A Comparison of the Economic Development of the Republic of Korea and the Philippines

Dec 03, 2011 Justin Lee Yongwook

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Introduction

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Similar historical experiences

S.K. was colonized by Japan (1910-

1945)
PHP were colonized by the U.S.

(1898-1945)

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Similar historical experiences

Korean war broke out (1950) Huk rebellion

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Similar historical experiences

Martial Law
Korea ; 1961-1980 (Park Junghee) Philippines ; 1972-1981 (Ferdinand

Marcos)

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Similar historical experiences

HIGH DEGREES OF

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Despite of these parallel experiences

SOUTH KOREA WAS ABLE TO INDUSTRIALIZE

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Real GDP per Capita

Real GDP per Capita in Selected Countries, 1950,1975, and 2000(Unit: US Dollars). Source: IMF, World Econom5/5/12 ic Outlook Database. Indirectly quoted after Balisacan.

Cleary, there are other factors that caused the stagnation of Philippine industries, which the lessons of South Korea can provide.
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Six Factors to Consider in Understanding the Philippine Industrial Debacle By Peter

The role of the State
LIMQUECO

Economic policy anchored on

State planning
The cultural factor The role of small and medium

enterprises
Education, research and devel5/5/12

opment (R&D)

The Miracle of the Han-River

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The Role of the State

The state nationalized all the bank, Granted investment priorities to

manufacturing and export-oriented industries, geted for development,

Channeled capital into industries tarGave exclusive licensing and tax privi-

leges to exporters,
Modernized agriculture and,
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The Role of the State

The state provided significant amount of loans to conglomerates called CHAEBOLS, who pursued government industrial projects and investment priorities.
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Economic policy anchored on State planning

5 year-Development Plans(1960-

1996)
Import-substituting to Export-ori-

ented economy Chemical, automobiles, shipbuilding, machine tools, and electronics.

Korea-Japan Normalization Treaty

(1965)

Direct 5/5/12

grant of $300 million + loans

Economic policy anchored on State planning

The Vietnam War (19650-1973);

300,000troops
$1 billion in American payments

went to Korea
The U.S. agreed to modernize the

ROK forces in South Korea itself.

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Economic policy anchored on State planning

Trade volume Per capita income 1962 $477 million $62 1995 $260billion $11,360

Export Growth 1971-1982 33%

GDP Growth 20%

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Economic policy anchored on State planning

The Share of MNC investment in

South Korea as a proportion of GDP is insignificant and even lower than that of the Philippines.
19841989 19901994
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Foreign Direct In- Percentage of vestment GDP 1.4% 0.28% 0.7%

The cultural factor

The role of Nationalism and Confu-

cianism.
Nationalism was used by the author-

itarian State by equating economic objectives with national aspirations.

Confucianism was used to discipline

labor

While Nationalism served as the

foundation of Koreans commitment to 5/5/12 industrial labor,

The role of small and medium enterprises.

Technology driven needs-market strategy
65% U.S. Camping tents 40% U.S. Motorcycle helmet

Jinwoong Hongjin Crown

Daeryung Precision

25% Global Satellite video receiver

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Education, research and development(R&D)

Rising the educational level of the

population allows firms to introduce technically-advanced and efficient capital equipment and production techniques.
A key factor in the sustained high

growth of the Korean economy is the combination of high quality education and adequate public spending. cation in 1980 compare with 1.7%

Korea spent 3.7 % of its GDP for edu5/5/12

Role of labor
As late as 1996, Korean workers worked the longest hours per week and got paid the least.
Korean France Germany United State 42.4 hrs 41.6 hrs

48.4 hrs 37.4 hrs

US$8.22 US$26.50 US$30.26 US$17.70

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Conclusion
Should we emulate the Korean We have to be original, creative We have experience? different historical WeWe have differentown We most of all be resources must develop our and have different imaginative. development. and weaknesses. strategy. culture.

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Conclusion
Should we emulate the Korean experience? We must develop our own strategy. We have different historical development, we have different culture, and we have different resources and weaknesses.

We have to be original, creative and most of all be imaginative.

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