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The economic ascent of a technological power: South Korea
Vittorio Valli
Dipartimento di Economia “S. Cognetti de Martiis”
Working paper No. 14/2010
Università di Torino
!
1!
The economic ascent of a technological power: South Korea
Vittorio Valli 1
Abstract
The chapter contains an analysis of the long-run trend and policies of South Korea’ s
economy. The main thesis is that a combination of historical events, wise industrial
policies and the great effort of families, the state and enterprises to enhance the level of
human capital and of technological progress, have strongly contributed to determine the
Korean economic period of fast growth. Ageing of population, financial crises, the
crumbling of the fordist model of development, difficulties in stimulating a rapid
productivity growth in several service sectors and other factors have reduced the rate
of economic growth, which remains, however, higher than the one prevailing in most
industrialized countries.
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
1 Professor at the University of Torino, Department of Economics Cognetti De Martiis, (vittorio.valli
@ unito.it). This chapter belongs to a volume which I am writing on the The Rise of Major Asian
Economies: China, India, Japan, South Korea, Indonesia and which will be published in 2011. Many thanks are
due to professors Irma Adelman, Joon Kyung Kim, Woosik Moon and Yeongseop Rhee for their
very useful suggestions and comments on the first draft of the paper and to the Dean and the staff of
GSIS at Seoul National University where in 2010 I spent a very fruitful period as a visiting professor.
Any remaining mistake is naturally my only responsibility.
!
2!
Contents.
1. Introduction
2. The economic consequences of the wars
3. From the Korean war to the building of democracy
4. The rapid fordist growth (1987-97)
5. East Asia’s financial crisis and Korea’s recession
6. The recovery and the globalization years
7. Technological upgrading and human capital
8. The 2008-9 crisis and its aftermath
9. Concluding remarks
References
Main historical facts in South Korea: 1948- 2010
Statistical Appendix
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3!
1. Introduction
Another economic power has gradually emerged in East Asia: South Korea.
At the end of the Korean War, in 1953, South Korea was a very poor country, with a per
capita GDP similar to that of the most deprived sub-Saharan African countries. It had
suffered also from the devastation of the war period, the cruel division between the
South and the North of the country and the sad memories of the Japanese domination
in the 1910-1945 years.
It was a limited-size country, with a relatively small, largely mountainous, territory and a
very dense population of about 21 million people, for about a quarter concentrated in
big urban areas as Seoul and Busan.
Now, South Korea is the 12 th country in the world in terms of total GDP,2 with almost
49 million inhabitants and a high technological level in various industrial and tertiary
sectors. Its shipbuilding industry is the strongest in the world; its great chaebols
(Samsung, LG, Hyundai, etc..) have inundated the world with their attractive mass-
consumer products; its nuclear power and steel industries have increased their
production and their exports; its building industry completes construction works in the
Middle East and in several other parts of the world; its University and research
laboratories have produced a great and increasing number of competent and highly
regarded scientists and engineers. Seoul metropolitan area, with more than 20 millions
inhabitants, is a modern, vibrant city, with lots of high-rise buildings, several luxury
shopping areas and some shabby quarters, but no miserable ones as in Mumbai or Rio
de Janeiro.
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
2!!According to the rankings based on PPPs. (Purchasing Power Parities) , South Korea was 12th in
the data-set of Conference Board-GGDC (2010). See also World Bank (2009).
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4!
How was this “miracle of the Han river” possible, which actually has happened in great
part of the country and not only in the Han’s basin, the Seoul’s area ?
In order to reply to this question it is necessary to commence from the turbulent years
of the Korean war and its proximate times.
2. The economic consequences of the wars
The years succeeding the second world war were desolate years. Korea had been
liberated from the Japanese domination, but it had been divided into two zones: north
and south of the 38° parallel. The northern part, under a communist regime, was heavily
influenced by USSR and China. The southern part, since 1948 under the authoritarian
regime of Syngman Rhee, was heavily influenced by the United States3. North Korea,
with less than half the population of South Korea, was less densely populated and
relatively better off, having more natural resources, some heavy industrial activities and
relatively better infrastructures than the Southern zone, but both were poor, mainly
agricultural, countries4. However, although North Korea was heavily assisted by the
Soviet Union, it was less aided than South Korea, which received a consistent financial
help from the United States.
When in June 1950 North Korea invaded South Korea, there was the outbreak of a
long, bloody war5, which devastated the country, led to millions of victims and
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
3 From the end of the war up to August 15, 1948 South Korea was ruled by the a US military
government. When Singman Rhee was elected president in August 1948, the power was transferred to
South Korean civil government, dominated by Singman Rhee and his increasingly authoritarian regime.
4 According to the estimates by Yeon Ha-Cheong (1987) North Korea had until 1966 a higher per
capita GDP than South Korea, but was then surpassed and greatly distanced. By 1985 South Korea had
a per capita GDP 2.9 times higher than North Korea.
5 On the Korean war, see, for example, Alexander (2000).
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5!
desolation in many families, separated by a cruel and almost impassable North- South
border.
At the end of the war, in July 1953, the economy of South Korea was in shatters: many
factories, farms and essential infrastructures had been destroyed, many valuable men and
women had died. Moreover the pre-war economic linkages between the Southern and
the Northern zones, already substantially cut down since 1945, had been completely
severed. Before the sealing of the border, many people had escaped from North Korea
to the South, while, mainly for ideological or family reasons, some people had made the
opposite choice.
However, the post- Korean war period further developed and re-enforced some radical
social and economic changes that had already begun since the last decades of the XIX
century and had accelerated since 1945.
The rigid traditional Confucian social ranking in which noblemen, scholars, government
officials and farmers, had been considered superior to merchants and entrepreneurs,
had gradually faded away.
The penetration of the Christian religion, mainly in its protestant version, had deeply
influenced Korean society leading to the so-called new Confucian ethics, defined by Tu
Wei-ming as “an amalgam of family and collectively oriented values of the East and the
pragmatic economic-goal oriented values of the West” 6.
These changes, which maintained the high traditional value given to education,
scholarship and government guidance, but also enhanced the social status of
entrepreneurs, managers and merchants, were crucial in the modernization of the
Korean economy and society.
In the late 1940s there was also great land re-distribution and a land-reform law in 1950
which contributed to reduce income and wealth inequalities, further attenuating the
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
6!See Tu Wei-Ming (1984), p. 110. See also Song Byung-Nak (1992), p. 50. In present Korea over 42%
of the population professes to be religious, of which about half is Christian, in large part Protestant.!
!
6!
traditional divisions in society. Less income inequality meant also increasing possibility
for poorer families to heavily invest in the education of their children preparing,
thereafter, a more homogenous society for the future generations. The Gini index of
income distribution was in 1965 0,34, went up to 0.39 in the second half of the 1970s
and then diminished to 0.36 in 1985, therefore appearing similar to Italy’s index, inferior
to the United States’ one and much lower than the index prevailing in most developing
countries, although higher than the one of Japan and West Germany.7
Another factor which contributed to reduce economic inequality in the Korean society is
the relatively balanced rural/ urban household income existing in Korea in the 1950-
1988 period, which contrasts with the very large gap usually existing in other emerging
or developing countries. According to Economic Planning Board’s and Bank of Korea’s
data, from 1965 up to 1988 the rural/ urban income ratio oscillated between 67.1% and
116 %8, while in most other developing or emerging countries the ratio was 20-40 %.
This relatively balanced ratio is partly due to protectionist policies and generous
subsidies conceded to farmers and to the compression of average urban wages in the
period of authoritarian regimes. In spite of these policies, South Korea experienced, as
other emerging countries, a radical structural transformation from a mainly agrarian
country to an industrial and tertiary one. The share of agriculture in total GDP and
labour force fell from, respectively, about 44 % and 62% in 1955 to 3% and 7 % in
2008. South Korea’s urban population, in cities over 20.000 inhabitants, rapidly
increased from about 36% in 1955 to over 80%. in the 2000s.
Another legacy from the Korean war and the division between the two Koreas was the
keeping of a very large and powerful army. Partly owing to the pressure of the big
military North Korean army, South Korea organized and maintained a sizable, well
equipped, but very costly army. However, military budget , at the time, was substantially
covered by the United States.
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
7!See Song Byung-Nak (1992), pp. 173-4.
8 ibidem, table 10.1, p. 170.
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7!
The military sector had both a negative and positive role in South Korean society. It was
subtracting many resources to the civilian production and was above all responsible, in
the years of authoritarian and then despotic rule, of a very brutal repression of civil
society, civil rights and political and social movements. On the other hand it had some
technological spill over effects on the civilian sector and imported, mainly by the
United States, new forms of organization and management, which were diffused,
through the extensive military service, to a large part of the population. Moreover, the
military-political leaders sometimes imposed positive strategic lines on economic growth
policies, although excessively favouring main corporations, the giant chaebols, and
overlooking small and medium size enterprises.
3. From the Korean war to the building of democracy
As we can see in Table 1, the rate of economic growth in the Korean economy was
exceptionally rapid until the financial crisis of 1997-8, so that South Korea merited
entering the restricted club of “ the four Asian tigers”, which included also Taiwan,
Hong Kong and Singapore. In a few decades South Korea passed from the status of a
poor developing economy, heavily dependent on foreign help, to being since 1970 a
NIC (newly industrializing country) and then becoming in the 2000s a fully
industrialized donor country, with a sizable current account surplus, rich international
reserves and substantial donations to poor developing countries.
The brisk acceleration of growth had happened since the beginning of the 1960s,
through a combination of positive factors and of long-run economic policies.
A positive factor was common to other emerging countries and was the possibility to
exploit Gerschenkron’ s advantages of relative economic backwardness.
!
8!
The first advantage was associated with the gradual, but massive, transfer of workers
from agricultural to non agricultural jobs, where labour productivity was on the average
higher. However, this advantage was lower than in other countries where the difference
between productivity in agriculture and in other sectors was more marked.
Table 1: Korean development in the years 1953-2009
(% annual average rates of change)
Phases
Years
Real
GDP
Real per
capita GDP
Population
Authoritarian regimes
1953-87
7.8
5.7
2.1
More democratic regimes: the
fordist years
1987-97
7.7
6.6
1.1
East Asian financial and real
crisis
1997-98
- 5.8
- 6.7
0.9
Recovery, restructuring and new
expansion in a globalizing world
1998-2007
5.6
5.1
0.5
Global financial and real crisis
2007-2009
1.2
0.9
0.3
The data on GDP and per capita GDP for 1950-2007 are in PPS: source: Conference
Board- GGDC (2010); KERI (2010) for 2007-9.
A second advantage was the possibility to introduce higher technology mainly through
the acquisition of foreign more advanced investment goods or licenses for new goods,
or through the imitation of foreign technology
9. This was made possible by three
principal factors: a) a relatively high rate of investment, although lower than the one of
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
9!In his fascinating book Imitation to Innovation. The Dynamics of Korea’s Technological Learning, Linsu Kim
(1997) vividly explains the difficult process by which Korean economy has been successful in
constantly upgrading its technological level passing from the status of almost passive imitator to the
status of real innovator for several goods and services.
!
9!
Japan in the 1950-73 years and of China in the 1978-2010 period; b) an increasing effort
in R.&D. (Research and Development); c) heavy spending by the state and by families
on education, with a fast rise in the level of education of population and labour force.
The average number of years of schooling of the population rose from 5.0 by 1966 to
6.6 in 1975, to 8.5 by 1985 10 The tradition of giving a great importance to education and
heavily investing in children’s human capital was accompanied, in the post-war period,
by a less unequal income distribution among families and a better availability of good
schools and Universities.
Economic policies were also very important for the rapid economic growth. In the 1953-
1987 period there was a heavy state intervention in economic activities. There was a
strong economic planning activity, strictly controlled by the presidency, which
determined the principal objectives of long-term industrial policy11. Chaebols, the great
Korean conglomerates, were important actors of the state-oriented policy because they
provided managerial and technological skill, the start-up of initiatives in new sectors and
the size to compete with foreign economic giants. At first there was an import-
substitution policy, together with an export-oriented industrialization policy. Later on,
when Korean infant industries were stronger, there was a gradual selective reduction of
import duties, with the continuation of the export –oriented policy. The, state, following
the Japanese model, favoured also the constitution of general trading companies, which
helped to promote exports and check imports. Until the 1980s most banks were State’s
controlled and they were essential for the financing of enterprises
12. So, through the
control of banks and of interest rates and fiscal incentive-disincentive schemes, the state
could direct the investment of main corporations towards certain objectives, of which
foremost was the building of heavy industry and the expansion of exports. The state
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
10 See Song Byung-Nak ( 1992), p. 26 and Economic Planning Board ; National Bureau of Statistics,
Population and Housing Census ( 1966, 1975, 1985).
11 The daring export policy and other important strategic choices were suggested by Irma Adelman,
who acted as consultant to the Korean government .
12 Several banks were privatized in 1981-83, but they were heavily influenced by the state policy also in
the following two decades.
!
10!
forced, for example, the Hyundai group to enter the ship-building industry, favoured in
various ways the building of a strong steel industry and the development of the
automobiles and the micro-electronics industries, created or improved infrastructures
and educational and R.&D. establishments; diffused technical knowledge through a
network of public research institutions (GRIs ) often working in collaboration with
private corporations, etc.13
To some extent Korea utilized Japan's and Taiwan's growth examples of a “state
developmental model”14, but having a considerably smaller internal market, Korea had
to rely much more than Japan on the growth of external demand in order to achieve the
desired economies of scale.
This great effort to rapidly expand exports, while at the same time slowly and
selectively reducing protectionism, together with a heavy injection of foreign aid, mainly
from the United States, and an undervalued currency, contributed to a steady reduction
of the trade deficit of the balance of payments, which became positive in 1986. Foreign
debt was in the 1963- 85 very high and increasing, but the improvement in the balance
of payments permitted to reduce it in 1986 and in some of the following years.
Moreover the country succeeded in continuously upgrading the technological level of its
production and of its exports. The export up-grading is so described by Linsu Kim:
“In the mid 1960s Korea began exporting textile, apparel, toys, wigs, plywood and other
labour- intensive mature products. Ten years later, ships, steel, consumer electronics and
construction services….By the mid-1980s computers, semiconductor memory chips,
videocassette recorders, electronic switching systems, automobiles, industrial plants and
other technology-intensive products were added to the list of Korea’s major export
items, with semiconductor chip topping the list in terms of export value. In the mid-
1990s Korea is working on such next- generation products as multi-media technology,
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
13 See Kim Linsu (1997) chapters 1-2 and 5-7.
14 On the influence of the Japanese model on Korea, see, for example, Amsden (1988), Boltho, Weber
(2009).
!
11!
high-density television, personal communication systems, and a new type of nuclear
breeder… 15
However, these economic achievements were reached in a grey and oppressive social
and political environment. The authoritarian governments of presidents Rhee, Park and
Chun greatly limited civil rights and brutally repressed opposition movements, until the
success of the democratization movement in 1987.
4. The rapid fordist growth (1987-1997)
Democracy had been partially achieved in 1987 and strengthened since 1992 with the
election of a new president of the opposition party.
In the 1987-97 period the country passed through its fordist years. As we know from
chapter 1, the fordist model of growth16 is present where there are at least two major
components: a) important economies of scale which determine high rates of growth of
productivity and b) a rapid increase in unit-wage and employment, which determines a rapid
rise in total wages, mass- consumption and aggregate demand.
In the 1960s, the 1970s and part of the 1980s the authoritarian governments had banned
labour unions and maintained a policy of low wages and long working hours in order to
ensure the increase of profits and investment of great chaebols and the rapid rise of
production and exports. In this context the fordist model could not build up, since it
lacked a basic element: the rapid rise of wages.
In the period 1987-97 there were instead in South Korea both a rapid increase of
production of sectors, such as the automobile, domestic electrical appliances and micro-
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
15!See Linsu Kim ( 1997), p. 14.
16 See Valli, Saccone (2009).
!
12!
electronic industries, which had important scale economies, and a brisk rise of unit
wages, spurred by the liberalization of labour unions and by their pressure in favour of
higher wages. Employment continued to increase, under the impulse of extensive
investment induced by growing internal demand and the rapid expansion of exports, but
also because employment in services could substantially increase over-compensating the
effects of labour saving policies of some corporations of the manufacturing export
sector17.
The fast rise in sales of automobiles, colour TVs, PCs, and, later on, chips and other
micro-electronic products both in the domestic and in the foreign markets was also
made possible by a continuous technological up-grading made by some of the major
chaebols and other Korean firms, as we will see in more detail in paragraph 7.
In Korea the fordist phase has occurred much later than in the United States, where it
had begun in 1908, and in Western Europe and Japan, where it prevailed in the 1950s
and in the 1960s entering in crisis since the 1970s. Therefore Korea's fordist phase could
combine fordist and post-fordist elements, such as an increasing recourse to the sub-
furniture of components and “just-in time” practices.
However this period of rapid growth had been mainly based on the great expansion of
the economic activities of major chaebols, heavily assisted by the state and financed by
state banks. Finance was linked to export- performance of chaebols. These big
corporations, having “soft” constraints on their finances, had continued to increase their
investment, their acquisitions and their debt even in conditions of declining profitability
or of heavy losses. The increase in aggregate consumption and the decline of profits
margins had begun to compress the internal saving rate, so that Korean banks became
favourable to an increasing liberalization of financial transactions. The entrance of South
Korea in OECD was preceded in 1994 by a substantial liberalization of capital
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
17!See Moon (1994) for an analysis of the employment effects of wage rises in an open economy such
as South Korea.
!
13!
movements18. Big chaebols and main Korean banks could thus rapidly increase their
foreign debt. The fast rise in internal demand of consumer and investment goods was
even greater than the increase of production, so that trade and current account balances
returned to register heavy deficits in almost all the 1990-1997 years19. This led to a
cumulative rise in the stock of foreign debt in South Korea and therefore to a sharp
worsening of expectations in financial international markets, although there was the
continuation, until 1997, of a rapid growth of real GDP. Exports rose rapidly until
1994, but there was a drastic slow down in their rate of growth in 1995-7 partly because
of the devaluation of the Japanese yen, partly because of the slack of world demand and
the reduction in the price of chips, automobiles and garments, all products which
accounted for a large part of exports.
5. East Asia’ s financial crisis and Korea’s recession
In 1997 in Thailand there was the outbreak of a great financial and currency crisis
which led to a deep financial and real crisis also in other Eastern Asian countries like
Indonesia, Malaysia, and South Korea.
Singapore, Taiwan and Hong Kong, although influenced by the crisis, had limited
damages, while China could continue, almost untouched, its rapid growth and Japan
went on struggling with the structural crisis there occurred since 1990.
South Korea was heavily hit by the crisis, although less than Indonesia, Thailand and
Malaysia.
As we can see from table 2, the origin of severe financial and currency crises in usually
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
18 See Adelman, Song (1999) p. 10.
19 The current account of the balance of payments was negative in all the period, with the exception of
1993 (see Table A3 of the Statistical Appendix).
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14!
relatively uniform. It generally stems from a prolonged period of structural weakness in
the current account of the balance of payments, worsened by a particular fragility in the
banking and financial system of the country20.
In fact in almost all cases considered in the table, there were at least three years of deficit
in the current account of the balance of payments 21 and excessive foreign debt of banks,
Table 2
Indicators on financial and real crises in selected countries
Countries
Year of
the crisis
Balance of
current account
as % of GDP
in the 3 years
preceding the
crisis (annual
average)
Years of
deficit in
the current
account
preceding
the crisis
Conditions of
the country’s
banking and
financial
system
Rate of change
of real GDP in
the crisis’ year
or in the year
following the
financial crisis
Mexico
1994
- 6.5
> 5
Fragile
- 6.2 (1995)
Thailand
1997
- 7.3
> 5
Very fragile
- 8.0 (1998)
Indonesia
1997
- 2.7
> 5
Very fragile
- 13.0 (1998)
Malaysia
1997
- 6.7
> 5
Fragile
- 6.8 (1998)
South Korea
1997
- 2.4
3
Fragile
- 6.7 (1998)
Russia
1998
1.6
0
Very fragile
- 4.5 (1998)
Brazil
1999
- 3.7
> 5
Fragile
0.8 (1998)
Argentina
2001
- 4.1
> 5
Fragile
- 10.8 (2002)
Sources: IMF (2004), World Bank (2004); Conference Board-GGDC (2005). The table is
drawn by Valli (2005), p. 153.
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
20 The 2007-9 global crisis had peculiar features because originated in the United States, which, besides
being the largest economy and the largest financial market in the world, held the key-currency in the
international monetary system.
21 The only exception is the 1998 Russian crisis, which did not originate by a deficit of the current
account of the balance of payments, but by a particularly fragile banking and financial system and the
massive outflows of capitals from the country.!
!
15!
enterprises and sometimes of the states, accompanied by a rapid rise in total foreign
debt. All this determined a growing distrust in the national currencies and adverse
speculative capital movements, followed by a devaluation of the currency, severe
deflationary stabilization policies, a heavy fall in investment, production and
employment, etc. In other words, all severe financial crisis has been followed by a deep
real crisis, as the data of table 2 confirm.
In the case of East Asia the crisis was probably worsened by the cumulative deflationary
effects due to the considerable interdependence existing between the economies of the
area, to the policy mistakes of the national governments and to the strict conditions
imposed by IMF when conceding its financial aids22.
South Korea’s crisis, although largely depending, as in several other countries, on the
deterioration of the current account and on the fragility of the banking and financial
system, had also some peculiar aspects, well analyzed by Adelman and Song23.
There was in South Korea “the combination of a highly-leveraged economy; a low-
information, poorly regulated domestic financial system; with an open capital market
operating in a globalized financial system which was excessively liquid …”
Moreover the Korean government made several policy mistakes. First, it tried to
continue to loosely peg the won to the dollar and did not devaluate the won “in tandem
with the Japanese yen”, so that it accumulated growing trade deficits in the 1994-97
years, because of the overvalued won and the large increase in trade deficit with Japan.
Secondly “government policy encouraged a very rapid growth of wages”, which
increased more than labour productivity. Thirdly, “the government adopted a high-
interest rate, tight money policy, which set domestic real interest rates way above world
markets” and then encouraged banks and firms to import capitals from abroad.
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
22 See, for example, Stiglitz (2002).
23 See Adelman, Song (1999), pp. 7-8
!
16!
Moreover, most of these capitals were short–term, and so dangerously volatile. All this
determined a large profit squeeze for most of the firms and a rapidly growing foreign
debt, preparing the pre-conditions for the financial unrest. The crisis was aggravated by
the futile attempt of the government to save Hambo steel and Kia motor and to defend
the currency depleting the international reserves in dollars. It was also worsened by the
under-development of the Korean financial system, the deficiencies in corporate
governance of the major financial and industrial groups, the excessive leverage and debt
ratio of most firms, the widespread corruption and the too early liberalization of capital
movements.
In more general terms, as Eichengreen and Chung have maintained, “ it was the tension
between institutional inheritance and current economic circumstance that was at the root
of the crisis: having exhausted the scope for growth through catch-up, Korea needed to
move toward a more flexible, innovation-friendly economic model. Yet its chaebol-
bank-and government - centered arrangements remained locked in place, placing the
prospects for continued growth at risk. It was this tension that set up the stage for the
crisis that erupted at the end of 1997”.24
The impact of the 1997-98 crisis on the economy of South Korea was very deep, in spite
of two packages of macro-economic measures which the government introduced in
1997 in the attempt to attenuate the crisis. Total investment collapsed, real GDP fell by
6.7 % in 1998, the rate of unemployment went up from 2.6 in 1997 to 7% in 1998, the
won depreciated by about 50%, many firms and banks went in bankruptcy, or had to be
radically restructured, or were sold to foreign capital. The entire productive and financial
systems were profoundly re-shaped. Income distribution worsened becoming more
unequal and relative poverty ratio increased from 9.3 % in 1996 to 13.1% in 199925.
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
24 See Eichengreen, Chung ( 2004), p. 4.
25 See Kim Sung Teak (2010), p. 21.
!
17!
6. The recovery and the globalization years
!
However, by 1999-2000, South Korea had already recovered the pre-crisis level of real
GDP and had inaugurated a new period of economic expansion, although with a rate of
growth significantly lower than in the years preceding the crisis. The recovery was
facilitated by the government policy undertaken since the end of 1997 partly in order
to obtain a substantial IMF’s financial support, partly under the genuine conviction of
the new president, Kim Dae –Jung, that the too strong relations between the State and
the great chaebols had to be severed or at least curtailed and both the financial system
and the industrial sectors had to be drastically reformed and restructured.
The government had let some of the major chaebols go into bankruptcy or in default:
the Hanbo steel , the 14th chaebol in terms of assets, after a futile attempt of public
rescue; the Sanmi group; two affiliates of the Jinro group; the Dainoi retailing chain; the
Ssangyong business group, the sixth largest chaebol; the Kia corporation, the third
major car maker, etc. It also allowed the acquisition of some banks by foreign capital
and the sale of the Daewo automobile corporation to the US company General
Motors.26 In general the Korean government tried to push the main chaebols to reduce
their debt and their diversification, concentrating more on their core business.
Moreover, it privatized several State- controlled banks often with large recourse to
foreign capital, with the aim of modernizing the banking and financial system, and
reduced some of the rigidities of the labour market. On the whole, the Korean economy
emerged from the crisis stronger than before, having reduced, but not fully eliminated,
some of its main structural problems.
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
26 See Adelman, Song (1999), p. 1. Kia corporation was then absorbed by Hyundai which thus
considerably increased its productive capacity, becoming in 2000 the 5th largest car maker in the world.
!
18!
After the recovery of the economy there was, in the 1999-2007 years a vast increase of
globalization in South Korea’s economy. Until 1997 there had been a rapid process of
internationalization, mainly based on the enormous increase of exports and imports. But
relatively few FDI had penetrated into the Korean economy and even less FDI had
been done abroad by Korean firms. Financial globalization had already begun, but the
state and central bank have continued tried controlling it, although with declining
success. After the 1997-98 crisis, the situation radically changed. As we can see in Table
3, FDI stocks began to rapidly increase, in particular since the late 1990s. In 2008, in
spite of the crisis, outward FDI continued increasing and their stocks overtook for the
first time inward FDI.
In the meanwhile there was also an important change in the geographic composition of
exports. While traditionally Korean exports had gone mainly to the triad: US, Japan and
EU, in recent years they have more and more been directed also to emerging countries,
as China and India. This change has largely contributed to smoothing down the effects
of the 2008-9 global crisis on the Korean economy, because these emerging countries
have continued to have a positive growth in 2008-9, although a bit less rapid, while the
triad has suffered from a very sharp recession.
Table 3
Stock of FDI in South Korea. (as percentage of GDP) : 1990-2008
Stocks of FDI as percentage of GDP
1990
2000
2007
2008
inward
2.0
7.1
11.4
9.8
outward
0.9
5.0
7.1
10.3
Source: Unctad ( 2009 )
!
19!
All these changes, and particularly the de-localization of part of the production made
through rapidly growing outwards Korean FDI in China and other emerging countries,
has had important effects on Korea’s economy and society. Most chaebols have
continued to increase their production and sales, but have drastically decreased
employment in Korea in the last decade. Although this effect has been partially
compensated by a rise in employment in smaller industrial firms and in services, the rate
of employment has remained relatively low, particularly for young people and women.
The opportunity to get an good inland job for Korea’s youth has declined, in a period in
which the supply of highly educated people has considerably increased. Creeping forms
of “intellectual unemployment” or of bad or precarious utilization of human capital
have emerged and grown over time. Growing youth’s discontent and social unrest might
ensue.
Moreover, the increasing use of cheaper work in de-localized plants in poorer countries
and the growing competition of immigrant workers on Korea’s soil has led to a
increasing income gap between low- income workers and top managers, highly-ranked
public officers, professional men and successful entrepreneurs, so that income
inequalities have continued increasing.
7. Technological upgrading and human capital
One of the major factors which can contribute to explain the remarkable long-run
success of the Korean economy is its capability to continuously increase its human
capital and its technological level.
Human capital can be improved through three main ways: the rise in the educational
level of population and labour force, both in quantity and in quality; the increase in the
processes of learning by doing and on-the-job training; the exposition of the labour force
!
20!
to an increasing input of information of new technological contents and of the main
results of R. & D. activities.
The first way has been followed with a fierce application by Korea’s society. Korean
have always greatly appreciated education and scholarship, but in traditional pre-Second
World War society a few people had the material possibility to attend higher education,
whose access was mainly reserved to Japanese or to noblemen or rich people. The
reforms of the post-war period, leading to less income and wealth inequalities, made
possible the access to education to the vast majority of the population. Not only the
government invested in education much more than most other countries at a similar
level of development, but the parents made enormous sacrifices in order to ensure
better education for their children. If we consider also the informal spending on
education due to long hours of private tuitions, etc.. total expenditures for education
were extraordinarily high. “ According to the estimates by Kim Ming Soak of the Korea
Development Institute, total expenditures for education amounted to 13.3 per cent of
GNP in 1984, including both private (6.9%) and public (6.4%) spending”.27 These
estimates were about the double of the corresponding figures of the US and Japan in
those years. Even if we consider more conservative estimates based on official OECD
figures, total public and private spending on education in South Korea in per cent of
GDP remained 7.2 in 2005, one of the highest levels in the world, superior to those of
richer countries as the US and most Western European countries28. These generous
expenditures have led to a rapid increase in both quantitative and qualitative education
indicators. The average years of schooling of the population has almost tripled from the
1955 up to now. The number of University students and graduates in per cent of the
population of the corresponding age groups is among the highest in the world.
According to the 2006 PISA tests South Korea was the top country in the world in
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
27 See Song Byung-Nak (1992), p. 51 on the basis of data by Kim Myung Sook (1986).
28 See OECD (2009). Korean’s level was inferior only to those of small countries as Iceland, Israel (8
%) and Denmark (7.4%) , but higher than the ones of the US ( 7.1%) , United Kingdom (6.2 %),
France (6.0 %), Germany (5. 1%) and Italy (4.9 %).
!
21!
reading, second in maths, eighty in science. 29 Moreover, in 2007 South Korea was the
top country in the world for household access to internet (94.1%),
The exposition of Korean labour force to learning by doing in high- tech sectors was
also comparatively high. For example in 2006 South Korea was the top country in the
world as share of ICT manufacturing in per cent of total manufacturing value added
(21.1 %) and the fourth in the world in share of telecommunication service in per cent
of total business services value added30. South Korea is also strong in the automobile
industry, which, although being a mature sector, is an important producer and user of
medium-high technology, and it is striving to rapidly improve its position in aero-spatial
activities; machinery; fast trains; nuclear plants; bio technologies, etc.
In the field of R.& D. South Korea has shown the almost ferocious determination
demonstrated in its human capital building. Its expenditure on R.&D. as per cent of
GDP rose from the low level, typical for developing country, of 0.3 in 1965 and 0.4 in
1975 to 0.8 in 1980; 1.6 in 1985 (surpassing Italy); 2.6 in 1994 (surpassing France,
Germany and UK), and 3.5 in 2007, one of the highest level in the world. 31 This huge
effort was initially mainly due to public expenditure, but since the mid- 1980s it was
more and more dependent on the very rapid increase of investment in R.& D made by
great cabals, as Samsung, LG and Hyundai, and by other firms, often benefiting from
generous incentives provided by the government. Since the mid-1990s the share of
private R.& D. on total R.& D expenditure has been the world highest, over 80 %. The
number of researchers per 10 000 of total population ski-rocketed from 0.7 in 1965 to
26.4 in 1994 and to 45.8 in 2007.32 The ratio of researchers as per cent of employed
people was in 2006 fourth in the world33. Also a rough, but meaningful, indicator of the
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
29 See OECD (2009).
30 Ibidem
31 See Linsu Kim ( 1997), pp. 54-5 and OECD (2009).
32 OECD (2010 a)
33 OECD (2009)
!
22!
output of R.&D., as the total number of “triadic” international patents (patents
registered in US, EU and Japan, steadily rose over time, overtaking almost all European
countries although remaining lower than the ones of United States, Japan and Germany.
But a rise in the technological level of a country, if on the long run is based on a good
educational and R.&D. system, also depends on a plurality of other factors: on the rate
of growth of investment in new plants and machines, incorporating a higher technology;
on the learning by doing processes for the labour force; on the innovative activities both
for new processes and for new products; in the capacity of attracting foreign capital and
foreign know-how; in the introduction of more advanced forms of labour organization,
production and marketing techniques and corporate governance; on the capability of
rapidly diffusing innovations in the productive system, etc. In all these aspects South
Korea has performed particularly well, but with some shadows for the future. It has
successfully passed from an imitative, rigidly planned economy, to a more flexible and
innovative one. It has invested very much in new machines and plants, but the rate of
growth of investment has decreased since 1997. It has exposed a lot of workers to
important processes of learning by doing, but its rate of employment has remained
relatively low, in particular for young people, also because of the increasing de-
localization of productive and research activities abroad. It has attracted less foreign
capital incorporating foreign know-how than other larger emerging countries, as China
or Brazil. It has improved since 1998 corporate governance, but its has not eradicated
corruption and excessive linkages between the state and major corporations. It has tried
to rapidly diffuse innovation to small and medium size enterprises, but with mixed
results. Moreover, as most European economies, it has overlooked demographic
problems, little by little becoming an ageing society, with one of the lowest fertility rates
in the world. In the very long-run an ageing society becomes perhaps wiser, but much
less innovative and dynamic.
!
23!
8. The 2008-9 crisis and its aftermath
In 1997 in the United States there was the outbreak of the great sub-prime financial
crisis, followed in 1998 by a severe generalized financial crisis in most industrialized
countries and then, in 1999, by a widespread real crisis and in 2010 by the Greek crisis
and the, probably temporary, weakening of the euro.
South Korea has been deeply affected by the global financial crisis, but the impact on
banks, big corporations, small firms and the real economy was much less pronounced
than in the 1997-8 East Asian crisis.
Many conditions had radically changed between 1997 and 2007 in South Korea. Current
account balances had been in surplus since 1998, so that foreign debt had been reduced
and a huge amount of international reserves had been built up. Corporate finance was
in 2007 much sounder both in big corporations and in main banks. The debt ratio of
main chaebols and their profitability had returned to normal. Private banks, largely
controlled by foreign banks, were in much better financial conditions than in 1997 and
were much less dependent on state’s directives and political influence. Financial markets
were more diversified and sophisticated than in 1997 and external trade was less
dependent on the US, Japan and EU, but more oriented towards better performing
emerging countries.
However, the continuous increase in the ratios of international trade and of inward and
outward FDI on GDP had further risen the exposition of Korea’s economy to external
shocks. So, when in 2008, after Lehman Brothers’ mid-September bankruptcy, the
global financial crisis violently struck, South Korea was also badly hurt. First, there was
!
24!
a sharp liquidity crisis, mainly due to short-term capitals outflows, only partly
compensated by limited portfolio inflows. There was, moreover, a large currency
devaluation34 followed by widely oscillating rates of exchange. There was a sharp
downfall in the stock- exchange market, followed in 2009-10 by a partial recovery. There
was consequently a real crisis, although much less pronounced than in the US or Europe
or in the 1997-98 Korean crisis. Real GDP’s percentage rate of growth diminished
from 5.1 in 2007 to 2.2 in 2008 and to 0.2 in 2009. Real investment and exports fell
even more. The rate of unemployment rose from 3.0 % in 2007 and 3.2% in 2008 to
about 4.1% in 2009, but was very distant from the 7% of 1998, also because the social
safety net of EIS (Employment Insurance System) had been in the meantime greatly
extended and reinforced 35. While in 1998 Korea had to borrow funds from IMF and so
its monetary policy had to be highly restrictive following the conditions imposed by
IMF, in 2008 the monetary policy was relatively accommodating36. Thus nominal rates
of interest did not increase so dramatically as in 1998 and did not excessively disrupt
investment and balance sheets of enterprises.
Although the 2008-9 crisis has been, for South Korea, much less profound than the
1997-8 crisis, it will probably have long-lasting consequences. It will most likely tend to
further strengthen the economic interconnections among big Asian countries, both
through trade and through FDI. Many Koreans can speak Japanese or Chinese and
some English and are, as Taiwan, in good condition to try using Japanese machines
and components and Chinese workforce in order to conquer world markets, but in
particular the huge markets of China, Japan and Indonesia. South Korea can also
aspire to overtake, in some selected fields, the Japanese, German and US’s supremacy
for several components and sophisticated machines, trying also to maintain its present
leadership on China and India for chips and various high-tech mass- consumer goods.
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
34 Stabilization was possible after the announcement of a bilateral swap agreement up to 30 billion
dollars made between Korea’s Central Bank and the US Federal Reserve.
35 See Kim Sung Teak (2010)
36 ibidem, pp. 17-18.
!
25!
However, due to the structural decline in manufacturing employment, it would be
necessary a better performance also in services, and especially in exportable services,
which at present tend to have a relatively low and almost stagnant productivity37.
9. Concluding remarks
South Korea’s economy has achieved a great economic development in the 1953-2010
period obtaining democracy since 1987 and overtaking dramatic social –political
tensions and two major economic crises in 1997-8 and in 2008-9. However, the pace of
growth has decelerated since 1999, youth employment problems and income inequalities
have worsened, the problem of the division between North and South Korea has not
been overcome. The powerful educational and innovative drive of the country has
continued to feed the vast engine of growth, but the ageing of population, the rise in
relative poverty, the poor dynamics of the tertiary sector and the increasing pressure of
emerging countries in a globalizing world risk deteriorating Korea’s competitive edge
and the job opportunities of its younger generations.
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
37 See Kim Joon -Kyung , Lee Chung H. (2009), pp. 4-5.
!
26!
References
Adelman Irma., Song Byung-Nak (1999), The Korean Financial Crisis 1997-98, <!
are.berkeley.edu/~adelman/crisis.pdf>
Alexander Bevin (2000), Korea. The First war We Lost, Hippocorne Books, New York.
Amsden Alice H. (1989), Asia’s Next Giant: South Korea and Late Industrialization, Oxford
University Press, Oxford and New York.
Boltho Andrea, Weber Maria (2009), Did China follow the East Asian development model?, in
“European Journal of Comparative Economics”, vol. 6, n. 2, pp. 267-286.
Conference Board-GGDC (2010),!Total! data(! base,!<http://www.conference-
board.org/economics/database.cfm>
Eichengreen Barry, Chung Duck –Koo (2004) (eds.),The Korean Economy Beyond the Crisis,
Edward Elgar, Cheltenham, UK.
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University Press, Cambridge, Mass.
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Seoul.
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Kim Myung Sook (1986), Study on Public Expenditures on Education, in “Korea
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Kim Sung Teak (2010), Korea’s Unemployment Insurance in the 1998 Asian Financial Crisis and
Adjustments in the 2008 Global Financial Crisis, ADBI Working Paper 214, Asian
Development Bank Institute, Tokyo.
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Application!to!Korea,!!"Journal!of!Post:Keynesian!Economics",!vol.!17,!n.!1,!pp.139:152.!!
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OECD (2009), Economic Outlook, OECD, Paris.
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OECD (2010 a), Main Science and Technology Indicators, OECD, Paris.
OECD (2010 b), Oecd Factbook, OECD, Paris.
Rabellotti Roberta., Hirsch Giovanna., Molini Vasco (2008), L’economia della Corea del Sud,
Carocci, Roma.
Stiglitz Joseph E (2002), Globalization and Its Discontents, W.W. Norton, New York.
Song Byung-Nak ( 1992), The Rise of the Korean Economy, Oxford University Press, Oxford
and New York.
Tu Wei-Ming ( 1984), Confucian Ethics To-Day- The Singapore Challenge, Federal
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UNCTAD ( 2009), World Investment Report, Geneve.
Valli Vittorio (2002), L’Europa e l’economia mondiale, Carocci, Roma.
Valli Vittorio (2005), Politica economica.Introduzione all’economia dello sviluppo, Carocci, Roma
Valli Vittorio, Saccone Donatella (2009), Structural Change and Economic Development in
China and India, in “European Journal of Comparative Economics”, n. 1, pp. 101-29.
World Bank (2009), World Development Indicators, Washington. D.C.
!
28!
Main historical facts in South Korea: 1948- 2010
1948
Division of Korea in two parts: South-Korea under the authoritarian
government of Syngman Rhee, and North Korea, under the communist
regime of Kim Il -Sung)
1950-53
Korean War: the North, helped by Soviet Union and then China,
invades the South, military helped by the USA and other UN countries.
The armistice, not signed by South Korea, concludes a war with over
2.5 millions victims.
1953- 60
President Syngman Rhee contributes to the recovery of the economy ,
but seriously limits civil rights and represses political opposition. He
has to resign in 1960 after a student uprising.
1960-61
Political instability.
1961-79
Military coup of the general Park Chung -hee who remains at the power
until his assassination in 1979. He contributes to the rapid
industrialization and economic growth of the country, but brutally
represses political opponents.
1979-80
Political turmoil under the weak interim presidency of Choi Gyu-ha.
1980 - 87
Another military coup brings to the power general Chun Doo-hwan,
who assumes the presidency and continues the repressive policy,
allowing in 1980 the massacre of 207 exponents of the democratization
movement in the city of Gwangju and the torturing and killing of Park
Jong Chul, a SNU student., in 1987. The ensuing protests lead to the
June 29th 1987 Declaration issued by Roh Tae-woo, leader of Chun’’s
party, the democratic justice party , which contemplates a direct popular
election of the president.
1987- 92
Roh Tae-woo (DJP -Democratic Justice Party) wins the presidential
election with a small margin. In 1980 Seoul hosts the Summer Olympic
games. In 1996 South Korea enters OECD. Rapid economic growth
continues.
1993-1997
President Kim Young Sam (DLP - Democratic-Liberal Party)
contributes to the continuation of rapid economic growth, but also to
the financial and structural problems which lead to the Korean
involvement in the great 1997 Asian financial crisis. In 1994 there is the
death of Kim Il Sung and his son seizes the power in North Korea.
1998-2002
President Kim Dae-Jung (MDP- New Congress for New Politics) ,
progressive leader, formerly jailed and exiled by authoritarian
governments, opens to North Korea with his “sunshine policy” and
obtains the Nobel peace Prize in 2000. He makes economic reforms
and favours a relatively rapid economic recovery after the severe 1997-8
financial and real crisis. Korea co-hosts with Japan the world soccer cup.
!
29!
Continuation of economic growth, but at a lower speed than in the
pre-1997 years.
2003-2007
President Roh Moo-hyun (MDP- Millenium Democratic Party).
Continuation of economic growth. Attempt at decentralization and a
transfer of the capital city , or at least its administrative offices, towards
the center-south of the country.
2008-
President Lee Myung-Bak (GNP - Grand National Party). A
conservative party returns to power. Among Lee’s projects there is the
controversial building of a great canal crossing the country and further
liberalization in external economic relations. The global crisis hits also
Korea’s economy, but less than in the US and Europe. The policy
towards North Korea becomes tougher and less conciliatory.
!
30!
Statistical appendix
A1 Selected macroeconomic indicators- 1 : South Korea 1972-2009
Year
Population
(millions)
GDP
in PPPs*
Per capita
GDP in
PPPs**
Employment
(millions)
Annual
hours per
employeee
Productivity
GDP in PPPs /
Employment **
1972
33.505
82.304
2.456
10.379
2.538
7.930
1973
34.073
96.231
2.824
10.942
2.583
8.795
1974
34.692
104.605
3.015
11.421
2.633
9.159
1975
35.281
111.548
3.162
11.691
2.653
9.541
1976
35.860
124.664
3.476
12.412
2.733
10.044
1977
36.436
137.531
3.775
12.812
2.703
10.735
1978
37.019
150.442
4.064
13.412
2.733
11.217
1979
37.534
161.172
4.294
13.602
2.718
11.849
1980
38.124
156.846
4.114
13.683
2.703
11.463
1981
38.723
166.581
4.302
14.023
2.688
11.879
1982
39.326
179.220
4.557
14.379
2.803
12.464
1983
39.910
199.828
5.007
14.505
2.778
13.776
1984
40.406
217.167
5.375
14.429
2.758
15.051
1985
40.806
231.386
5.670
14.970
2.758
15.457
1986
41.214
258.122
6.263
15.505
2.698
16.648
1987
41.622
287.854
6.916
16.354
2.773
17.601
1988
42.031
320.301
7.621
16.869
2.788
18.988
1989
42.449
340.751
8.027
17.560
2.733
19.405
1990
42.869
373.150
8.704
18.085
2.688
20.633
1991
43.340
408.200
9.419
18.623
2.672
21.919
1992
43.837
432.185
9.859
18.985
2.650
22.765
1993
44.307
458.694
10.353
19.211
2.667
23.877
1994
44.719
497.851
11.133
19.829
2.651
25.107
1995
45.105
543.499
12.050
20.397
2.658
26.646
1996
45.468
581.536
12.790
20.838
2.648
27.907
1997
45.808
608.583
13.286
21.201
2.592
28.705
1998
46.152
566.868
12.283
19.920
2.496
28.457
1999
46.485
620.643
13.351
20.275
2.502
30.611
2000
46.839
673.312
14.375
21.137
2.520
31.855
2001
47.178
700.066
14.839
21.557
2.506
32.475
2002
47.437
750.120
15.813
22.151
2.465
33.864
2003
47.657
771.145
16.181
22.116
2.434
34.868
2004
47.854
806.764
16.859
22.533
2.404
35.804
2005
48.005
838.689
17.471
22.832
2.364
36.733
2006
48.124
882.122
18.330
23.131
2.357
38.136
2007
48.250
927.162
19.216
23.417
2.316
39.593
2008
48.379
947.555
19.586
23.561
2.256
40.217
2009
48.509
920.040
18.966
23.450
2.259
39.234
* in millions 1990 US $ in PPPs; ** in 1990 US $ in PPPs.
Sources: Conference Board- GGDC (2010), Song (1990), pp. 60-1; OECD (2010 b).
!
31!
A2 Selected macroeconomic indicators- 2 : South Korea 1972-2009
Years
Unemploment
rate
Inflation
rate
Nominal
effective
exchange
rate
2000=100
Current
account
balance as
% GDP
Real GDP
rates of
change
1972
4.5
16.1
287.4
4.5
1973
4.0
13.4
257.9
12.0
1974
4.1
29.5
266.3
7.2
1975
4.1
25.7
223.9
5.9
1976
3.9
20.7
215.0
10.6
1977
3.8
15.7
183.5
10.0
1978
3.2
21.9
185.6
9.3
1979
3.8
21.2
151.6
6.8
1980
5.2
25.6
160,1
- 1.5
1981
4.5
15.4
139.2
6.2
1982
4.4
6.7
142.0
7.3
1983
4.1
3.9
136.1
10.8
1984
3.8
3.8
136.0
8.1
1985
4.0
4.1
129.7
6.8
1986
3.8
2.7
107.1
10.6
1987
3.1
3.0
104.5
11.1
1988
2.5
7.1
112.3
10.6
1989
2.6
2.7
129.7
6.7
1990
2.4
8.6
125.9
-0.8
9.2
1991
2.4
9.3
121.5
-2.7
9.4
1992
2.5
6.2
113.2
-1.2
5.9
1993
2.9
4.8
111.5
0.2
6.1
1994
2.5
6.3
112.8
-1.0
8.5
1995
2.1
4.5
113.2
-1.7
9.2
1996
2.0
4.9
115.0
-4.1
7.0
1997
2.6
4.4
106.4
-1.6
4.7
1998
7.0
7.5
77.0
11.7
-6.9
1999
6.3
0.8
88.4
5.5
9.5
2000
4.1
2.3
94.7
2.4
8.5
2001
3.8
4,1
87.5
1.7
3.8
2002
3.1
2.7
90.4
1.0
7.0
2003
3.4
3.6
89.8
2.0
3.1
2004
3.5
3.6
89.8
4.1
4.7
2005
3.5
2.8
100,0
1.9
4.2
2006
3.3
2.2
107.8
0.6
5.1
2007
3.2
2.5
107.2
0.6
5.1
2008
3.2
4.7
86.5
-0.4
2.2
2009
3.6
2.8
73.5
5.1
0.2
Sources: OECD (2009) e (2010 b) ; Bank of Korea; Economic Planning Board.
