Example research essay topic: Analysing The Growth Of Korean And Japanese Economy – 1,408 words

South Korea (henceforth referred to as Korea) is
being looked upon as the role model by different
countries for their economic development. Korean
history and culture, state intervention, policy
reforms, and Chaebols have been the corner stones
for Koreas success. As B N. Song (1990) describes
The way the Korean economy has grown, and the way
the Korean people have shared the fruits of
economic growth, have been greatly influenced by
Koreas history and culture. Korea was among the
very poorest countries in the world, the out come
of the Korean War was devastating. Recovery of the
country started in early 1950s, with extensive
support and assistance from United States.
According to B N.

Song The period from 1953 to
1961 was one of very slow recovery from the warthe
trend curve changed abruptly, however with the
beginning of first five year plan in
1962.Thereafter, Koreas climb up the ladder of
development acceleratedby 1970 Korea had achieved
NIC (Newly Industrialising country) status. In
Korea the Chaebols and the State, played an
important role in initiating development. With the
start of the first five-year plan, The Korean
economy entered the take off stage. as, described
by W W. Rostow (1983). The development policy
chosen by many developing countries is inward
looking rather than outward looking because they
believe it to be safe and correct.

But it was the
boldness of Korea to choose an outward looking
growth strategy, which paved the path to its
success. B N. Song describes Koreas growth
strategy as It is growth oriented than equity
orientedKoreas strategy has been industry oriented
rather than resource or service oriented Koreas
approach has been outward looking rather than
inward looking. The economic growth started with
the rapid industrialisation of export industries.
According to C B. Hollis and M Syrquin (1977) The
expansion of exports has been almost forced by the
government, export industries and the economy as a
whole were run by the government, in many cases
beyond normal capacity. The officials in Ministry
of Trade and Industry assigned export targets to
Korean firms.

Firms which met the export goals
were rewarded by numerous benefits reserved for
exporters, like preferential credit and loans,
administrative support and other benefits like tax
reduction. On the other hand firms that could not
meet the export target risked themselves with
heavy administrative sanctions from the
government. Therefore the business strategy of the
firms was to increase exports along with profit
making. The exports increased rapidly, due to
various reforms in trade and economic policies.
According to B N. Song When the first five year
economic plan (1962-6) began, the total value of
Korean exports amounted to only US $ 55 million,
but by 1988 this had increased to US $ 55 billion.
The other strategy of the government was to
promote few firms rather than developing every
field and promoting overall business, therefore a
few large business conglomerates emerged. These
firms were in direct link with the government and
followed the states action plan.

To regulate these
growth strategies the state used various policy
reforms. One of the important tools to guide the
private enterprise was the control of banks by the
government. It exercised control on the amount
borrowed, interest rates and loan terms. Tax
structure and administration was the second
important tool in the hands of the government.
According to B N. Song Firms were exempted from
indirect taxes on income earned from export
salesAdministrative support for the business also
served as an effective supplemental policy
instrument. The government developed export
industrial estates and provided help for building
a plant in every provincial capital.

(GTC) was
established by ministry of trade and industry in
1975 to speed up export expansion. A unified
exchange rate system was introduced, to boost the
growth of export industries. The state was not
always supportive, as B N. Song describes sticks
or threat systems, such as tax inspections,
withdrawal of financial support and legal
punishment to enforce policies were used. However
Korean firms lacked business expertise and they
succeeded, just because of government support. The
state launched HCI programme to develop heavy and
chemical industries, the performance of these
industries was spectacular, which contributed
substantially towards the GNP.

H J. Chang (1993)
suggests that The HCI programme, far from being a
failure, produced impressive growth and trade
performance, especially in the heavy industries.
Under this programme the Korean ship building
industry grew up to be the worlds second largest
ship building industry. The Korean economy has
been able to succeed with the state intervention
because, the state received extensive support from
the Chaebols, also as H J. Chang describes The
Korean state played a central role in the countrys
economic development through its cunning use of
state created rents as an instrument for
industrial development. Of course such a result
was only possible because the Korean state was a
strong state which could discipline firms. The
reforms and policies changed with every five-year
plans, the state designed steady growth strategies
to reach a developed economy stage.

According to B
N. Song Koreas per capita income rose, above US $
2000(1980 prices) in 1985, there by passing Arthur
Lewiss threshold between development economies and
developed economies. The state had excessive
control over the economic activities, and as it
was the only decision maker in the strategic
development of the country, a small mistake would
have proved to be fatal. In the development of
exports, the state forgot the overall development
of the economy. Korean banks have also faced the
problem of getting bankrupt because of they lacked
commercial expertise and they were used as mere
tools to implement governments financial policies.
According to B N. Song The premature over
expansion of heavy and maritime industries by the
government on the eve of second oil crises
resulted in a heavy loss for the banks, which has
been forced by the government to provide these
industries with tremendous loans.

W W. Rostow
predicted Korea will become an advanced country
shortly before the year 2000. But to everybodys
surprise Korea is in severe economic crises. The
Korean growth strategy is derived from the
Japanese model, however some distinctive factors
make Japanese economy the worlds second largest
market economy.- As quoted by Ministry of Foreign
affairs, Japan (2001). This very reason makes me
compare Korean economy with the Japanese economy,
but before that we need to have a brief insight on
the development of Japanese economy. The Japanese
economy started with state capitalism, first long
term (ten year) development plan was started in
1884, since then Japan was on the threshold of
acquiring western technology, and gaining access
in the modern economic world.

Japan suffered heavy
devastation during World War II; the nation’s
economy was almost dead from wartime destruction.
In the beginning of 1952 the main focus of the
government was to increase coal and steel output.
Increase in the production of steel laid the
foundation for growth of the economy. According to
Ministry of Foreign affairs, Japan Japan averaged
an annual growth rate of 8%, enabling it to become
the first country to move from “Less-developed” to
“developed” status in the post-war era… The
reasons for this include high rates of both
personal savings and private-sector facilities
investment, a labour force with a strong work
ethic, an ample supply of cheap oil, innovative
technology, and effective government intervention
in private-sector industries. In the year 1973
Japan faced recession due to the oil crises, in
1979 Japan was exposed to second oil crises. This
forced the government to change its strategies on
development of heavy industries towards
development of technology industries. In 1970s and
1980s exports played an important role in the
economic growth, however increasing balance of
payments made Japan to concentrate on domestic
markets to achieve economic growth.

Japanese
economy was facing a downfall in the late 1980s.
The value of yen and land prices dropped abruptly,
this was known as the bubble economy. The
recession continued until mid 1990s.In 1997 the
Asian crises worsened the recession. Government
initiated various reforms to fix this problem,
according to Ministry of Foreign affairs, Japan.
In 1998 the government established a 60 trillion
yen funding framework to provide the public funds
necessary to promote economic recovery. The
economy started recovering in early 2000, stock
prices increased and there was an increasing
demand for Japanese products due rapid growth in
information -technology business. Korean and
Japanese economies have similarity in their
approach, but disparity in there reforms. The
development strategies and the way they have grown
are almost astonishing.

According to B N. Song For
most ….

Research essay sample on Analysing The Growth Of Korean And Japanese Economy