This study provides suggestions for the stabilization of the Korean economy based on an analysis of the current economic situation in Korea.
The author of the study is Osamu Shimomura, a renowned economist hailing from Japan, who stayed in Korea for two months in 1972 on invitation from the Korea Development Institute (KDI). Shimomura is known for his advocacy of a human-centered economy, and his exhortations of policymakers and businesses to pursue and implement proper economic policies, attitudes, and efforts to that end. These emphases are on full display in this study as well.
This study is divided into three parts. In Part 1, the author discusses the characteristics and aspects of inflation in Korea and shares his advice for the stabilization of the Korean economy, providing an overview of how the stabilization process will likely pan out. In Part 2, the author discusses and analyzes the relationship between exchange rates and inflation, exchange rates that can be recognized, how to enhance industrial productivity, the relationship between individual consumption rates and economic stability, the amounts of currency supplies, and exports and imports. The last part offers a summary of the findings and includes a transcript of an interview held with the author.
As for the high rice price policy, identified as the main culprit for inflation, Shimomura argues that such a policy should be avoided in principle. Should Japan adopt a more liberal stance on the trade of agricultural produce, it may help increase Korean farmers’ income with increases in exports. Given the current protectionist trade policy in Japan, however, this presents an unlikely prospect. The high rice price policy is not as fatal a threat to price stability in Japan. As for the policy of imposing two different prices on a single item, intended to increase exports and enhance the competitiveness of smaller Korean businesses, Shimomura suggests that exports be increased by enhancing the productivity and competitiveness of all domestic industries. Given the smallness of the Korean market, there should be limits on the number of businesses allowed to enter and stay in it, but there should be no limits on how far these businesses can develop their technologies. Korea’s dependency on international trade should be double or triple that of Japan, and Korea’s degree of departmentalization should also be higher than that of Japan. Whether or not to import businesses or industries from abroad is a matter to be left to the capacity of domestic and international markets.
Shimomura emphasizes the priority of finding and encouraging competent entrepreneurs in the crusade against inflation and in the stabilization of the Korean economy. He also suggests increases in investment in manufacturing facilities, fixed exchange rates, limits on government consumption and spending, increases in currency supplies, and decreases in bank loan interests. It is through these measures that the Korean economy can overcome the current hardship and realize its aspirations for high growth in a stable setting.
한국 경제안정화를 위한 제언(Recommendations for the stabilization of the Korean economy)
|Series Title; No||연구보고서 / 제8권|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Economic Conditions|
|Holding||KDI; KDI School|