Introduction
South Korea is one of the fastest growing economies in the world and especially in Asia. Today, South Korea is among those countries with a middle-level economy. This significant growth began in the mid 1970s after the realization of the need to create a strong industrial base (Horikane 390).
Although various factors have facilitated this trendy growth and success in the general export portfolio, few factors remain critical. Firstly, the eminent and significant political will demonstrated during the early 1970s acted as an impetus in redefining the political scenario capable of harnessing from the then existing potentials. During this momentum, South Korea felt threatened about its political sovereignty and as such, the need for the creation of international relations acted in its favor (Horikane 390).
Discussion
During the early 1960s, export promotions became the fundamental objective of the Korean government. Subsequently, to improve the quality of international balance of payments, the government mobilized every policy agenda that could boost the nature of its exports. According to Horikane (2005), the government pursued these policy measures with extensive patriotism through the application of orthodox tax system, credit breaks and incentives (309).
Relying on these impetuses, the Korean exports received much promotion thus recording phenomenal growth. According to Economic Planning Board (EPB), the country registered an annual export value of about $55 million in 1962 Horikane (2005).
Although studies reveal no strict relationship between the Korean exports and the growth of GNP, records indicate that the ever-growing annual export rate of about 23% came with an average annual per capita income of 6.4% during the period of 1965-87 (Krueger 108).
The faster growth in the general export in the Asian countries gains from the underlying lack of restrictions that prevailed within the export regimes. This support proved as a formidable strategy in South Korea in which exporters were exempt from export restrictions necessary for the promotion of exports. Therefore, the government interventions implied an outright assurance of the profiting period (Krueger 108).
Contrary to the export strategies adopted by South Korea and other Sian countries, countries that exhibited quantitative controls over the importation with slow potential growth lagged behind in terms of the value of their exports and the resultant growth in the Gross National product (GNP). Increased GNP is an assurance for the increase in the overall per capita income since GNP is a function of Per Capita Income.
As GNP increases, while assuming constancy or slow growth in population, the resultant per capita income continues to grow significantly. This scenario explains why South Korea has registered a successful growth in its export portfolios on an international scale (Westpha 41).
For a successful production process, skilled labor must be present in order to yield possible results. During this growth, South Korea benefited from the existing and skilled labor force, which necessitated the growth of domestic production to serve the expanded foreign export markets (Krueger 109).
Conclusion
Although the strategies adopted had no express capacity to fuel continued export growth, it is worth noting that the base created by this momentum modeled a self-fulfilling trend. In this case, any policy that could sabotage the growth of exports had little or no influence based on the strengths gained from the initial phases. In essence, the political will coupled with proper harmonization of economic and human resources may account for the phenomenal growth experienced by South Korea as demonstrated by its growth in GNP and annual per capita income.
Works Cited
Horikane, Yumi. “The Political Economy of Heavy Industrialization: The Heavy and Chemical Industry (HCI) Push in South Korea in the 1970s.” Modern Asian Studies 39.2 (2005): 369–397.
Krueger, Anne. “Asian Trade and Growth Lessons.” The American Economic Review 80.2 (1990): 108-112.
Westpha, Larry E. “Industrial Policy in an Export- Propelled Economy: Lessons from South Korea’s Experience”. The Journal of Economic Perspective 4.3 (1990): 41-59.