South Korea had experienced a high rate of growth since the 1960s under the developmentally-oriented military dictatorship. This regime pursued a growth-first, outward-looking, government-driven and conglomerate-favoring strategy. Along with its positive effects of high growth and economic modernization, it had negative effects of imbalance, instability and political oppression as well.
The financial crisis in 1997 hit the Korean economy severely. On the one hand, the crisis was caused by the hastily implemented opening-up of the capital market. On the other hand, it resulted from the structural defects of family-owned conglomerates and the financial system. Since then Korea has come to terms with a lowered growth rate. The aggregate demand structure was transformed as well. The proportion of export and government expenditure has surged, whereas those of private consumption and investment has fallen.
Korea has spent too little on a social safety net for dealing with those who suffer from poverty caused by unemployment and old age. Furthermore, insufficiency of welfare goods such as education, healthcare and housing aggravates the unequal income distribution among people. Inequality is on the rise, which is also due to the increase of contingent workers. There exists extreme discrimination between regular and contingent workers, not only in pay, but also in labor conditions, job security and promotion. To make matters worse, this insider-outsider division originates from organization power and luck rather than from labor productivity.
The Korean growth model in the past 40 years has depended primarily on boosting exports and the increasing development of high-tech products. This has contributed greatly to overall development and modernization. At the same time, the export dependence of the Korean economy and the lack of domestic demand, combined with snowballing household debt, have led to a stagnation in per capita income over the past several years. Therefore, Korea needs to re-think its growth model. This also applies to the question of how to transform the economy into a sustainable or “green” economy. Despite the so-called “Green Growth” strategy of the current Korean government, the supplies of renewable energy are still minimal and the Korean economy continues to follow a path of high dependency of on fossil-based and nuclear energy as well as low energy efficiency.
- Socially just, sustainable and dynamic growth for a good society
- Lee, Joung Woo; Kim, Ky Won; Kim, Ho Gyun; Cho, Young Tak
- Friedrich Ebert Stiftung
Socially just, sustainable and dynamic growth for a good society
A case study for Korea
[Seoul] : Friedrich Ebert Stiftung
|Series Title; No||FES Economy of Tomorrow|
|Subject Country||South Korea(Asia and Pacific)|
|Subject||Economy < Economic Administration|
|Holding||Friedrich Ebert Stiftung|