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Objectives and Contents of the Project

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Objectives and Contents of the Project06



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Title Objectives and Contents of the Project
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Material Type Report
Date 2015
Language Korean
File Type Theme
Subject Industry and Technology < Energy
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Abstract

Sub-Theme 1 | Objectives and Contents of the Project



In the process of economic growth, some industries are declining because of losing competitiveness. It is desirable to move inefficiently-used resources of the declining industry to a more productive industry. In the case of high exit barriers existing in the declining industry, the government may execute adjustment policies. In general, adjustment policies comprise measures for re-employing laborers employed in the declining industry, disposal or transfer of facilities and revitalization of the community where the declining industry is located. In Korea, the adjustment policies of the coal industry proceeded rapidly from the latter part of the 1980s to the early part of the 1990s.



Production of anthracite, which was only 1 million tons in 1955, exceeded 10 million tons in 1965 and had increased to the level of 25 million tons until the mid- 1980s. However, after 1988, the production of anthracite plummeted, following the sharp drop in its consumption after 1986. Only during 7 years from 1988 to 1995, production of anthracite decreased from 25 million tons to 5 million tons.



 
[Production, Consumption and Stocks of Anthracite]

 







Such a drastic contraction of the industry is the result of adjustment policies entitled as “coal industry rationalization,” which had to solve a lot of difficulties because of its high exit barriers: huge assets which are not transferrable and have a low liquidating value, enormous costs for retirement allowance and compensation for pollution, governmental barriers such as policies to maintain the industry to secure a domestic energy source or supplying briquette at a low price especially in Korea, and social barriers like the protest from residents of coal-mining regions. So, adjustment policies had to mediate the different interests among stake-holders such as mine-owners, laborers, residents in coal mining regions, government, consumers, etc.