Intro: according to American magazine, Foreign policy 2009, Korea is ranked as 29
of Globalization Index. And on another globalization index by kof, Korea ranked to 59
thisarticle shows that korea is not so globalized as other developed countries. However, whatdoes it practically mean? In order to understand this, it is important to pre-comprehendeconomic history of korea in that it has unique cultural, historical and geographicalbackground. And then based on this, checking the globalization index of Koreaneconomy, we will figure it out korea’s economic trade is consistent with trade theory.
1.Korea : Economical History since 1950.
*1950s: right after Korean war
After the Korean War, Korean government get aid from the united states during 1950s tobuild an infrastructure that included a nationwide network of primary and secondaryschools, modern roads, and a modern communications network. The result was that by1961, South Korea had a well-educated young work force and a modern infrastructurethat provided a solid foundation for economic growth. South Korea signed in 1965 to Treaty on Basic Relations between Japan and the Republic of Korea. Hereby, South Koreareceived $800 million in grants and soft loans from Japan. The South Korea governmentspent most of its money establishing social infrastructures and corporation, investingsocial fundamental industry : POSCO(still mill), Gyeongbu Expressway and the SoyangRiver Dam.
*Rapid growth from 1960s to 1980s
As we can check with diagram, South Korea's real GDP expanded by an average of around 8.7% per year, which is from US$30.3 billion in 1960 to US$340.7 billion in 1989.GDP per capita grew from US$1,226 in 1960 to US$8,027 in 1989. this rapid growth ismainly due to adapting of an "outward-looking strategy" in 1960s. As south korea hadpoor natural resource condition, high-savings rate, and small- domestic market, it hasbeen a good strategy for korea and worked in efficiency.this strategy mainly focused on labor-intensive manufactured exports ,which had leadkorean economic growth during 1960s-1970s, which was because south korea could havea competitive advantage. During this rapid growth, Korea government has playedimportant role to support its industry. The inflow of foreign capital was greatlyencouraged to supplement the shortage of domestic savings. These efforts enabledSouth Korea to achieve rapid growth in exports and subsequent increases in income.In the early 1980s, in order to control inflation, a conservative monetary policy and tightfiscal measures were adopted. Growth of the money supply was reduced from the 30