Globalization Case Study: South Korea

Assignment 1: Globalization Case Study: South Korea

1. “Prior to 1960, South Korea was an impoverished nation, and today, it is one of the major NICs (Newly industrialized Countries) with annual GDP of well over 9% and rank as 14th largest economy in the world”. What role do you think globalization played in determining the success of the country?

South Korea stands out as an example of how participation in the globalization can propel a country from poverty to being one of the most successful in the world. Before 1960, the country did not have proper and sufficient infrastructures, and they were poor in natural resources. But now it is well known for its rapid economic growth because of its centrally planned and trade oriented economic policies. Globalization has allowed the country to get involved in most of the world’s important trade blocs and agreements such as APEC . Globalization followed by strong export emphasis since the 1960’s ,high-quality labor supply, vigilant government planning, emphasis upon more skill-intensive, high-quality industries such as the motor vehicle industry and electronics manufacturers are the major factors that has driven South Korea’s growth. Developing industrial capabilities and a strong manufactured exports base became South Koreas predominant objective.

Hence, at present the country has the sixth largest motor vehicle industry in the world, and is now also the fourth largest manufacturer of electronics goods. For example: Hyundai Motor Co. affiliated to Kia Motors, business conglomerates such as LG, Daewoo, Samsung, and Hyundai. In addition to it, the rise of trade liberalization has also provided incentive for these businesses to become global and establish foreign subsidiaries. Globalization has incorporated open market trade, financial transfers and technological advancements resulting into rapid industrialization, extensive policy mix, five year FDI plans to promote economic improvements, government deregulation, and reduction of tariff in the nation.

1. Despite having limited natural resource, South Korea was able to benefit a lot from international trade, what lesson should country like Nepal learn from this case?

South Korea is one of Asia's fast-growing economies, which metamorphosed into a vibrant manufacturing powerhouse from an under-developed third-world nation, thus, becoming one of the Newly Industrialized Countries (NICs). Nepal can learn the following lessons from South Korea:

1. Policies that emphasize on increasing exports especially the ones which brings both the production and cost advantage to the nation. Industry policies favoring the nation should be drafted and implemented. South Korea focused on producing products that were its strengths (electronic goods and motor vehicle industries) and exported the same through comparative advantage.
2. Government should plan in developing infrastructures within the country like the skilled human resources, physical infrastructures, proper health and education system from a systematic allocation of national budget or attractive FDIs .
3. South Korea is known as the shrimp among the whales because it is squeezed among three titans: China, Japan and Russia. Yet it has been outperforming its neighbors in qualitative terms. Nepal can also find itself in a similar geographic setting. While such geographical setting confers great challenges, it also provides potential trade options such as relaxed trade restrictions.
4. Development activities should be systematically distributed throughout the country in order to have a balanced growth along with appropriate transfer of foreign technologies.
5. Self-sufficient sectors such as hydropower, Tourism, Woolen industries, Tea and Herbal medicines should be identified and worked upon.

1. What kind of foreign/domestic policies should government of Nepal adopts to take maximum benefits from globalized economic system and international trade?

Nepal could adopt the following policies:

1. Policies concerning the infrastructure development especially through the FDI.
2. Relaxed Trade Policies with the neighboring countries.
3. National policies for the development of self-sustainable sectors.
4.  National Policies to train and retain the skilled labor forces within the country.

http://www.keia.org/publication/payoff-south-korea-globalization

http://www.koreatimes.co.kr/www/news/biz/2013/05/348_91475.html

http://www.americasquarterly.org/rodrik