Korea in focus
A People and History in Harmony
Introduction
In the past two decades, Korea has been one of the
fastest developing nations in the world - both in economic and social terms.
Rapid industrial and economic growth has seen the Republic nearly reach
developed nation status in a remarkably short time. The Korean people also find
themselves in the midst of a new era of democratic development following the
birth of the civilian Administration of President Kim Young Sam on February 25,
1993. This wiped out the negative legacy of decades of military-backed
authoritarian rule. The country has since been implementing bold political and
economic reforms to eradicate corruption and revitalize and restructure the
economy with the goal of building a New Korea - a mature and vibrant industrial
democracy.
This rapid economic and social development has brought
Korea increased international exposure and recognition, as the Republic begins
to expand its role on the international stage. Testifying to this was the
successful hosting of the 1988 Seoul Olympics, the largest held in history up to
that time. This was following by the 1993 hosting of an international
exposition, the Taejon Expo '93. Both
the Seoul Olympics and the Taejon Expo played an important role in deepening
ties between Korea and countries all over the world and gave an impetus to the
Korean economy.
This era of stability and expanding international ties
represents the most exciting period in the country's history - and yet, in
retrospect, Korea has, in its 5,000-year history, quite an enviable record for
governments of longevity and stability. The country's last dynasty, the Yi
Dynasty 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 historical perspective; but, in order to
understand today's Korea - its land, people, culture, history, and recent
economic and political transitions - it is necessary to look at both the past
and the present. "Korea In Focus" aims to give you a brief overview to help in
your general awareness of Korea today. More detailed information can be
obtained from individual organizations or government offices.
Land
The Korean Peninsula, located in Northeast Asia, is
bordered on the north by China and Russia and juts towards Japan to the southeast.
Since 1948, the 221,487 square
kilometers which make up the entire Peninsula have been divided, roughly along
the 38th parallel, into the Republic of Korea in the south and the Democratic
People's Republic of Korea in the north. The Republic of Korea covers 99,221
square kilometers, a land area a little more than twice the size of
Switzerland.
Seoul is the capital of the country which is made up
of nine provinces; other major cities include Pusan, Taegu, Inch'on, Kwangju,
and Taejon.
The landscape is spectacular in its variations and
about 70 percent of it is mountaneous. The oceans around the Peninsula are a
major source of livelihood and recreation for Koreans. The shoreline is dotted
by more than 3,000 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 flows through Seoul to the West Sea (Yellow Sea).
History
A look back at the 5,000 years of Korean history
reveals triumphs and tragedies, successes and struggles which have been
instrumental in shaping the Korea and Koreans of today. One remarkable fact
that emerges from such a historical
examination is that Korea has largely been ruled by long-term, stable
governments. Korea's kindoms and
dynasties generally lasted about 500 years or more.
Although Korea's traceable history began considerably
earlier that the seventh century, it was the Shilla Unification in 668 that
Korea, as a historical entity with a cohesive culture and society, came to occuðy most of the Peninsula as it
exists today.
It was almost a decade after the end of the war before
the Republic of Korea had recovered sufficiently to establish stability and
start the momentum for its now remarkable recovery and development. The three
decades since then have been a time of spectacular progress which has seen the
creation of a modern, industrialized nation.
People
Korea is homogeneous society, although there have been
historic and prehistoric migrations of Chinese, Mongols and Japanese. Koreans
are very conscious of the ethnic differences and cultural distinctions which
give them their unique identity.
The population of the Republic of Korea was estimated
at 44.1 million in 1993. Its population density is among the world's highest
and Seoul, the capital, has more than 10 million inhabitants. The annual
population growth in the Republic has dropped from an average of 2.7 percent in
the 1960-66 period to only 0.90 percent in 1993. The slowdown is also partly the result of the increasing number
of young working women.
The country's rapid industrialization is responsible
for today's concentration of population in urban centers. The proportion of Koreans living in cities
has jumped from only 28 percent in 1960 to 74.4 percent as of 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 on the
Peninsula and its outlying islands as well as some 1.5 million Koreans living
in other parts of the world.
Korean belongs to the Ural-Altaic language group,
which is found in an narrow band from Korea and Japan across Mongolia and
central Asia to Turkey. Korean is a non-tonal language, with agglutinative and
polysynthetic elements.
Religion
Religion in today's Korea covers a broad spectrum of
faiths and beliefs. Buddhism, Christianity, Confucianism, Islam and numerous
other indigenous religions exist in Korea. Although none of them dominates,
they all influence contemporary culture.
Education
Education has been at the heart of Korea's growth by
training and supplying the manpower needed for rapid industrial and economic
expansion.
A multi-tiered educational system is currently in use,
encompassing elementary school (six years), middle school (three years), high
school (three years), and college (four years), as well as various graduate and
professional programs.
The government has eased regulations on overseas
study. This new policy also encourages those in the teaching profession to take
advantage of opportunities for training abroad.
Transportation
The tremendous pace of domestic economic growth in the
past two decades has been reflected in the expansion of transportation
facilities and the increases in Korea's annual passenger and cargo volumes. The
annual volume of passenger transportation rose from 1.6 billion persons in 1996
to 14.24 billion in 1993.
Seoul has a well-developed mass transit system of
subways, buses, and taxis. Airport shuttles or city buses are conveniently
available and operate throughout the city. The subway system is the eighth
longest in the world, carrying 1,388 million people in 1993. Its four lines
reach most major locations in the city.
Korea has three international airports in Seoul
(Kimpo), Pusan (Kimhae) and Cheju (Cheju), all of which are equipped with
modern air traffic control facilities and support systems. Korean Air's
worldwide network serves 43 cities in 24 nations, including recently
inaugurated flights to Rome. The newly launched Asiana Airlines recently
started international flights with regular service to fourteen cities in Japan,
the US, Singapore, Hong Kong, Taipei and Bangkok.
All expressway system also connects Seoul with
provincial cities and towns, putting any place in mainland South Korea within a
one-day round trip of the capital. Express buses transport passengers to and
from all principal cities and resorts in the country.
The railway also serve the entire country through an
efficient and extensive network. The super-express train, Saemaul, runs 444.5
kilometers from Seoul to Pusan in four hours and 10 minutes. There are also
ordinary express and local trains.
Ocean liners, cruise ships, and passenger-carrying
freighters visit Korean ports. A ferry service links Pusan with Chejudo Island
and the Japanese ports of Shimonoseki, Kobe and Hakada. Another ferry service
recently 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, with the investment of US $ 2.64
billion in communications annually, 1.76 million new telephone circuits were
installed each year, increasing the total number of telephone lines to 10.14
million as of 1993. Virtually every home in the country now has its own
telephone and all the telephone circuits are connected by automatic switching
systems.
Also, through the launch of KOREASAT scheduled in
1995, Korea will be able to provide satellite communication services by using
its own satellite from October 1995.
THE ECONOMY
Looking Ahead to the 21st Century
In the last quarter century, Korea's economic growth
has been among the fastest in the world. The country has overcome obstacles and
challenges to transform itself from a subsistence-level economy into one of the
world's leading newly industrialized countries. Today, however, the Korean
economy faces the new challenges of internationalization and globalization in
an increasingly complex global economic environment.
Past Performance and Policies
Since Korea launched its First Five-Year Economic
Development Plan in 1962, the country's real GNP has expanded by an average of
more than 8 percent per year. As a result, Korea's GNP has grown from US $ 2.3
billion in 1962 to US $ 328.7 billion in 1993; per capita GNP has increased from
a meager US $ 82 in 1962 to US $ 7,466 in 1993 at current price levels.
The industrial structure of the Korean economy has also been completely
transformed. The agricultural sector's share of GNP declined from 37.0 percent
in 1962 to 7.1 percent in 1993. The manufacturing sector's share has increased
from 14.4 percent to 27.1 percent in the same period. The service sector
accounted for only 24.1 percent of GNP in 1962 but grew to 40.0 percent in
1993.
Korea's merchandise trade volume increased from US $ 500
million in 1962 to US $ 166 billion in 1993. The nation continuously posted trade
deficits until 1985 when its foreign debt reached US $ 46.8 billion, the fourth
largest in the world. From 1986 to 1989, Korea recorded current account
surpluses and its debt declined.
Trends of Major Economic Indicators
Unit
'62
'70
'80
'85
'90
'92
'93
GNP
US $
bil.
2.3
8.1
60.5
91.1
251.8
305.7
328.7
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 $
bil.
0.5
2.8
39.8
61.4
134.9
158.4
166.0
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 70s and early 80s, during which consumer prices rose at annual
rates of 10-20 percent. Since 1982, Korea has managed to keep inflation down to
a single digit. The ratio of domestic savings to GNP grew from 3.3 percent in
1962 to 34.9 percent in 1993.
Recent Challenges
Beginning in 1989, the Korean economy began
experiencing slower growth, high inflation and a deterioration in the balance
of payments. The GNP growth rate fell to 6.7 percent in 1989 from the 12
percent level of previous years. A slump in the growth of the manufacturing
sector, from 18.8 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 growth
rate on a customs clearance basis, which was 36.2 percent in 1987 and 28.4
percent in 1988, fell to just 2.8 percent in 1989. Reflecting this fall in the
export growth rate, the current account surplus lowered to around US $ 5.1
billion, a significant drop from the 1988 surplus of US $ 14.2 billion.
In 1991, the economic growth rate showed signs of
recovery. The GNP grew during the year 9.1 percent. However, most of this
growth was attributed to an increase in domestic demand, particularly domestic
consumption. Exports increased 10.3 percent compared to 1990, while the growth
rate of imports increased 17.7 percent. The trade balance deteriorate rapidly
to a US $ 7.0 billion deficit in 1991 from the US $ 4.6 billion surplus in 1989. In
addition, price stability, which had served to boost Korea's competitiveness,
weakened. Consumer prices, which had risen on an annual average of 2-3 percent
between 1984 and 1987, rose 9.3 percent in 1991.
Recent Economic Trends
'91
'92
'93
'94.
1 ~ 6
GNP
GNP
Growth
Rate in%
9.1
5.0
5.6
8.5
Manufacturing Sector
Growth
Rate in%
9.1
5.1
5.0
10.0
Private Consumption
Growth
Rate in%
9.5
6.6
5.7
7.2
Investment
Growth
Rate in%
12.6
0.8
3.6
10.3
Equipment
Growth
Rate in%
12.1
1.1
0.2
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 growth rate dipping to 5.0 percent, influenced chiefly by blunted
investment in capital goods. The consumer price index rose just 6.2 percent,
and the deficit in the balance of payments also dropped to US $ 4.5 billion.
At that time, the Korean economy faced many challenges
on both the internal and external fronts. Part of the economic slowdown may be
explained by the cyclical adjustment of the economy after three consecutive
years of rapid growth. However, the stagnation was more likely the result of a
structural deterioration in competitiveness, due to a combination of the
lingering legacies of the past government-led economic management system, which
had now become inefficient, and the disappearance of the advantages derived
from the once ample availability of low-cost labor: Thus the country was forced
to search for a new driving force sufficient for sustained economic growth.
Major Tasks and Policy Directions
To revitalize the economy, the Kim Young Sam
Administration, which was inaugurated
in February 1993 as the first civilian democratic government in over
three decades, is endeavoring to construct a new developmental paradigm called
"The New Economy". This signals a clean departure from the past, when the government directed and
controlled the concentrated 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 economic actors in order
to maximize efficiency, while ensuring the equitable distribution of income. In
that way, it seeks to enable the nation to leap into the ranks of the developed
nations within the next five years.
As an initial step, the new Administration implemented
a short-term 100-Day Plan for the New Economy in March 1993, designed to
promptly create conditions conductive to revitalizing the economy. This was
followed by the development of a new five-year economic development plan.
Formally announced in July 1993, the Five-Year Plan for the New Economy was
conceived primarily to lay the basis for joining the ranks of advanced
countries and thus to effectively prepare for the eventual unification of the
Korean Peninsula.
The Government will continue its efforts to ensure the
effective implementation of the five-year plan through the spontaneous
participation of the people by reforming economic institutions including the
improvement or simplification of existing financial and tax systems and
administrative measures. Furthermore, the Government will continue to endeavor
to fully realized the nation's economic growth potential, strengthen its
international competitiveness, and improve the economic conditions of the
public.
If the plan is implemented as intended, the Korean
economy is projected to change as follows:
First with increased efficiency and greater
realization of growth potential, the gross national product should rise at an
average annual rate of about 6.9 percent, raising per capita GNP to US $ 14,076
in 1998.
Second, greater price stability should prevail as
balance is maintained between the more steadily rising demand and the more
briskly expanding supply, while wage increases are linked to rises in
productivity. The stabilization of the value of the won currency should help
stabilize the prices of imported goods and services. The net effect should be
to hold down the rise in consumer prices to an annual average of 3.7 percent,
the increase in producer prices to an annual average of 1.6 percent and the
rise 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-'98
GNP
growth,%
8.4
4.7
6.0
7.1
7.2
7.1
7.0
7.0
6.9
Per
capita GNP, US $
6,518
6,749
7,306
8,196
9,339
10,716
12,305
14,076
14,0762)
Rise
in producer prices,%
4.7
2.2
1.8
1.8
1.7
1.6
1.5
1.4
1.6
Rise
in consumer prices,%
9.3
6.2
4.9
4.3
3.7
3.6
3.2
2.9
3.7
Rise
in GNP deflator,%
11.2
6.3
5.3
5.3
4.8
4.5
4.1
3.8
4.6
Balance
on curren account,
8.7
4.6
1.4
0
0.9
2.1
3.7
5.3
5.32)
US $
billion
Exports
1), US $ billion
69.6
75.1
82.3
82.3
99.3
110.1
122.6
136.3
136.32)
Rate of increase,%
(10.2)
(7.9)
(9.5)
(9.5)
(10.2)
(10.9)
(11.3)
(11.2)
(10.4)
Imports,
US $ billion
76.6
77.3
81.3
81.3
95.8
105.3
116.1
128.1
128.12)
Rate
of increase,%
(17.5)
(1.0)
(5.1)
(5.1)
(9.3)
(9.9)
(10.2)
(10.3)
(8.8)
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
toward revitalizing the economy and eliminating corruption by announcing the
inplementation of the long-anticipated real-name financial transaction system.
In the past, it had been possible to open accounts and conduct business
transactions under false names, directly and indirectly fostering
institutionalized-corruption and illegal financial dealings. Deeming this
reform as the most important in the creation of a New Korea, the President
announced this action in a Presidential Emergency Decree, stating that the
real-name system was essential for cutting the dark link between politics and
business.
With the introduction of the real-name financial
transaction system, it appears that financial dealings are becoming fully transparent and underground
economic dealings and nonproductive land speculation are diminishing. It is
hoped the funds that had been channeled into political circles in the past as a
result of government-business collusion are now available for more productive
activities.
Encouraging Signs
The implementation of a real-name financial
transaction system, the easing of administrative controls, expanded capital
investment by major enterprises, and increased financial and administrative support for small-and
medium-sized enterprises all combined to lay a solid foundation for another
economic take-off. Exports rose 7.6 percent in 1993 to US $ 82.4 billion, while
imports grew just 2.5 percent. Korea was thus able to register a US $ 600 million
trade surplus last year for the first time in four years. The current account also yielded a surplus
of US $ 200-300 million. Industrial production
has been growing at about a 10 percent rate during the first half of 1994.
Furthermore, labor disputes decreased markedly last year, while the composite
stock index of the Seoul Stock Exchange climbed markedly. In view of these
indications, the Korean economy seems to be well on the way to revitalization.
External Policies for Greater International
Cooperation
Import Liberalization
Korea is committed to fulfilling its international
responsibilities. It positively supports the trend toward openness and utilizes
it as a catalyst for further enhancing the international competitiveness of
industry and thus speeding the advancement of the economy, so that it can join
the group of advancedcountries.
Since 1980, Korea has made continuous efforts toward import
liberalization. The import liberalization rate increased from 68.6 percent in 1980 to 98.1 percent in 1993. The average
tariff rate decreased from 24.9 percent to 8.9 percent during the same period
and is expected to be only 7.9 percent by the end of 1994, the same average
level of tariffs found in OECD member countries.
In October 1989, Korea decided to relinquish GATT
balance of payments protection which mostly covers agricultural products.
According to the decision Korea will move to eliminate its remaining
restrictions or otherwise 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 of the blueprint for financial liberalization and
internationalization, which was implemented from the second half of 1993. Under
the plan, procedures for various foreign exchange transactions are being
gradually simplified. Beginning in 1994, the ceiling on foreign investment in
the stock market will be gradually raised, and the bond market will also be
gradually opened to foreign investment. Initially, from 1994 foreign investors
will be allowed to purchase convertible bonds, even those issued by small-and
medium-sized domestic enterprises.
Foreign-invested firms engaged in the manufacture of
high-tech products or banking and other services are currenlty allowed to
induce foreign credit repayable within three years. Beginning in 1997, the liberal inducement of foreign
credit by both domestic and foreign-invested enterprises will be allowed.
Increasing Opportunities for Foreign Investors
In June 1993, the Korean Government also announced a
five-year plan for liberalizing foreign investment. Under the plan, 132 of the
224 business lines currently being protected from foreign competition will be
opened to foreign investment in five phases, over a period of five years
starting from July 1993. With the implementation of this plan, of the total
1,148 business lines under the standard industrial classification of Korea,
1,056 will be open to foreign competition. This means that the foreign
investment liberalization rate will rise from 83 percent as of June 2, 1993 to
93.4 percent by 1997.
Included among the business lines to be opened to
foreign competition under the plan are most of the service industries including
distribution and transportation, hospital management, vocational training and
"Value-added" communications.
The business conditions for foreign-invested firms
will also be greatly improved through various measures, including relaxed
control on the acquisition of land by foreign-invested firms, the augmented
protection of foreign intellectual rights, and other similar steps.
Cooperation with the Rest of the World, Including
Developing Nations and Socialist Countries
Expanding Trade and Economic Exchanges
The Republic of Korea has emerged as a major global
trader by steadily pursuing freer trade and greater openness, while promoting
its business presence around the world. In the past, Korea's foreign trade
concentrated on the developed world - mainly the United States, Japan and the
EU. In more recent years, however, it has rapidly expanded trade and capital
cooperation with Southeast Asia, former and present socialist countries and
Third World nations as well.
Especially since the 1988 Seoul Olympics, economic
interactions with the former Soviet republics have been brisk. The Republic of
Korea is also increasing its support of economic development efforts in the
Third World on the basis of its more than three decades 'experience with
successful domestic development.
The nation will continue to pursue expanded and more
diversified trade and to promote economic cooperation on a long-term basis with
the rest of the world, taking into consideration the individual economic
characteristics of each country.
With the United States, the Republic of Korea will
pursue not only expanded bilateral trade and increased mutual private
investment and technological cooperation but also government-to-government
cooperation in industrial technologies. As for Japan, the Republic will pursue
Forward-lookoing practical economic relations and will, in particular, strive
to attract Japanese investment more effectively. Since Korea does not have
serious trade issues with the EU it will focus on promoting overall economic
cooperation, including mutual investment and industrial and technological
cooperation.
With the dinamically growing Asian economies, such as
China and Southeast Asian Nations, the Republic of Korea will endeavor to
continue to expand two-way trade, especially by helping to meet their expanding
needs for capital goods and intermediate products to support their continuing
rapid development, while increasing imports from them as much as possible. The
nation will also encourage Korean business investment in these countries and
make efforts to build an industrial structure complementary with theirs.
The Republic of Korea is increasing its official
development assistance to developing countries proportionate to its economic
strength. In this, efforts are being made to combine such assistance with
private Korean investment, with the aim of maximizing its effect, while
developing two-way trade and other economic ties on a long-term basis.
Economic ties with the Commonwealth of Independent
States and East European countries will continue to focus on commercial
applications of their high technologies
and other forms of technological cooperation and joint development of natural
resources.
Korea Trade with and Investment in Various Countries
and Regions
Country
or Region
Trade
(US $ bil.)
Investment
(US $ mil.)
1987
1993
1987
1993
U.S.A.
27.1
(30.7)
36.1
(21.7)
165.3
(40.3)
380
(30.3)
Japan
22.1
(25.0)
31.6
(19.0)
1.4
(0.3)
6
(0.5)
EU
11.2
(12.7)
19.6
(11.8)
6.5
(1.6)
157
(12.5)
China
1.7
(1.9)
9.1
(5.5)
6.0
(1.5)
260
(20.7)
Southeast
Asia
8.9
(10.1)
27.8
(16.7)
130.5
(31.8)
179
(14.3)
Note: Figures in parenthesis represent percentage of the total.
Active Participation in Multilateral Economic Forums
Korea has actively participated in virtually all major
multilateral forums. During the Uruguay Round of trade talks, finally concluded
in December 1993, Korea tried to make conrtibutions commensurate with its
capabilities as a major world trading power, and play a mediating role between
the developed and developing countries. Korea introduced various proposals in
the Uruguay Round negotiations to reduce tariffs, eliminate non-tariff
barriers, liberalize the textile trade, improve safeguards and reduce subsidies
and countervailing duties.
The Republic of Korea is actively participating in
global efforts to protect the environment, a crucial task facing all of humanity. In recent years it
has joined the Convention on Climate Change, the Basel Convention on the
Control of Transboundary Movements of Hazardous Wastes and their Disposal, the
Convention on the Prevention of Marine Pollution by Dumping of Wastes and Other
Matter, also called the London Dumping Convention, the Convention on
International Trade in Endangered Species of Wild Fauna and Flora, and the
Convention on Biological Diversity.
Korea has also begun an informal dialogue with the Organization
for Economic Cooperation and Development (OECD) and has expanded participation
in its various committees. Korea hopes and intends to improve its economic
systems to the level of advanced countries so as to join the OECD in 1996.
One organization in which the Republic of Korea has
played a particularly critical role has been the Asia-Pacific Economic
Cooperation (APEC) forum, a forum for multilateral discussions on economic
issues concerning the Asia-Pacific region.Two examples of Korea's valuable
efforts have been the "Seoul Declaration" adopted at the third APEC Ministerial
Meeting hosted by the Republic which laid the foundation for the
institutionalization of APEC, and its diplomatic role in bringing China, Taiwan
and Hong Kong, three key regional economic powers, into the APEC fold, giving
the forum a new impetus. Subsequently, the Republic played a leading role at
the first APEC Leaders Economic Meeting in Seattle in November 1993, which
coincided with the fifth APEC Ministerial Meeting, and was elected the chair
member of the Committee on Trade and Investment (CTI).
Conclusion
The rise of the Korean economy over the past several
decades, often called the "Miracle of the Han", has been an inspiring model of
modern economic development. The rapid pace with which the Koeran economy rose
from the ashes of war and expanded stunned the outside world. However, this
rapid growth was not unaccompanied by growing pains which began to manifest
themselves in all sectors of society particularly during the late 1980s.
Excessive wage hikes, high capital costs and an overly bureaucratic
administration, not to mention institutionalized corruption, served to weaken
Korea's international competitiveness, and this was aggravated by unfavourable
external circumstances. In the past year, though, strenuous efforts have been
made to overcome these impediments and
through this, as well as improving international economic climate, it appears
that the Korean economy is regaining its former vigor. The upcoming years pose severe challenges for the Republic in light
of the December 1993 conclusion of the
Uruguay Round and the rise of the Asia-Pacific region as the new global
economic center, but with the increasing emphasis in both the public and
private sector on globalization and internalization, the Republic seems braced
to meet these challenges.
REFORM TOWARD A NEW KOREA
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 concept was the keynote of the President's
inaugural address as well as the main slogan of his presidential election
campaign in December 1992.
"I have a dream. It is the creation of a New Korea in
which a new politics, a new economy and a new culture will bloom. This is my
dream and vision; it is the dream and vision of all our people. "This quotation appears in the book," Kim
Young Sam: New Korea 2000, "published in Korea in October 1992 prior to the
presidential election.
In his inaugural speech on February 25, 1993,
President Kim Young Sam defined the three major priorities of his policies to
create a New Korea: the eradication of social injustice and corruption, the
revitalization of the national economy and the establishment of official discipline and public order.
The President declared that the eradication of
corruption was a vital foundation for reforms in every sector of the country,
and that there would be no sanctuary from the investigation of misconduct. The
movement to establish official discipline and public order, which began with
high-ranking government officials, is intended to ensure integrity and high
ethical standards by "purifying the upper reaches of the stream," ie, the
upper levels of government and society.
The main purpose of these reforms is to revitalize the
nation and elevate the overall standard of living. President Kim Young Sam has
thus pushed ahead with firm determination since his inauguration, bringing
about enormous changes in this country.
From the very start of his Administration, President
Kim Young Sam concentrated on eliminating corrupt practices and behavior which
arose from decades of authoritarian rule. This kind of housecleaning was unhead
of in the past. President Kim believes, and popular opinion supports him on
this, that such reform must be carried on without letting up in the interest of
the 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, fully mature democratic state. To that end, drastic changes and
reforms are being pursued to raise the quality of life for all those who were
sacrificed in the blind quest for rapid growth over the past 30-odd years.
What will the future New Korea be like? Korea's first
non-military President since 1961, President Kim in his inaugural address said
the New Korea will be:
A freer and more mature democratic society.
A community where people share, work and live together
in harmony. A higher quality of life will flourish and the dignity of the
individual will be upheld.
A state 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.
A new country in which human dignity is respected and
culture is valued.
A unified 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 referred to as the Korean disease: (1) Korean industriousness and
ingenuity - long the envy of the world - seem to be evaporating, (2) values
continue to erode, due to injustice, corruption, lethargy, bigotry, inertia,
strife and confrontation, and narrow self-interests, and (3) self-confidence
has been lost and defeatism has set in.
To create a New Korea, the new Administration has been
vigorously addressing these symptoms through drastic change and reform. The
President outlined the goals of these changes and reforms in his inaugural
address: (1) the establishment of a new era of courage and hope by shaking off
frustration and lethargy, (2) the replacement of bigotry and inertia with
openmindedness and vitality, strife and confrontation with dialogue and
cooperation, mistrust with trust, and (3) the building of a society which sees
all citizens not only living together but also truly carring about one another,
discarding narrow self-interests.
Three Tasks
The President outlined three essential tasks in his
inaugural address.
First, misconduct and corruption must be rooted out.
He defined misconduct and corruption as the most terrifying enemies attacking
the foundation of society, and called for an end to all manner of impropriety
and graft, allowing no sanctuary. He called for immediate reform starting from
the very top.
Second, the economy must be revitalized. He vowed that
the new Administration would do away with unwarranted controls and protection
and instead guarantee self-regulation and fair competition. "Private initiative
and creativity will thus be allowed to flourish ". He went on to say. "The
Administration will be the first to tighten uts belt. Our citizens must also
conserve more and save more.
Extravagance and wastefulness must be
eliminated ... Only when the Government and the people, and labor and
business work together with enthusiasm will it be possible to turn our economy
around ..."
Third, national discipline must be enhanced. "Respect
for authority must be reestablished ... Freedom must serve society ... The true
meaning of freedom is in using it to plant a flower in the park rather than
picking a flower from the park. "The President also said," Ethics ... must be
made to prevail. To this end, education must henceforth cultivate wholesome
character and unwavering democratic belief, as well as equip our young people
for the future with knowledge and skill in science and technology ..."
Four majot Goals of the New Administration
The four major goals of the Administration are clean
government, a sound economy, a healthy society and peaceful unification.
Clean government
means a government free of corruption and injustice. There is a saying
that the lower reaches of a river will be clean only when the upper reaches are
kept clean. The President is determined to keep the upper reaches of the stream
clean, and all the Cabinet members and high-ranking public officials will join
in this effort so that the public will have confidence in the Government.
The campaign to keep the upper reaches of the stream
clean means reforms from the top. The new Government has required high-ranking
public officials to register and make public their personal assets to
discourage the illegal accumulation of wealth under the Public Officials 'Ethics
Law. The President himself has made public his own assets and has said that he
would not accept political contributions.
A sound economy means a New Economy free of
unwarranted controls and protection - an economy which guarantees
self-regulation and fair competition and encourages the private initiative and
creativity necessary for economic revitalization. The economy has been marked
by quantitative growth in the past three decades; now it needs qualitative
development. In order to develop New Economy, Korea must (1) establish a
liberal market system, (2) liberalize financing, (3) decentralize economic
power and (4) promote economic reforms.
The New Economy emphasizes concentrated efforts for
the renovation of science and technology. In the 21st century, the strength of
nations will be measured by the development of science and technology. It is
for this reason the new Administration is sharply raising research and
development expenditures.
President Kim Young Sam announced on August 12, 1993,
implementation of real-name system for all financial transactions to assist in
the realization of economic justice and clean government. The new
Administration also has a firm position to control speculation in real estate
and institute tax reforms.
By effecting all these changes, it is predicted that
the inflation rate as measured by the consumer price index will fall to the 3-4
percent range 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. The
economy 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.
A healthy society means a society in which all people
work hard and receive just rewards. It is obvious that a clean government and
sound economy alone cannot create a New
Korea. A healthy society is absolutely required as well. Everyone must
spontaneously take responsibility for keeping society healthy. Each and every
person must be honest, courageous and dignified.
Peaceful unification is the supreme task for Koreans.
the Republic's Korean national Community Unification Formula envisages a Korean
Commonwealth, an interim arrangement designed to build political, economic and
military trust and restore national
homogeneity, leading to full national integration through free general
elections throughout the Korean Peninsula. President Kim will consistently
pursue this unification formula, widely regarded as being very realistic. He
will, however, flexibly adapt it to changes in the international situation. In
a Liberation Day speech on August 15, 1994, he thus prpoposed South-North joint
projects for national development, including light-water nuclear reactor
construction in the North, once the North Korean nuclear issue is resolved.
Reform backed by the Korean people
The Korean people's deep support of President Kim's
comprehensive reform agenda has been reflected in the Korean leader's strong
public approval rating. President Kim has fared consistently well in public
opinion polls which indicate that his reform policies continue to enjoy the
support of a solid majority of Koreans.
Ethics Reform
To maintain the public's trust, President Kim has
pledged to create a corruption-free political environment by establishing high
ethical standards for the members of his administration and political party.
Symbolizing his strong commitment to this goal on February 27, 1993, just two
days after his inauguration President Kim disclosed all of his financial assets
to the public, and encouraged all senior cabinet and ruling party figures to do
the same. A number of his government's newly appointed officials were forced to
resign for their past unethical financial conduct and President Kim declared
that there would be "no sanctuary" from his clean-up campaign. He stressed that
the new ethical standards "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 and
disclosure their assets under this law. As a result of the clean-up drive resulting from the asset disclosure,
1,363 public officials were dismissed for malfeasance and 242 were forced to
resign due to improperly acquired wealth.
President Kim's inauguration brought to an end the
deep involvement of the military in Korea's political arena. Corruption in the
armed forces, long a taboo subject, became a focus of the new reform drive.
Promotion kickback scandals were uncovered, and a number of senior military
officers have been removed from their posts. The Administration has also
investigated and taken legal action against defense procurement
irregularitites. At the same time, Prsident Kim has moved to depoliticize the
government bureaucracy. In particular, he has reformed the nation's
intelligence apparatus, ending its involvement in domestic politics and
directing it to focus solely on Korea's national security concerns.
President Kim has taken steps to reform the Office of
the President itself. The President's residence and office complex, Chong Wa
Dae, better known as a Blue House, has been made more accessible to the public.
For the first time in decades, the avenue in front of the Blue House is now
open to traffic, as are the scenic mountain hiking trails adjacent to the
presidential residence. Gone are the lavish Blue House meals once served to
staff and guests. Instead, everyone, including the President himself, dines on
simple yet traditional Korean cuisine.
Financial Reform
Following this reform to require the disclosure of
personal assets by public officials, President Kim Young Sam boldly introduced
a real-name financial transaction system in order to achieve fundamental
structural reform that will greatly assist in the realization of economic
justice and clean government.
This real-name financial transaction system, which was
put into effect by an emergency presidential decree on August 12, 1993 is the
core of the entire reform movement, "the reform of all reforms." This reform is
helping eradicate misconducts and realize economic justice by rectifying the
distorted economic structure and income distribution caused by underground
economic activities and real estate speculation and by cutting shady financial
ties between politicians and businessmen. In order to join the ranks of
advanced countries, Korea must eradicate the corruption and irregularities
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
economic dealings have diminished, and nonproductive land speculation has been
curbed. The funds that were channeled into political circles in the past as a
result of government-business collusion are now being invested in business
activities.
As a result drastic changes are occurring in
political, economic and social
activities in virtually every sector of Korean society. Business
investment is actively increasing, and the past distorted economic structure
and income distribution is being rectified.
President Kim's declaration not to receive any money
from businesses so as to maintain a clean government and to build a clean
society, combined with his political philosophy, laid the foundation for the
introduction of the real-name financial transaction system. The success of the
real-name financial 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 bills was unanimously passed by the National Assembly on March
24, 1994. Marked by heavy penalties for offenders, the Law for Electing Public
Officials and Preventing Electoral Irregularities is designed to ensure the
transparency of campaign financing, limit campaign expenditures while
encouraging freer campaigns, and ban "premature electioneering," as well as all
other electoral misconduct. The amended Political Fund Law is intended to
control fund raising by political parties and individual politicians with the
aim of stamping out "money politics" and "politics-business collusion," while
encouraging relatively small contributions by individuals and groups to the
coffers of the parties or politicians that they support. Together, these two
laws are aimed at ensuring free, fair, clean and frugal politics in general.
The revised Local Autonomy Law provides for the election of the chief
executives of local governments in addition to the local councils already
instituted in 1991 to restore local autonomy after a 30-year hiatus.
Under the new Local Autonomy Law, four kinds of local
elections are scheduled to be conducted on June 27, 1995, to choose 15
provincial governors and metropolitan mayors, 866 members of provincial and
metropolitan councils, 260 city mayors, country executives and municipal
district chiefs, and 4,304 members of lower-level local councils - for a total
of 5,445.
In line with the key goals of President Kim's
political reform, the enforcement of these new laws will enhance the ability of
Korean citizens from all walks of life to more fully participate in the
democratic political process.
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