Nicolás Gómez R.: Module 7: East Asia (Summary)

In the module referring to East Asia, we focused on the Korean case, the so called “Korean miracle”. It adopted this name due to the accelerated growth in economy that this Asian country lived during the XX century. We must start by knowing that Korea liberated from Japan only in 1945 and finally created a government in 1948. The main growth took place between 1960 and 1990. Nevertheless the Japanese influence on Korea during all the colonial period is one of the factors that marked the Korean success.

Korea developed an export-led growth strategy, which main objective was to develop the industry in order to increase the level of exportations. This way Korea started the transition from an agricultural based economy to an industrial developed one and their products (such as manufactures) started to be known around the world.

A very important concept that we are going to study are the Chaebols. They are powerful global multinationals conglomerates owning numerous international enterprises. The Korean word means "business family" or "monopoly". Chaebols had a great impact in economy growth and granted the access to new technology.

After the departure of the Japanese in 1945, some Korean businessmen obtained the assets of some of the Japanese firms, a number of which grew into the chaebol of the 1990s. Government industrial policy set the direction of new investment, and the chaebol were to be guaranteed loans from the banking sector. In this way, the chaebol played a key role in developing new industries, markets, and export production.

Government-chaebol cooperation was essential to the subsequent economic growth and astounding successes that began in the early 1960s. Driven by the urgent need to turn the economy away from consumer goods and light industries toward heavy, chemical, and import-substitution industries, political leaders and government relied on the ideas and cooperation of the chaebol leaders. The government provided the blueprints for industrial expansion; the chaebol realized the plans. However, the chaebol-led industrialization accelerated the monopolistic and oligopolistic concentration of capital and economically profitable activities in the hands of a limited number of conglomerates.

The tremendous growth that the chaebol experienced, beginning in the early 1960s, was closely tied to the expansion of South Korean exports. Growth resulted from the production of a diversity of goods rather than just one or two products. Innovation and the willingness to develop new product lines were critical. In the 1950s and early 1960s, chaebol concentrated on wigs and textiles; by the mid-1970s and 1980s, heavy, defense, and chemical industries had become predominant. While these activities were important in the early 1990s, real growth was occurring in the electronics and high-technology industries. Some of the most known Chaebols nowadays are LG, Hyundai and Samsung.