Textbook Notes (369,133)
Canada (162,403)
POLI 243 (70)
Chapter 19

CHAPTER 19: SOUTH KOREA OPTS FOR EXPORT ORIENTED INDUSTRIALIZATION

3 Pages
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Department
Political Science
Course Code
POLI 243
Professor
Mark Brawley

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CHAPTER 19: SOUTH KOREA OPTS FOR EXPORT ORIENTED INDUSTRIALIZATION The Kennedy Round negotiations marked the real beginning of a wave of tariff reductions by GATT members. The lower tariffs, plus the resulting expansion of trade, created the systemic environment in which countries had enormous opportunities to exploit trade. South Korea’s Initial Trade and Industrialization Strategy: Import- Substitution Industrialization • ISI ensures that domestic manufactures make profit but hurts domestic consumers • ISI was supposed to be a temp. policy • The private business was not very well developed • The community was not powerful next to the state • ISI did set the foundation for success in South Koreas EOI policy Export Oriented Industrialization • With EOI, a country builds industrial plants for efficiency then produces international demand • EOI means entering a very competitive market system • Strategic Trade Policy à choosing what items are completely open for trade and what items do have some sort of protectionism • The strategy of EOI assumes free trade • The EOI strategy that South Korea adopted was not blanket liberalization The Shift to EOI • 1. Exchange rate policy was changed à single exchange rate • 2. Devalued currency à exports seemed cheaper • 3. The government enacted a set of domestic investment policies intended to adi the expansion of exports o invested in education and infrastructure o interest rates were raised • 4. Trade relations were liberalized- not completely à cheaper to produce than before • 5. A number of incentives were structured to entice businesses to engage in exporting o subsidizing o mix of EOI and ISI The Regional and System Level Forces Conducive to EOI • Systemic Level Factors: the expansion of opportunities to export • South Korea exported basic models of what Japan was producing à bird analogy • Neither
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