|Korea in Focus |
KOREаIN FOCUSаPeople and History in HarmonyIntroduction In the past two decades, Korea has been one of the fastest developingnations in the world - both in economic and social terms. Rapid industrialand economic growth has seen the Republic nearly reach developed nationstatus in a remarkably short time. The Korean people also find themselvesin the midst of a new era of democratic development following the birth ofthe civilian Administration of President Kim Young Sam on February 25,1993. This wiped out the negative legacy of decades of military-backedauthoritarian rule. The country has since been implementing bold politicaland economic reforms to eradicate corruption and revitalize and restructurethe economy with the goal of building a New Korea - a mature and vibrantindustrial democracy. This rapid economic and social development has brought Koreaincreased international exposure and recognition, as the Republic begins toexpand its role on the international stage. Testifying to this was thesuccessful hosting of the 1988 Seoul Olympics, the largest held in historyup to that time. This was following by the 1993 hosting of an internationalexposition, the Taejon Expo ‘93. Both the Seoul Olympics and the TaejonExpo played an important role in deepening ties between Korea and countriesall over the world and gave an impetus to the Korean economy. This era of stability and expanding international ties represents themost exciting period in the country’s history - and yet, in retrospect,Korea has, in its 5,000-year history, quite an enviable record forgovernments of longevity and stability. The country’s last dynasty, the YiDynasty of the Choson Kingdom, lasted 500 years. The Koreans of today, while enormously proud of their country’s past,look at Korea’s role and reputation from a more recent historicalperspective; but, in order to understand today’s Korea - its land, people,culture, history, and recent economic and political transitions - it isnecessary to look at both the past and the present. “Korea In Focus” aimsto give you a brief overview to help in your general awareness of Koreatoday. More detailed information can be obtained from individualorganizations or government offices.Land The Korean Peninsula, located in Northeast Asia, is bordered on thenorth by China and Russia and juts towards Japan to the southeast. Since1948, the 221,487 square kilometers which make up the entire Peninsulahave been divided, roughly along the 38th parallel, into the Republic ofKorea in the south and the Democratic People’s Republic of Korea in thenorth. The Republic of Korea covers 99,221 square kilometers, a land area alittle more than twice the size of Switzerland. Seoul is the capital of the country which is made up of nineprovinces; other major cities include Pusan, Taegu, Inch’on, Kwangju, andTaejon. The landscape is spectacular in its variations and about 70 percentof it is mountaneous. The oceans around the Peninsula are a major source oflivelihood and recreation for Koreans. The shoreline is dotted by more than3,000 islands. The Peninsula’s longest river is the Amnokkang (790 km) in the North.One of the South’s major waterways is the Han-gang River, which flowsthrough Seoul to the West Sea (Yellow Sea).History аlook back at the 5,000 years of Korean history reveals triumphs andtragedies, successes and struggles which have been instrumental in shapingthe Korea and Koreans of today. One remarkable fact that emerges from sucha historical examination is that Korea has largely been ruled by long-term, stable governments. Korea’s kindoms and dynasties generally lastedabout 500 years or more. Although Korea’s traceable history began considerably earlier thatthe seventh century, it was the Shilla Unification in 668 that Korea, as ahistorical entity with a cohesive culture and society, came to occuрy mostof the Peninsula as it exists today. It was almost a decade after the end of the war before the Republicof Korea had recovered sufficiently to establish stability and start themomentum for its now remarkable recovery and development. The three decadessince then have been a time of spectacular progress which has seen thecreation of a modern, industrialized nation.People Korea is homogeneous society, although there have been historic andprehistoric migrations of Chinese, Mongols and Japanese. Koreans are veryconscious of the ethnic differences and cultural distinctions which givethem their unique identity. The population of the Republic of Korea was estimated at 44.1 millionin 1993. Its population density is among the world’s highest and Seoul, thecapital, has more than 10 million inhabitants. The annual population growthin the Republic has dropped from an average of 2.7 percent in the 1960-66period to only 0.90 percent in 1993. The slowdown is also partly theresult of the increasing number of young working women. The country’s rapid industrialization is responsible for today’sconcentration of population in urban centers. The proportion of Koreansliving in cities has jumped from only 28 percent in 1960 to 74.4 percent asof 1990 - very similar to the 73 to 76 percent levels in the United States,Japan and France.Language The Korean language is spoken by some 60 million people living onthe Peninsula and its outlying islands as well as some 1.5 million Koreansliving in other parts of the world. Korean belongs to the Ural-Altaic language group, which is found inan narrow band from Korea and Japan across Mongolia and central Asia toTurkey. Korean is a non-tonal language, with agglutinative andpolysynthetic elements.Religion Religion in today’s Korea covers a broad spectrum of faiths andbeliefs. Buddhism, Christianity, Confucianism, Islam and numerous otherindigenous religions exist in Korea. Although none of them dominates, theyall influence contemporary culture.Education Education has been at the heart of Korea’s growth by training andsupplying the manpower needed for rapid industrial and economic expansion. аmulti-tiered educational system is currently in use, encompassingelementary school (six years), middle school (three years), high school(three years), and college (four years), as well as various graduate andprofessional programs. The government has eased regulations on overseas study. This newpolicy also encourages those in the teaching profession to take advantageof opportunities for training abroad.Transportation The tremendous pace of domestic economic growth in the past twodecades has been reflected in the expansion of transportation facilitiesand the increases in Korea’s annual passenger and cargo volumes. The annualvolume of passenger transportation rose from 1.6 billion persons in 1996 to14.24 billion in 1993. Seoul has a well-developed mass transit system of subways, buses, andtaxis. Airport shuttles or city buses are conveniently available andoperate throughout the city. The subway system is the eighth longest in theworld, carrying 1,388 million people in 1993. Its four lines reach mostmajor locations in the city. Korea has three international airports in Seoul (Kimpo), Pusan(Kimhae) and Cheju (Cheju), all of which are equipped with modern airtraffic control facilities and support systems. Korean Air’s worldwidenetwork serves 43 cities in 24 nations, including recently inauguratedflights to Rome. The newly launched Asiana Airlines recently startedinternational flights with regular service to fourteen cities in Japan, theU.S., Singapore, Hong Kong, Taipei and Bangkok. All expressway system also connects Seoul with provincial cities andtowns, putting any place in mainland South Korea within a one-day roundtrip of the capital. Express buses transport passengers to and from allprincipal cities and resorts in the country. The railway also serve the entire country through an efficient andextensive network. The super-express train, Saemaul, runs 444.5 kilometersfrom Seoul to Pusan in four hours and 10 minutes. There are also ordinaryexpress and local trains. Ocean liners, cruise ships, and passenger-carrying freighters visitKorean ports. аferry service links Pusan with Chejudo Island and theJapanese ports of Shimonoseki, Kobe and Hakada. Another ferry servicerecently started between Inch’on and Tianjin China.Telecommunications Telephone services have rapidly expanded during the last decade,particularly during the last 5 Years (1988-”92). During these years, withthe investment of US$2.64 billion in communications annually, 1.76 millionnew telephone circuits were installed each year, increasing the totalnumber of telephone lines to 10.14 million as of 1993. Virtually every homein the country now has its own telephone and all the telephone circuits areconnected by automatic switching systems. Also, through the launch of KOREASAT scheduled in 1995, Korea will beable to provide satellite communication services by using its own satellitefrom October 1995. THE ECONOMY Looking Ahead to the 21st Century In the last quarter century, Korea’s economic growth has been amongthe fastest in the world. The country has overcome obstacles and challengesto transform itself from a subsistence-level economy into one of theworld’s leading newly industrialized countries. Today, however, the Koreaneconomy faces the new challenges of internationalization and globalizationin an increasingly complex global economic environment.Past Performance and Policies Since Korea launched its First Five-Year Economic Development Plan in1962, the country’s real GNP has expanded by an average of more than 8percent per year. As a result, Korea’s GNP has grown from US$2.3 billion in1962 to US$328.7 billion in 1993; per capita GNP has increased from ameager US$82 in 1962 to US$7,466 in 1993 at current price levels. The industrial structure of the Korean economy has also beencompletely transformed. The agricultural sector’s share of GNP declinedfrom 37.0 percent in 1962 to 7.1 percent in 1993. The manufacturingsector’s share has increased from 14.4 percent to 27.1 percent in the sameperiod. The service sector accounted for only 24.1 percent of GNP in 1962but grew to 40.0 percent in 1993. Korea’s merchandise trade volume increased from US$500 million in1962 to US$166 billion in 1993. The nation continuously posted tradedeficits until 1985 when its foreign debt reached US$46.8 billion, thefourth largest in the world. From 1986 to 1989, Korea recorded currentaccount surpluses and its debt declined. Trends of Major Economic Indicators| |Unit |‘62 |‘70 |‘80 |‘85 |‘90 |‘92 |‘93 ||GNP |US$ |2.3 |8.1 |60.5 |91.1 |251.8|305.7|328.7|| |bil. | | | | | | | ||Per Capita GNP |US$ |8.2 |242 |2,194|2,242|5,883|7,007|7,466||GNP Growth Rate |% |2.2 |7.6 |7.0 |7.0 |9.6 |5.0 |5.6 ||Domestic Savings |% |3.3 |17.9 |29.1 |29.8 |35.9 |34.9 |34.9 ||Ratio | | | | | | | | ||Trade Volume |US$ |0.5 |2.8 |39.8 |61.4 |134.9|158.4|166.0|| |bil. | | | | | | | ||Producer Price |% |9.4 |9.2 |38.9 |0.9 |4.2 |2.2 |1.5 ||Consumer Price |% |8.3 |15.9 |28.8 |2.4 |8.6 |6.2 |4.8 | Inflation in Korea was one of the major economic problems in the 70sand early 80s, during which consumer prices rose at annual rates of 10-20percent. Since 1982, Korea has managed to keep inflation down to a singledigit. The ratio of domestic savings to GNP grew from 3.3 percent in 1962to 34.9 percent in 1993.Recent Challenges Beginning in 1989, the Korean economy began experiencing slowergrowth, high inflation and a deterioration in the balance of payments. TheGNP growth rate fell to 6.7 percent in 1989 from the 12 percent level ofprevious years. аslump in the growth of the manufacturing sector, from18.8 percent in 1987 and 13.4 percent in 1988 to 13.7 percent in 1989,contributed largely to this decline in GNP growth rate. The export growthrate on a customs clearance basis, which was 36.2 percent in 1987 and 28.4percent in 1988, fell to just 2.8 percent in 1989. Reflecting this fall inthe export growth rate, the current account surplus lowered to aroundUS$5.1 billion, a significant drop from the 1988 surplus of US$14.2billion. In 1991, the economic growth rate showed signs of recovery. The GNPgrew during the year 9.1 percent. However, most of this growth wasattributed to an increase in domestic demand, particularly domesticconsumption. Exports increased 10.3 percent compared to 1990, while thegrowth rate of imports increased 17.7 percent. The trade balancedeteriorate rapidly to a US$7.0 billion deficit in 1991 from the US$4.6billion surplus in 1989. In addition, price stability, which had served toboost Korea’s competitiveness, weakened. Consumer prices, which had risenon an annual average of 2-3 percent between 1984 and 1987, rose 9.3 percentin 1991. Recent Economic Trends| | |‘91 |‘92 |‘93 |‘94. 1 || | | | | |( 6 ||GNP | | | | | || GNP |Growth Rate in |9.1 |5.0 |5.6 |8.5 || |% | | | | || Manufacturing |Growth Rate in |9.1 |5.1 |5.0 | ||Sector |% | | | |10.0 || Private |Growth Rate in |9.5 |6.6 |5.7 |7.2 ||Consumption |% | | | | || Investment |Growth Rate in | |0.8 |3.6 | || |% |12.6 | | |10.3 || Equipment |Growth Rate in | |1.1 |0.2 | || |% |12.1 | | |17.7 ||Prices | | | | | || Producer Price |% |4.7 |2.2 |1.5 |2.2 || Consumer Price |% |9.3 |6.2 |4.8 |6.2 ||Balance of Payments| |7.0 |2.2 |1.9 |1.6 || Export |US$ bil. | | | | || | |69.6 |75.1 |81.0 |43.1 || Imports |US$ bil. | | | | || | |76.6 |77.3 |79.1 |44.7 ||Current Account | | | | | || Balance |US$ bil. |8.7 |4.5 |0.4 |2.7 | In 1992, the Korean economy rapidly cooled off, with the GNP growthrate dipping to 5.0 percent, influenced chiefly by blunted investment incapital goods. The consumer price index rose just 6.2 percent, and thedeficit in the balance of payments also dropped to US$4.5 billion. At that time, the Korean economy faced many challenges on both theinternal and external fronts. Part of the economic slowdown may beexplained by the cyclical adjustment of the economy after three consecutiveyears of rapid growth. However, the stagnation was more likely the resultof a structural deterioration in competitiveness, due to a combination ofthe lingering legacies of the past government-led economic managementsystem, which had now become inefficient, and the disappearance of theadvantages derived from the once ample availability of low-cost labor: Thusthe country was forced to search for a new driving force sufficient forsustained economic growth. Major Tasks and Policy Directions To revitalize the economy, the Kim Young Sam Administration, whichwas inaugurated in February 1993 as the first civilian democraticgovernment in over three decades, is endeavoring to construct a newdevelopmental paradigm called “the New Economy”. This signals a cleandeparture from the past, when the government directed and controlled theconcentrated investment of capital, labor and other resources in selected“strategic” industrial sectors to achieve rapid economic growth. Instead,the New Economy will promote the autonomy and creativity of all economicactors in order to maximize efficiency, while ensuring the equitabledistribution of income. In that way, it seeks to enable the nation to leapinto the ranks of the developed nations within the next five years. As an initial step, the new Administration implemented a short-term100-Day Plan for the New Economy in March 1993, designed to promptly createconditions conductive to revitalizing the economy. This was followed by thedevelopment of a new five-year economic development plan. Formallyannounced in July 1993, the Five-Year Plan for the New Economy wasconceived primarily to lay the basis for joining the ranks of advancedcountries and thus to effectively prepare for the eventual unification ofthe Korean Peninsula. The Government will continue its efforts to ensure the effectiveimplementation of the five-year plan through the spontaneous participationof the people by reforming economic institutions including the improvementor simplification of existing financial and tax systems and administrativemeasures. Furthermore, the Government will continue to endeavor to fullyrealized the nation’s economic growth potential, strengthen itsinternational competitiveness, and improve the economic conditions of thepublic. If the plan is implemented as intended, the Korean economy isprojected to change as follows: First with increased efficiency and greater realization of growthpotential, the gross national product should rise at an average annual rateof about 6.9 percent, raising per capita GNP to US$14,076 in 1998. Second, greater price stability should prevail as balance ismaintained between the more steadily rising demand and the more brisklyexpanding supply, while wage increases are linked to rises in productivity.The stabilization of the value of the won currency should help stabilizethe prices of imported goods and services. The net effect should be to holddown the rise in consumer prices to an annual average of 3.7 percent, theincrease in producer prices to an annual average of 1.6 percent and therise in the GNP deflator to an annual average of 4.6 percent. Targets of the 5-Year Plan for the New Economy| |‘91 |‘92 |‘93 |‘94 |‘95 |‘96 |‘97 |‘98 |‘93-’9|| | | | | | | | | |8 ||GNP growth, % |8.4 |4.7 |6.0 |7.1 |7.2 |7.1 |7.0 |7.0 |6.9 ||Per capita GNP, |6,51|6,74|7,30|8,19|9,33|10,7|12,3|14,0|14,076||US$ |8 |9 |6 |6 |9 |16 |05 |76 |2) ||Rise in producer |4.7 |2.2 |1.8 |1.8 |1.7 |1.6 |1.5 |1.4 |1.6 ||prices, % | | | | | | | | | ||Rise in consumer |9.3 |6.2 |4.9 |4.3 |3.7 |3.6 |3.2 |2.9 |3.7 ||prices, % | | | | | | | | | ||Rise in GNP |11.2|6.3 |5.3 |5.3 |4.8 |4.5 |4.1 |3.8 |4.6 ||deflator, % | | | | | | | | | ||Balance on curren |8.7 |4.6 |1.4 |0 |0.9 |2.1 |3.7 |5.3 |5.32) ||account, | | | | | | | | | ||US$ billion | | | | | | | | | ||Exports 1) ,US$ |69.6|75.1|82.3|82.3|99.3|110.|122.|136.|136.32||billion | | | | | |1 |6 |3 |) || Rate of |(10.|(7.9|(9.5|(9.5|(10.|(10.|(11.|(11.|(10.4)||increase, % |2) |) |) |) |2) |9) |3) |2) | ||Imports, US$ |76.6|77.3|81.3|81.3|95.8|105.|116.|128.|128.12||billion | | | | | |3 |1 |1 |) ||Rate of increase, |(17.|(1.0|(5.1|(5.1|(9.3|(9.9|(10.|(10.|(8.8) ||% |5) |) |) |) |) |) |2) |3) | |Note: 1) On a balance-of-payments basis 2) In terms of 1998 current market prices The Real name Financial Transaction System On August 12, 1993, the President took a decisive step towardrevitalizing the economy and eliminating corruption by announcing theinplementation of the long-anticipated real-name financial transactionsystem. In the past, it had been possible to open accounts and conductbusiness transactions under false names, directly and indirectly fosteringinstitutionalized-corruption and illegal financial dealings. Deeming thisreform as the most important in the creation of a New Korea, the Presidentannounced this action in a Presidential Emergency Decree, stating that thereal-name system was essential for cutting the dark link between politicsand business. With the introduction of the real-name financial transaction system,it appears that financial dealings are becoming fully transparent andunderground economic dealings and nonproductive land speculation arediminishing. It is hoped the funds that had been channeled into politicalcircles in the past as a result of government-business collusion are nowavailable for more productive activities. Encouraging Signs The implementation of a real-name financial transaction system, theeasing of administrative controls, expanded capital investment by majorenterprises, and increased financial and administrative support for small-and medium-sized enterprises all combined to lay a solid foundation foranother economic take-off. Exports rose 7.6 percent in 1993 to US$82.4billion, while imports grew just 2.5 percent. Korea was thus able toregister a US$600 million trade surplus last year for the first time infour years. The current account also yielded a surplus of US$200-300million. Industrial production has been growing at about a 10 percent rateduring the first half of 1994. Furthermore, labor disputes decreasedmarkedly last year, while the composite stock index of the Seoul StockExchange climbed markedly. In view of these indications, the Korean economyseems to be well on the way to revitalization. External Policies for Greater International CooperationImport Liberalization Korea is committed to fulfilling its international responsibilities.It positively supports the trend toward openness and utilizes it as acatalyst for further enhancing the international competitiveness ofindustry and thus speeding the advancement of the economy, so that it canjoin the group of advancedcountries. Since 1980, Korea has made continuous efforts toward importliberalization. The import liberalization rate increased from 68.6 percentin 1980 to 98.1 percent in 1993. The average tariff rate decreased from24.9 percent to 8.9 percent during the same period and is expected to beonly 7.9 percent by the end of 1994, the same average level of tariffsfound in OECD member countries. In October 1989, Korea decided to relinquish GATT balance of paymentsprotection which mostly covers agricultural products. According to thedecision Korea will move to eliminate its remaining restrictions orotherwise make them conform with GATT rules by July 1, 1997.Liberalizing Foreign Exchange Transactions and Capital Markets In June 1993, the Korean Government made public the third-phase ofthe blueprint for financial liberalization and internationalization, whichwas implemented from the second half of 1993. Under the plan, proceduresfor various foreign exchange transactions are being gradually simplified.Beginning in 1994, the ceiling on foreign investment in the stock marketwill be gradually raised, and the bond market will also be gradually openedto foreign investment. Initially, from 1994 foreign investors will beallowed to purchase convertible bonds, even those issued by small-andmedium-sized domestic enterprises. Foreign-invested firms engaged in the manufacture of high-techproducts or banking and other services are currenlty allowed to induceforeign credit repayable within three years. Beginning in 1997, theliberal inducement of foreign credit by both domestic and foreign-investedenterprises will be allowed.Increasing Opportunities for Foreign Investors In June 1993, the Korean Government also announced a five-year planfor liberalizing foreign investment. Under the plan, 132 of the 224business lines currently being protected from foreign competition will beopened to foreign investment in five phases, over a period of five yearsstarting from July 1993. With the implementation of this plan, of the total1,148 business lines under the standard industrial classification of Korea,1,056 will be open to foreign competition. This means that the foreigninvestment liberalization rate will rise from 83 percent as of June 2, 1993to 93.4 percent by 1997. Included among the business lines to be opened to foreign competitionunder the plan are most of the service industries including distributionand transportation, hospital management, vocational training and “value-added” communications. The business conditions for foreign-invested firms will also begreatly improved through various measures, including relaxed control on theacquisition of land by foreign-invested firms, the augmented protection offoreign intellectual rights, and other similar steps. Cooperation with the Rest of the World, Including Developing Nations and Socialist CountriesExpanding Trade and Economic Exchanges The Republic of Korea has emerged as a major global trader bysteadily pursuing freer trade and greater openness, while promoting itsbusiness presence around the world. In the past, Korea’s foreign tradeconcentrated on the developed world - mainly the United States, Japan andthe EU. In more recent years, however, it has rapidly expanded trade andcapital cooperation with Southeast Asia, former and present socialistcountries and Third World nations as well. Especially since the 1988 Seoul Olympics, economic interactions withthe former Soviet republics have been brisk. The Republic of Korea is alsoincreasing its support of economic development efforts in the Third Worldon the basis of its more than three decades’ experience with successfuldomestic development. The nation will continue to pursue expanded and more diversifiedtrade and to promote economic cooperation on a long-term basis with therest of the world, taking into consideration the individual economiccharacteristics of each country. With the United States, the Republic of Korea will pursue not onlyexpanded bilateral trade and increased mutual private investment andtechnological cooperation but also government-to-government cooperation inindustrial technologies. As for Japan, the Republic will pursue Forward-lookoing practical economic relations and will, in particular, strive toattract Japanese investment more effectively. Since Korea does not haveserious trade issues with the EU it will focus on promoting overalleconomic cooperation, including mutual investment and industrial andtechnological cooperation. With the dinamically growing Asian economies, such as China andSoutheast Asian Nations, the Republic of Korea will endeavor to continue toexpand two-way trade, especially by helping to meet their expanding needsfor capital goods and intermediate products to support their continuingrapid development, while increasing imports from them as much as possible.The nation will also encourage Korean business investment in thesecountries and make efforts to build an industrial structure complementarywith theirs. The Republic of Korea is increasing its official developmentassistance to developing countries proportionate to its economic strength.In this, efforts are being made to combine such assistance with privateKorean investment, with the aim of maximizing its effect, while developingtwo-way trade and other economic ties on a long-term basis. Economic ties with the Commonwealth of Independent States and EastEuropean countries will continue to focus on commercial applications oftheir high technologies and other forms of technological cooperation andjoint development of natural resources. Korea Trade with and Investment in Various Countries and Regions|Country or |Trade (US$ bil.) |Investment (US$ mil.) ||Region | | || |1987 |1993 |1987 |1993 ||U.S.A. |27.1 |36.1 |165.3 |380 (30.3) || |(30.7) |(21.7) |(40.3) | ||Japan |22.1 |31.6 |1.4 (0.3) |6 (0.5) || |(25.0) |(19.0) | | ||EU |11.2 |19.6 |6.5 (1.6) |157 (12.5) || |(12.7) |(11.8) | | ||China |1.7 (1.9) |9.1 (5.5) |6.0 (1.5) |260 (20.7) ||Southeast Asia |8.9 (10.1)|27.8 |130.5 |179 (14.3) || | |(16.7) |(31.8) | | Note: Figures in parenthesis represent percentage of the total.Active Participation in Multilateral Economic ForumsKorea has actively participated in virtually all major multilateral forums.During the Uruguay Round of trade talks, finally concluded in December1993, Korea tried to make conrtibutions commensurate with its capabilitiesas a major world trading power, and play a mediating role between thedeveloped and developing countries. Korea introduced various proposals inthe Uruguay Round negotiations to reduce tariffs, eliminate non-tariffbarriers, liberalize the textile trade, improve safeguards and reducesubsidies and countervailing duties. The Republic of Korea is actively participating in global efforts toprotect the environment, a crucial task facing all of humanity. In recentyears it has joined the Convention on Climate Change, the Basel Conventionon the Control of Transboundary Movements of Hazardous Wastes and theirDisposal, the Convention on the Prevention of Marine Pollution by Dumpingof Wastes and Other Matter, also called the London Dumping Convention, theConvention on International Trade in Endangered Species of Wild Fauna andFlora, and the Convention on Biological Diversity. Korea has also begun an informal dialogue with the Organization forEconomic Cooperation and Development (OECD) and has expanded participationin its various committees . Korea hopes and intends to improve its economicsystems to the level of advanced countries so as to join the OECD in 1996. One organization in which the Republic of Korea has played aparticularly critical role has been the Asia-Pacific Economic Cooperation(APEC) forum, a forum for multilateral discussions on economic issuesconcerning the Asia-Pacific region.Two examples of Korea’s valuable effortshave been the “Seoul Declaration” adopted at the third APEC MinisterialMeeting hosted by the Republic which laid the foundation for theinstitutionalization of APEC, and its diplomatic role in bringing China,Taiwan and Hong Kong, three key regional economic powers, into the APECfold, giving the forum a new impetus. Subsequently, the Republic played aleading role at the first APEC Leaders Economic Meeting in Seattle inNovember 1993, which coincided with the fifth APEC Ministerial Meeting, andwas elected the chair member of the Committee on Trade and Investment(CTI). Conclusion The rise of the Korean economy over the past several decades, oftencalled the “Miracle of the Han”, has been an inspiring model of moderneconomic development. The rapid pace with which the Koeran economy rosefrom the ashes of war and expanded stunned the outside world. However, thisrapid growth was not unaccompanied by growing pains which began to manifestthemselves in all sectors of society particularly during the late 1980s.Excessive wage hikes, high capital costs and an overly bureaucraticadministration, not to mention institutionalized corruption, served toweaken Korea’s international competitiveness, and this was aggravated byunfavourable external circumstances. In the past year, though, strenuousefforts have been made to overcome these impediments and through this, aswell as improving international economic climate, it appears that theKorean economy is regaining its former vigor. The upcoming years posesevere challenges for the Republic in light of the December 1993conclusion of the Uruguay Round and the rise of the Asia-Pacific region asthe new global economic center, but with the increasing emphasis in boththe public and private sector on globalization and internalization, theRepublic seems braced to meet these challenges. REFORM TOWARD аNEW KOREа The Basic Goals and Reform Process of the Kim Young Sam Administration What are the vision and goals of the Administration of Kim Young Sam, inaugurated on February 25, 1993. In a nutshell, the answer is the“creation of a New Korea” through “Reform Admist Stability.” This conceptwas the keynote of the President’s inaugural address as well as the mainslogan of his presidential election campaign in December 1992. “I have a dream. It is the creation of a New Korea in which a newpolitics, a new economy and a new culture will bloom. This is my dream andvision; it is the dream and vision of all our people.” This quotationappears in the book, “Kim Young Sam: New Korea 2000,” published in Korea inOctober 1992 prior to the presidential election. In his inaugural speech on February 25, 1993, President Kim Young Samdefined the three major priorities of his policies to create a New Korea:the eradication of social injustice and corruption, the revitalization ofthe national economy and the establishment of official discipline andpublic order. The President declared that the eradication of corruption was a vitalfoundation for reforms in every sector of the country, and that there wouldbe no sanctuary from the investigation of misconduct. The movement toestablish official discipline and public order, which began with high-ranking government officials, is intended to ensure integrity and highethical standards by “purifying the upper reaches of the stream,” i.e., theupper levels of government and society. The main purpose of these reforms is to revitalize the nation andelevate the overall standard of living. President Kim Young Sam has thuspushed ahead with firm determination since his inauguration, bringing aboutenormous changes in this country. From the very start of his Administration, President Kim Young Samconcentrated on eliminating corrupt practices and behavior which arose fromdecades of authoritarian rule. This kind of housecleaning was unhead of inthe past. President Kim believes, and popular opinion supports him on this,that such reform must be carried on without letting up in the interest ofthe long-term stability and economic development of Korea. The Concept of a New Korea The creation of a New Korea means the building of unified, fullymature democratic state. To that end, drastic changes and reforms are beingpursued to raise the quality of life for all those who were sacrificed inthe blind quest for rapid growth over the past 30-odd years. What will the future New Korea be like? Korea’s first non-militaryPresident since 1961, President Kim in his inaugural address said the NewKorea will be:. аfreer and more mature democratic society.. аcommunity where people share, work and live together in harmony. а higher quality of life will flourish and the dignity of the individual will be upheld.. аstate where justice flows like a river throughout the land. In other words, it will be a just society in which honest and earnest individuals live well.. аnew country in which human dignity is respected and culture is valued.. аunified land where the presently divided people live in peace as one.. And, it will stand tall and proud on the center stage of the civilized world, making vital contributions to global peace and progress. Curing the Korean Disease The problems which are widespread in Korea today are often referredto as the Korean disease: (1) Korean industriousness and ingenuity - longthe envy of the world - seem to be evaporating, (2) values continue toerode, due to injustice, corruption, lethargy, bigotry, inertia, strife andconfrontation, and narrow self-interests, and (3) self-confidence has beenlost and defeatism has set in. To create a New Korea, the new Administration has been vigorouslyaddressing these symptoms through drastic change and reform. The Presidentoutlined the goals of these changes and reforms in his inaugural address:(1) the establishment of a new era of courage and hope by shaking offfrustration and lethargy, (2) the replacement of bigotry and inertia withopenmindedness and vitality, strife and confrontation with dialogue andcooperation, mistrust with trust, and (3) the building of a society whichsees all citizens not only living together but also truly carring about oneanother, discarding narrow self-interests. Three Tasks The President outlined three essential tasks in his inauguraladdress. First, misconduct and corruption must be rooted out. He definedmisconduct and corruption as the most terrifying enemies attacking thefoundation of society, and called for an end to all manner of improprietyand graft, allowing no sanctuary. He called for immediate reform startingfrom the very top. Second, the economy must be revitalized. He vowed that the newAdministration would do away with unwarranted controls and protection andinstead guarantee self-regulation and fair competition. “Private initiativeand creativity will thus be allowed to flourish”. He went on to say. “TheAdministration will be the first to tighten uts belt. Our citizens mustalso conserve more and save more. Extravagance and wastefulness must beeliminated... Only when the Government and the people, and labor andbusiness work together with enthusiasm will it be possible to turn oureconomy around...” Third, national discipline must be enhanced. “Respect for authoritymust be reestablished... Freedom must serve society... The true meaning offreedom is in using it to plant a flower in the park rather than picking aflower from the park.” The President also said, “Ethics... must be made toprevail. To this end, education must henceforth cultivate wholesomecharacter and unwavering democratic belief, as well as equip our youngpeople for the future with knowledge and skill in science andtechnology...” Four majot Goals of the New Administration The four major goals of the Administration are clean government, asound economy, a healthy society and peaceful unification. Clean government means a government free of corruption andinjustice. There is a saying that the lower reaches of a river will beclean only when the upper reaches are kept clean. The President isdetermined to keep the upper reaches of the stream clean, and all theCabinet members and high-ranking public officials will join in this effortso that the public will have confidence in the Government. The campaign to keep the upper reaches of the stream clean meansreforms from the top. The new Government has required high-ranking publicofficials to register and make public their personal assets to discouragethe illegal accumulation of wealth under the Public Officials’ Ethics Law.The President himself has made public his own assets and has said that hewould not accept political contributions. аsound economy means a New Economy free of unwarranted controls andprotection - an economy which guarantees self-regulation and faircompetition and encourages the private initiative and creativity necessaryfor economic revitalization. The economy has been marked by quantitativegrowth in the past three decades; now it needs qualitative development. Inorder to develop New Economy, Korea must (1) establish a liberal marketsystem, (2) liberalize financing, (3) decentralize economic power and (4)promote economic reforms. The New Economy emphasizes concentrated efforts for the renovation ofscience and technology. In the 21st century, the strength of nations willbe measured by the development of science and technology. It is for thisreason the new Administration is sharply raising research and developmentexpenditures. President Kim Young Sam announced on August 12, 1993, implementationof real-name system for all financial transactions to assist in therealization of economic justice and clean government. The newAdministration also has a firm position to control speculation in realestate and institute tax reforms. By effecting all these changes, it is predicted that the inflationrate as measured by the consumer price index will fall to the 3-4 percentrange by the end of 1994 from the usual past level of nearly 6 percent,while the balance on current account will shift into the black. Theeconomy as a whole should grow at an average annual rate of 6.9 percent,boosting per capita GNP to US$14,076 in 1998 from US$7,466 in 1993. аhealthy society means a society in which all people work hard andreceive just rewards. It is obvious that a clean government and soundeconomy alone cannot create a New Korea. аhealthy society is absolutelyrequired as well. Everyone must spontaneously take responsibility forkeeping society healthy. Each and every person must be honest, courageousand dignified. Peaceful unification is the supreme task for Koreans. the Republic’sKorean national Community Unification Formula envisages a KoreanCommonwealth, an interim arrangement designed to build political, economicand military trust and restore national homogeneity, leading to fullnational integration through free general elections throughout the KoreanPeninsula. President Kim will consistently pursue this unification formula,widely regarded as being very realistic. He will, however, flexibly adaptit to changes in the international situation. In a Liberation Day speech onAugust 15, 1994, he thus prpoposed South-North joint projects for nationaldevelopment, including light-water nuclear reactor construction in theNorth, once the North Korean nuclear issue is resolved. Reform backed by the Korean people The Korean people’s deep support of President Kim’s comprehensivereform agenda has been reflected in the Korean leader’s strong publicapproval rating. President Kim has fared consistently well in publicopinion polls which indicate that his reform policies continue to enjoy thesupport of a solid majority of Koreans.Ethics Reform To maintain the public’s trust, President Kim has pledged to create acorruption-free political environment by establishing high ethicalstandards for the members of his administration and political party.Symbolizing his strong commitment to this goal on February 27, 1993, justtwo days after his inauguration President Kim disclosed all of hisfinancial assets to the public, and encouraged all senior cabinet andruling party figures to do the same. а number of his government’s newlyappointed officials were forced to resign for their past unethicalfinancial conduct and President Kim declared that there would be “nosanctuary” from his clean-up campaign. He stressed that the new ethicalstandards “must be internalized and become a way of life” for all Koreans. In order to institutionalize the disclosure of public officials’assets, the existing Public Officials’ Ethics Act as revised in June 1993,and ranking government officials are now required to register anddisclosure their assets under this law. As a result of the clean-up driveresulting from the asset disclosure, 1,363 public officials were dismissedfor malfeasance and 242 were forced to resign due to improperly acquiredwealth. President Kim’s inauguration brought to an end the deep involvementof the military in Korea’s political arena. Corruption in the armed forces,long a taboo subject, became a focus of the new reform drive. Promotionkickback scandals were uncovered, and a number of senior military officershave been removed from their posts. The Administration has alsoinvestigated and taken legal action against defense procurementirregularitites. At the same time, Prsident Kim has moved to depoliticizethe government bureaucracy. In particular, he has reformed the nation’sintelligence apparatus, ending its involvement in domestic politics anddirecting it to focus solely on Korea’s national security concerns. President Kim has taken steps to reform the Office of the Presidentitself. The President’s residence and office complex, Chong Wa Dae, betterknown as a Blue House, has been made more accessible to the public. For thefirst time in decades, the avenue in front of the Blue House is now open totraffic, as are the scenic mountain hiking trails adjacent to thepresidential residence. Gone are the lavish Blue House meals once served tostaff and guests. Instead, everyone, including the President himself, dineson simple yet traditional Korean cuisine.Financial Reform Following this reform to require the disclosure of personal assets bypublic officials, President Kim Young Sam boldly introduced a real-namefinancial transaction system in order to achieve fundamental structuralreform that will greatly assist in the realization of economic justice andclean government. This real-name financial transaction system, which was put intoeffect by an emergency presidential decree on August 12, 1993 is the coreof the entire reform movement, “the reform of all reforms.” This reform ishelping eradicate misconducts and realize economic justice by rectifyingthe distorted economic structure and income distribution caused byunderground economic activities and real estate speculation and by cuttingshady financial ties between politicians and businessmen. In order to jointhe ranks of advanced countries, Korea must eradicate the corruption andirregularities stemming from certain aspects of past administrations’pursuance of rapid growth-oriented economic development. With the introduction of the real-name financial transaction system,all financial dealing have become transparent, underground economicdealings have diminished, and nonproductive land speculation has beencurbed. The funds that were channeled into political circles in the past asa result of government-business collusion are now being invested inbusiness activities. As a result drastic changes are occurring in political, economic andsocial activities in virtually every sector of Korean society. Businessinvestment is actively increasing, and the past distorted economicstructure and income distribution is being rectified. President Kim’s declaration not to receive any money from businessesso as to maintain a clean government and to build a clean society, combinedwith his political philosophy, laid the foundation for the introduction ofthe real-name financial transaction system. The success of the real-namefinancial transaction system is serving as a stepping-stone to a New Korea. Reform Legislation Promoting Clean Polities and Participatory Democracy As President Kim’s urging, a package of three political reform billswas unanimously passed by the National Assembly on March 24, 1994. Markedby heavy penalties for offenders, the Law for Electing Public Officials andPreventing Electoral Irregularities is designed to ensure the transparencyof campaign financing, limit campaign expenditures while encouraging freercampaigns, and ban “premature electioneering,” as well as all otherelectoral misconduct. The amended Political Fund Law is intended to controlfund raising by political parties and individual politicians with the aimof stamping out “money politics” and “politics-business collusion,” whileencouraging relatively small contributions by individuals and groups to thecoffers of the parties or politicians that they support. Together, thesetwo laws are aimed at ensuring free, fair, clean and frugal politics ingeneral. The revised Local Autonomy Law provides for the election of thechief executives of local governments in addition to the local councilsalready instituted in 1991 to restore local autonomy after a 30-yearhiatus. Under the new Local Autonomy Law, four kinds of local elections arescheduled to be conducted on June 27, 1995, to choose 15 provincialgovernors and metropolitan mayors, 866 members of provincial andmetropolitan councils, 260 city mayors, country executives and municipaldistrict chiefs, and 4,304 members of lower-level local councils - for atotal of 5,445. In line with the key goals of President Kim’s political reform, theenforcement of these new laws will enhance the ability of Korean citizensfrom all walks of life to more fully participate in the democraticpolitical process.
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