An Outline of the Korean Model of Accumulation and Industrialization

Abstract

The Korean economy until the beginning of the 60s can be classified as a typical circulus vitiosus of the stagnating economy, with a very low GNP per capita and a low domestic savings ratio. But the situation has changed drastically since the onset of the first economic plan in 1962. Since then, Korea has experienced extraordinary economic progress, with almost 10 % GNP growth and 35 % export growth per year. The sources of this success can be identified with the typical characteristics of the so-called Korean Economic Model, which consists of government-guided economic policy, outward - looking growth strategy and unbalanced investment strategy in economic sectors, enterprise sizes and markets. These sources of economic success can at the same time be seen as the sources of the various economic distortions which have been observed since the end of the 70s. Many indicators show that Korea must reconsider the past economic model and revise concepts and strategies in order to cope with the various problems. One of the possibilities could be the transformation of the economic order from a guided to a self-regulating market economy.