With the implementation of economic development schemes since the 1960s, economic instability lying underneath the rapid growth is deemed as an obstacle to development. In this context, this research aims to analyze the relevant concepts and determining factors of stable growth, thus building its effective utilization scheme.
The Korean economy achieved a remarkably high and rapid development. At the back of its glory however, lay an unstable concentration of foreign companies and foreign dependency. To overcome the uncertainty in the global market, the country will have to closely monitor foreign concentration in a more flexible manner. The starting point of this research is the awareness that the rate of foreign exchange earning holds an intimate relation to the study.
The rate of foreign exchange is defined as the “balance of the export amount of a specific period or item subtracted by the total cost of imported raw materials for production of export items expressed in ratios.” The rate is influenced by the complex interaction between factors of production or strategies, and is noted for its inability to reflect the domestic market’s competitiveness or changes in foreign demand. Nevertheless, there is a strong necessity to seek for ways to make full use of the economy’s present co-index.
The rate of foreign currency earning for automobiles, televisions and home electronics were rapidly increasing in 1983, during a period when the industrialization strategy started to take the most reasonable form. However, earning rates for other products fell below a rate of 50.0. This is a reflection that the Korean industry is making its transition from a light industry to heavy and chemical industry, slowly building its national competitiveness with the continuous increase in earning rates despite the recession of the 1980s. Korea’s rate of earning foreign exchange is slowly showing improvements since 1980s, while it is below Japan’s level by an average of 20.0 and intensifying its progress based on the heavy and chemical industry.
The most reasonable method of analyzing the foreign exchange earning rates is by comparing it with the comparative advantage considering the intermediate goods. However, R.N.Batra and F.R.Casas point out that this could lead to a gap between the GFIs. In this context, foreign exchange earning rate needs to be improved first in order to build national competitiveness. However, this could lead to a distortion in continuous increase in exports through a dynamic comparative advantage.
As Korea shows a high dependency on imported intermediate goods due to its industrial-oriented development, a significant portion of the revenue from increased export flows back overseas and leads to the low rate of foreign change earning. Relevant institutional frameworks up until now have played a positive impact on increasing export. But the impact on increasing the foreign exchange earning rate is seen to have been minimal, even negative.
Policies in improving the foreign exchange earning rate can be classified as active or comprehensive measures depending on the level of market intervention. In addition, improvement can be achieved through a relative modification according to goals for export increase and foreign exchange rate improvement through improved price competitiveness of companies. For this, a comprehensive and indirect policy must continuously be searched that can put emphasis on modification without going over the marginal line. Another scheme for improvement can be carried out by increasing the benefit range of premiums for businesses with a high foreign exchange earning rate.
외화가득율 현황분석 및 제고방안(An analysis of the foreign exchange earning rate and schemes for its improvement)
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Financial Policy|
|Holding||KIET; KDI School|