
|
|
|
|
Balance |
US$ bil. |
8.7 |
4.5 |
0.4 |
2.7 |
In 1992, the Korean economy rapidly cooled off, with the GNP
growth rate
dipping to 5.0 percent, influenced chiefly by blunted investment in
capital
goods. The consumer price index rose just 6.2 percent, and the deficit
in the
balance of payments also dropped to US$4.5 billion.
At that time, the Korean economy faced many challenges on both
the internal
and external fronts. Part of the economic slowdown may be explained by
the cyclical
adjustment of the economy after three consecutive years of rapid
growth.
However, the stagnation was more likely the result of a structural
deterioration in competitiveness, due to a combination of the lingering
legacies of the past government-led economic management system, which
had now
become inefficient, and the disappearance of the advantages derived
from the
once ample availability of low-cost labour: Thus the country was forced
to
search for a new driving force sufficient for sustained economic
growth.
Major Tasks and Policy Directions
To revitalise the economy,
the Kim Young Sam Administration, which was inaugurated in February
1993 as the
first civilian democratic government in over three decades, is
endeavouring to
construct a new developmental paradigm called “the New
Economy” . This signals
a clean departure from the past, when the government directed and
controlled
the concentrated investment of capital, labour and other resources in
selected
“strategic” industrial sectors to achieve rapid
economic growth. Instead, the
New Economy will promote the autonomy and creativity of all economic
actors in
order to maximise efficiency, while ensuring the equitable distribution
of
income. In that way, it seeks to enable the nation to leap into the
ranks of
the developed nations within the next five years.
As an initial step, the new
Administration implemented a short-term 100-Day Plan for the New
Economy in
March 1993, designed to promptly create conditions conductive to
revitalising
the economy. This was followed by the development of a new five-year
economic
development plan. Formally announced in July 1993, the Five-Year Plan
for the
New Economy was conceived primarily to lay the basis for joining the
ranks of
advanced countries and thus to effectively prepare for the eventual
unification
of the Korean Peninsula.
The Government will
continue its efforts to ensure the effective implementation of the
five-year
plan through the spontaneous participation of the people by reforming
economic
institutions including the improvement or simplification of existing
financial
and tax systems and administrative measures. Furthermore, the
Government will
continue to endeavour to fully realised the nation’s economic
growth potential,
strengthen its international competitiveness, and improve the economic
conditions of the public.
If the plan is implemented
as intended, the Korean economy is projected to change as follows: First with increased efficiency and
greater
realisation of growth potential, the gross national product should rise
at an
average annual rate of about 6.9 percent, raising per capita GNP to
US$14,076
in 1998.
Second, greater price
stability should prevail as balance is maintained between the more
steadily
rising demand and the more briskly expanding supply, while wage
increases are
linked to rises in productivity. The stabilisation of the value of the
won
currency should help stabilise the prices of imported goods and
services. The
net effect should be to hold down the rise in consumer prices to an
annual
average of 3.7 percent, the increase in producer prices to an annual
average of
1.6 percent and the rise in the GNP deflator to an annual average of
4.6
percent.
Targets of the 5-Year Plan for the New Economy
|
‘91 |
‘92 |
‘93 |
‘94 |
‘95 |
‘96 |
‘97 |
‘98 |
‘93-’98 |
GNP growth, % |
8.4 |
4.7 |
6.0 |
7.1 |
7.2 |
7.1 |
7.0 |
7.0 |
6.9 |
Per capita GNP, US$ |
6,518 |
6,749 |
7,306 |
8,196 |
9,339 |
10,716 |
12,305 |
14,076 |
14,0762) |
Rise in producer prices, % |
4.7 |
2.2 |
1.8 |
1.8 |
1.7 |
1.6 |
1.5 |
1.4 |
1.6 |
Rise in consumer prices, % |
9.3 |
6.2 |
4.9 |
4.3 |
3.7 |
3.6 |
3.2 |
2.9 |
3.7 |
Rise in GNP deflator, % |
11.2 |
6.3 |
5.3 |
5.3 |
4.8 |
4.5 |
4.1 |
3.8 |
4.6 |
Balance on current account, |
8.7 |
4.6 |
1.4 |
0 |
0.9 |
2.1 |
3.7 |
5.3 |
5.32) |
US$ billion |
|
|
|
|
|
|
|
|
|
Exports 1) , US$
billion |
69.6 |
75.1 |
82.3 |
82.3 |
99.3 |
110.1 |
122.6 |
136.3 |
136.32) |
Rate of increase, % |
(10.2) |
(7.9) |
(9.5) |
(9.5) |
(10.2) |
(10.9) |
(11.3) |
(11.2) |
(10.4) |
Imports, US$ billion |
76.6 |
77.3 |
81.3 |
81.3 |
95.8 |
105.3 |
116.1 |
128.1 |
128.12) |
Rate of increase, % |
(17.5) |
(1.0) |
(5.1) |
(5.1) |
(9.3) |
(9.9) |
(10.2) |
(10.3) |
(8.8) |
Note: 1) On
a balance-of-payments basis
2)
In terms of 1998 current market prices
The Real name Financial Transaction System
On August 12,1993, the
President took a decisive step toward revitalising the economy and
eliminating
corruption by announcing the implementation of the long-anticipated
real-name
financial transaction system. In the past, it had been possible to open
accounts and conduct business transactions under false names, directly
and
indirectly fostering institutionalised-corruption and illegal financial
dealings. Deeming this reform as the most important in the creation of
a New
Korea, the President announced this action in a Presidential Emergency
Decree,
stating that the real-name system was essential for cutting the dark
link
between politics and business.
With the introduction of
the real-name financial transaction system, it appears that financial
dealings
are becoming fully transparent and underground economic dealings and
non-productive land speculation are diminishing. It is hoped the funds
that had
been channelled into political circles in the past as a result of
government-business collusion are now available for more productive
activities.
Encouraging Signs
The implementation of a
real-name financial transaction system, the easing of administrative
controls,
expanded capital investment by major enterprises, and increased
financial and
administrative support for small-and medium-sized enterprises all
combined to
lay a solid foundation for another economic take-off. Exports rose 7.6
percent
in 1993 to US$82.4 billion, while imports grew just 2.5 percent. Korea
was thus
able to register a US$600 million trade surplus last year for the first
time in
four years. The current account also yielded a surplus of US$200-300
million.
Industrial production has been growing at about a 10 percent rate
during the
first half of 1994. Furthermore, labour disputes decreased markedly
last year,
while the composite stock index of the Seoul Stock Exchange climbed
markedly.
In view of these indications, the Korean economy seems to be well on
the way to
revitalisation.
External Policies for Greater International
Co-operation
Import Liberalisation
Korea is committed to
fulfilling its international responsibilities. It positively supports
the trend
toward openness and utilises it as a catalyst for further enhancing the
international competitiveness of industry and thus speeding the
advancement of
the economy, so that it can join the group of advanced countries.
Since 1980, Korea has made
continuous efforts toward import liberalisation. The import
liberalisation rate
increased from 68.6 percent in 1980 to 98.1 percent in 1993. The
average tariff
rate decreased from 24.9 percent to 8.9 percent during the same period
and is
expected to be only 7.9 percent by the end of 1994, the same average
level of
tariffs found in OECD member countries.
In October 1989, Korea
decided to relinquish GATT balance of payments protection, which mostly
covers
agricultural products. According to the decision Korea will move to
eliminate
its remaining restrictions or otherwise make them conform with GATT
rules by
July 1,1997.
Liberalising Foreign Exchange Transactions
and Capital Markets
In June 1993, the Korean
Government made public the third-phase of the blueprint for financial
liberalisation and internationalisation, which was implemented from the
second
half of 1993. Under the plan, procedures for various foreign exchange
transactions are being gradually simplified. Beginning in 1994, the
ceiling on
foreign investment in the stock market will be gradually raised, and
the bond
market will also be gradually opened to foreign investment. Initially,
from
1994 foreign investors will be allowed to purchase convertible bonds,
even
those issued by small-and medium-sized domestic enterprises.
Foreign-invested firms
engaged in the manufacture of high-tech products or banking and other
services
are currently allowed to induce foreign credit repayable within three
years.
Beginning in 1997, the liberal inducement of foreign credit by both
domestic
and foreign-invested enterprises will be allowed.
Increasing Opportunities for Foreign
Investors
In June 1993, the Korean
Government also announced a five-year plan for liberalising foreign
investment.
Under the plan, 132 of the 224 business lines currently being protected
from
foreign competition will be opened to foreign investment in five
phases, over a
period of five years starting from July 1993. With the implementation
of this
plan, of the total 1,148 business lines under the standard industrial
classification of Korea, 1,056 will be open to foreign competition.
This means
that the foreign investment liberalisation rate will rise from 83
percent as of
June 2,1993 to 93.4 percent by 1997.
Included among the business
lines to be opened to foreign competition under the plan are most of
the
service industries including distribution and transportation, hospital
management, vocational training and “value-added”
communications.
The business conditions for
foreign-invested firms will also be greatly improved through various
measures,
including relaxed control on the acquisition of land by
foreign-invested firms,
the augmented protection of foreign intellectual rights, and other
similar
steps.
Co-operation with the Rest of the World, Including
Developing Nations and
Socialist Countries
Expanding Trade and Economic Exchanges
The Republic of Korea has
emerged as a major global trader by steadily pursuing freer trade and
greater
openness, while promoting its business presence around the world. In
the past,
Korea’s foreign trade concentrated on the developed world -
mainly the United
States, Japan and the EU. In more recent years, however, it has rapidly
expanded trade and capital co-operation with Southeast Asia, former and
present
socialist countries and Third World nations as well.
Especially since the 1988
Seoul Olympics, economic interactions with the former Soviet republics
have
been brisk. The Republic of Korea is also increasing its support of
economic
development efforts in the Third World on the basis of its more than
three
decades’ experience with successful domestic development.
The nation will continue to
pursue expanded and more diversified trade and to promote economic
co-operation
on a long-term basis with the rest of the world, taking into
consideration the
individual economic characteristics of each country.
With the United States, the
Republic of Korea will pursue not only expanded bilateral trade and
increased
mutual private investment and technological co-operation but also
government-to-government
co-operation in industrial technologies. As for Japan, the Republic
will pursue
Forward-looking practical economic relations and will, in particular,
strive to
attract Japanese investment more effectively. Since Korea does not have
serious
trade issues with the EU it will focus on promoting overall economic
co-operation, including mutual investment and industrial and
technological
co-operation.
With the dynamically
growing Asian economies, such as China and Southeast Asian Nations, the
Republic of Korea will endeavour to continue to expand two-way trade,
especially by helping to meet their expanding needs for capital goods
and
intermediate products to support their continuing rapid development,
while
increasing imports from them as much as possible. The nation will also
encourage Korean business investment in these countries and make
efforts to
build an industrial structure complementary with theirs.
The Republic of Korea is
increasing its official development assistance to developing countries
proportionate to its economic strength. In this, efforts are being made
to
combine such assistance with private Korean investment, with the aim of
maximising its effect, while developing two-way trade and other
economic ties
on a long-term basis.
Economic ties with the
Commonwealth of Independent States and East European countries will
continue to
focus on commercial applications of their high technologies and other
forms of
technological co-operation and joint development of natural resources.
Korea Trade with and Investment in Various Countries
and Regions
Country or Region |
Trade (US$ bil.) |
Investment (US$ mil.) |
||
|
1987 |
1993 |
1987 |
1993 |
U. S. A. |
27.1 (30.7) |
36.1 (21.7) |
165.3 (40.3) |
380 (30.3) |
Japan |
22.1 (25.0) |
31.6 (19.0) |
1.4 (0.3) |
6 (0.5) |
EU |
11.2 (12.7) |
19.6 (11.8) |
6.5 (1.6) |
157 (12.5) |
China |
1.7 (1.9) |
9.1 (5.5) |
6.0 (1.5) |
260 (20.7) |
Southeast Asia |
8.9 (10.1) |
27.8 (16.7) |
130.5 (31.8) |
179 (14.3) |
Note: Figures in
parenthesis represent percentage of the total.
Active Participation in Multilateral
Economic Forums
Korea has actively participated in virtually all major
multilateral forums.
During the Uruguay Round of trade talks, finally concluded in December
1993,
Korea tried to make contributions commensurate with its capabilities as
a major
world trading power, and play a mediating role between the developed
and
developing countries. Korea introduced various proposals in the Uruguay
Round
negotiations to reduce tariffs, eliminate non-tariff barriers,
liberalise the textile
trade, improve safeguards and reduce subsidies and countervailing
duties.
The Republic of Korea is
actively participating in global efforts to protect the environment, a
crucial
task facing all of humanity. In recent years it has joined the
Convention on
Climate Change, the Basel Convention on the Control of Transboundary
Movements
of Hazardous Wastes and their Disposal, the Convention on the
Prevention of
Marine Pollution by Dumping of Wastes and Other Matter, also called the
London
Dumping Convention, the Convention on International Trade in Endangered
Species
of Wild Fauna and Flora, and the Convention on Biological Diversity.
Korea has also begun an
informal dialogue with the Organisation for Economic Co-operation and
Development (OECD) and has expanded participation in its various
committees.
Korea hopes and intends to improve its economic systems to the level of
advanced countries so as to join the OECD in 1996.
One organisation in which
the Republic of Korea has played a particularly critical role has been
the
Asia-Pacific Economic Co-operation (APEC) forum, a forum for
multilateral
discussions on economic issues concerning the Asia-Pacific region. Two
examples
of Korea’s valuable efforts have been the “Seoul
Declaration” adopted at the third
APEC Ministerial Meeting hosted by the Republic which laid the
foundation for
the institutionalisation of APEC, and its diplomatic role in bringing
China,
Taiwan and Hong Kong, three key regional economic powers, into the APEC
fold,
giving the forum a new impetus. Subsequently, the Republic played a
leading
role at the first APEC Leaders Economic Meeting in Seattle in November
1993,
which coincided with the fifth APEC Ministerial Meeting, and was
elected the
chair member of the Committee on Trade and Investment (CTI) .
Conclusion
The rise of the Korean
economy over the past several decades, often called the
“Miracle of the Han” ,
has been an inspiring model of modern economic development. The rapid
pace with
which the Koeran economy rose from the ashes of war and expanded
stunned the
outside world. However, this rapid growth was not unaccompanied by
growing
pains which began to manifest themselves in all sectors of society
particularly
during the late 1980s. Excessive wage hikes, high capital costs and an
overly
bureaucratic administration, not to mention institutionalised
corruption,
served to weaken Korea’s international competitiveness, and
this was aggravated
by unfavourable external circumstances. In the past year, though,
strenuous
efforts have been made to overcome these impediments and through this,
as well
as improving international economic climate, it appears that the Korean
economy
is regaining its former vigour. The upcoming years pose severe
challenges for
the Republic in light of the December 1993 conclusion of the Uruguay
Round and
the rise of the Asia-Pacific region as the new global economic centre,
but with
the increasing emphasis in both the public and private sector on
globalisation
and internalisation, the Republic seems braced to meet these
challenges.
REFORM TOWARD A NEW KOREA The Basic Goals and Reform
Process of the Kim
Young Sam Administration
What are the vision and
goals of the Administration of Kim Young Sam, inaugurated on February
25,1993.
In a nutshell, the answer is the “creation of a New
Korea” through “Reform
Admist Stability.” This concept was the keynote of the
President’s inaugural
address as well as the main slogan of his presidential election
campaign in
December 1992.
“I have a dream. It is the
creation of a New Korea in which a new politics, a new economy and a
new
culture will bloom. This is my dream and vision; it is the dream and
vision of
all our people.” This quotation appears in the book,
“Kim Young Sam: New Korea
2000,” published in Korea in October 1992 prior to the
presidential election.
In his inaugural speech on
February 25,1993, President Kim Young Sam defined the three major
priorities of
his policies to create a New Korea: the eradication of social injustice
and
corruption, the revitalisation of the national economy and the
establishment of
official discipline and public order.
The President declared that
the eradication of corruption was a vital foundation for reforms in
every
sector of the country, and that there would be no sanctuary from the
investigation
of misconduct. The movement to establish official discipline and public
order,
which began with high-ranking government officials, is intended to
ensure
integrity and high ethical standards by “purifying the upper
reaches of the
stream,” i. e., the upper levels of government and society.
The main purpose of these
reforms is to revitalise the nation and elevate the overall standard of
living.
President Kim Young Sam has thus pushed ahead with firm determination
since his
inauguration, bringing about enormous changes in this country.
From the very start of his
Administration, President Kim Young Sam concentrated on eliminating
corrupt
practices and behaviour, which arose from decades of authoritarian
rule. This
kind of housecleaning was unheard of in the past. President Kim
believes, and
popular opinion supports him on this, that such reform must be carried
on
without letting up in the interest of the long-term stability and
economic
development of Korea.
The Concept of a New Korea
The creation of a New Korea
means the building of unified, fully mature democratic state. To that
end,
drastic changes and reforms are being pursued to raise the quality of
life for
all those who were sacrificed in the blind quest for rapid growth over
the past
30-odd years.
What will the future New
Korea be like? Korea’s first non-military President since
1961, President Kim
in his inaugural address said the New Korea will be:
Curing the Korean Disease
The problems which are
widespread in Korea today are often referred to as the Korean disease:
(1)
Korean industriousness and ingenuity - long the envy of the world -
seem to be
evaporating, (2) values continue to erode, due to injustice,
corruption,
lethargy, bigotry, inertia, strife and confrontation, and narrow
self-interests, and (3) self-confidence has been lost and defeatism has
set in.
To create a New Korea, the
new Administration has been vigorously addressing these symptoms
through
drastic change and reform. The President outlined the goals of these
changes
and reforms in his inaugural address: (1) the establishment of a new
era of
courage and hope by shaking off frustration and lethargy, (2) the
replacement
of bigotry and inertia with open-mindedness and vitality, strife and
confrontation with dialogue and co-operation, mistrust with trust, and
(3) the
building of a society which sees all citizens not only living together
but also
truly caring about one another, discarding narrow self-interests.
Three Tasks
The President outlined
three essential tasks in his inaugural address.
First, misconduct and
corruption must be rooted out. He defined misconduct and corruption as
the most
terrifying enemies attacking the foundation of society, and called for
an end
to all manner of impropriety and graft, allowing no sanctuary. He
called for
immediate reform starting from the very top.
Second, the economy must be
revitalised. He vowed that the new Administration would do away with
unwarranted controls and protection and instead guarantee
self-regulation and
fair competition. “Private initiative and creativity will
thus be allowed to
flourish” . He went on to say. “The Administration
will be the first to tighten
its belt. Our citizens must also conserve more and save more.
Extravagance and
wastefulness must be eliminated... Only when the Government and the
people, and
labour and business work together with enthusiasm will it be possible
to turn
our economy around...”
Third, national
discipline must be enhanced. “Respect for authority must be
re-established...
Freedom must serve society... The true meaning of freedom is in using
it to
plant a flower in the park rather than picking a flower from the
park.” The
President also said, “Ethics... must be made to prevail. To
this end, education
must henceforth cultivate wholesome character and unwavering democratic
belief,
as well as equip our young people for the future with knowledge and
skill in science
and technology...”
Four major Goals of the New Administration
The four major goals of the
Administration are clean government, a sound economy, a healthy society
and
peaceful unification.
Clean government means a
government free of corruption and injustice. There is a saying that the
lower
reaches of a river will be clean only when the upper reaches are kept
clean.
The President is determined to keep the upper reaches of the stream
clean, and
all the Cabinet members and high-ranking public officials will join in
this
effort so that the public will have confidence in the Government.
The campaign to keep the
upper reaches of the stream clean means reforms from the top. The new
Government has required high-ranking public officials to register and
make
public their personal assets to discourage the illegal accumulation of
wealth
under the Public Officials’ Ethics Law. The President himself
has made public
his own assets and has said that he would not accept political
contributions.
A sound economy means a New
Economy free of unwarranted controls and protection - an economy which
guarantees self-regulation and fair competition and encourages the
private
initiative and creativity necessary for economic revitalisation. The
economy
has been marked by quantitative growth in the past three decades; now
it needs
qualitative development. In order to develop New Economy, Korea must
(1)
establish a liberal market system, (2) liberalise financing, (3)
decentralise
economic power and (4) promote economic reforms.
The New Economy emphasises
concentrated efforts for the renovation of science and technology. In
the 21st
century, the strength of nations will be measured by the development of
science
and technology. It is for this reason the new Administration is sharply
raising
research and development expenditures.
President Kim Young Sam
announced on August 12,1993, implementation of real-name system for all
financial transactions to assist in the realisation of economic justice
and
clean government. The new Administration also has a firm position to
control
speculation in real estate and institute tax reforms.
By effecting all these
changes, it is predicted that the inflation rate as measured by the
consumer
price index will fall to the 3-4 percent range by the end of 1994 from
the
usual past level of nearly 6 percent, while the balance on current
account will
shift into the black. The economy as a whole should grow at an average
annual
rate of 6.9 percent, boosting per capita GNP to US$14,076 in 1998 from
US$7,466
in 1993.
A healthy society means a
society in which all people work hard and receive just rewards. It is
obvious
that a clean government and sound economy alone cannot create a New
Korea. A
healthy society is absolutely required as well. Everyone must
spontaneously
take responsibility for keeping society healthy. Each and every person
must be
honest, courageous and dignified.
Peaceful unification is the
supreme task for Koreans. The Republic’s Korean national
Community Unification
Formula envisages a Korean Commonwealth, an interim arrangement
designed to
build political, economic and military trust and restore national
homogeneity,
leading to full national integration through free general elections
throughout
the Korean Peninsula. President Kim will consistently pursue this
unification
formula, widely regarded as being very realistic. He will, however,
flexibly
adapt it to changes in the international situation. In a Liberation Day
speech
on August 15,1994, he thus proposed South-North joint projects for
national
development, including light-water nuclear reactor construction in the
North,
once the North Korean nuclear issue is resolved.
Reform backed by the Korean people
The Korean people’s deep
support of President Kim’s comprehensive reform agenda has
been reflected in
the Korean leader’s strong public approval rating. President
Kim has fared
consistently well in public opinion polls, which indicate that his
reform
policies continue to enjoy the support of a solid majority of Koreans.
Ethics Reform
To maintain the public’s
trust, President Kim has pledged to create a corruption-free political
environment by establishing high ethical standards for the members of
his
administration and political party. Symbolising his strong commitment
to this
goal on February 27,1993, just two days after his inauguration
President Kim
disclosed all of his financial assets to the public, and encouraged all
senior
cabinet and ruling party figures to do the same. A number of his
government’s
newly appointed officials were forced to resign for their past
unethical
financial conduct and President Kim declared that there would be
“no sanctuary”
from his clean-up campaign. He stressed that the new ethical standards
“must be
internalised and become a way of life” for all Koreans.
In order to
institutionalise the disclosure of public officials’ assets,
the existing
Public Officials’ Ethics Act as revised in June 1993, and
ranking government
officials are now required to register and disclosure their assets
under this
law. As a result of the clean-up drive resulting from the asset
disclosure,
1,363 public officials were dismissed for malfeasance and 242 were
forced to
resign due to improperly acquired wealth.
President Kim’s
inauguration brought to an end the deep involvement of the military in
Korea’s
political arena. Corruption in the armed forces, long a taboo subject,
became a
focus of the new reform drive. Promotion kickback scandals were
uncovered, and
a number of senior military officers have been removed from their
posts. The
Administration has also investigated and taken legal action against
defence
procurement irregularities. At the same time, President Kim has moved
to
depoliticise the government bureaucracy. In particular, he has reformed
the
nation’s intelligence apparatus, ending its involvement in
domestic politics
and directing it to focus solely on Korea’s national security
concerns.
President Kim has taken
steps to reform the Office of the President itself. The
President’s residence
and office complex, Chong Wa Dae, better known as a Blue House, has
been made
more accessible to the public. For the first time in decades, the
avenue in
front of the Blue House is now open to traffic, as are the scenic
mountain
hiking trails adjacent to the presidential residence. Gone are the
lavish Blue
House meals once served to staff and guests. Instead, everyone,
including the
President himself, dines on simple yet traditional Korean cuisine.
Financial Reform
Following this reform to
require the disclosure of personal assets by public officials,
President Kim
Young Sam boldly introduced a real-name financial transaction system in
order
to achieve fundamental structural reform that will greatly assist in
the
realisation of economic justice and clean government.
This real-name financial
transaction system, which was put into effect by an emergency
presidential
decree on August 12,1993 is the core of the entire reform movement,
“the reform
of all reforms.” This reform is helping eradicate misconduct
and realise
economic justice by rectifying the distorted economic structure and
income
distribution caused by underground economic activities and real estate
speculation and by cutting shady financial ties between politicians and
businessmen. In order to join the ranks of advanced countries, Korea
must
eradicate the corruption and irregularities stemming from certain
aspects of
past administrations’ pursuance of rapid growth-oriented
economic development.
With the introduction of
the real-name financial transaction system, all financial dealing have
become
transparent, underground economic dealings have diminished, and
non-productive
land speculation has been curbed. The funds that were channelled into
political
circles in the past as a result of government-business collusion are
now being
invested in business activities.
As a result drastic changes
are occurring in political, economic and social activities in virtually
every
sector of Korean society. Business investment is actively increasing,
and the
past distorted economic structure and income distribution is being
rectified.
President Kim’s declaration
not to receive any money from businesses so as to maintain a clean
government
and to build a clean society, combined with his political philosophy,
laid the
foundation for the introduction of the real-name financial transaction
system.
The success of the real-name financial transaction system is serving as
a
stepping-stone to a New Korea.
Reform Legislation Promoting Clean Polities and
Participatory Democracy
As President Kim’s urging,
a package of three political reform bills was unanimously passed by the
National Assembly on March 24,1994. Marked by heavy penalties for
offenders,
the Law for Electing Public Officials and Preventing Electoral
Irregularities
is designed to ensure the transparency of campaign financing, limit
campaign
expenditures while encouraging freer campaigns, and ban
“premature
electioneering,” as well as all other electoral misconduct.
The amended
Political Fund Law is intended to control fund raising by political
parties and
individual politicians with the aim of stamping out “money
politics” and
“politics-business collusion,” while encouraging
relatively small contributions
by individuals and groups to the coffers of the parties or politicians
that
they support. Together, these two laws are aimed at ensuring free,
fair, clean
and frugal politics in general. The revised Local Autonomy Law provides
for the
election of the chief executives of local governments in addition to
the local
councils already instituted in 1991 to restore local autonomy after a
30-year
hiatus.
Under the new Local
Autonomy Law, four kinds of local elections are scheduled to be
conducted on
June 27,1995, to choose 15 provincial governors and metropolitan
mayors, 866
members of provincial and metropolitan councils, 260 city mayors,
country
executives and municipal district chiefs, and 4,304 members of
lower-level
local councils - for a total of 5,445.
In line with the key goals
of President Kim’s political reform, the enforcement of these
new laws will
enhance the ability of Korean citizens from all walks of life to more
fully
participate in the democratic political process.
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