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World Rank

Steel making (Posco):

6th

Shipbuilding (Hyundai Heavy Industry):

1st

Car manufacturing (Hyundai Motor):

5th

Consumer Electronics (Samsung, LG):

1st

Semiconductor (Samsung, Hynix):

1st

Industrial structure and employment structure in 1962


Industry Structure

43%

45%

Employment Structure

Primary

28%

Primary

Secondary
Tertiary

Secondary
9%

63%

12%

* based on GDP

Typical underdeveloped agricultural economy

Tertiary

Agricultural development or
Industrial development ?

<factors of consideration>
rapid absorption of unemployment(absolute poverty)
long-term sustainability

Industrialization

Disadvantages:
lack of domestic capital
narrow domestic market
scarcity of resources

Advantages:
abundant supply of labor(massive unemployment)
highly educated manpower(high rate of college enrollment)

Import substitution industrialization or


Export-led industrialization ?

<Factor of consideration>
domestic market or global market ?
capital intensive or labor intensive ?

Export-led industrialization

Aspect of comparative advantage


Low wage
Abundant labor supply

Aspect of foreign market environment


Trend of free trade under GATT
Low competition in global market

Inevitable aspects due to structural issues

Absorption of massive unemployment to ease absolute


poverty
Secure foreign exchange for purchasing raw materials
needed for development

Providing incentives

Tax benefits
Funding at low interest rate
Undervalued exchange rate

Securing technical labor force and technology

Promotion of vocational training


Institutionalization of science and technology development

Administrative support

Presidential Meeting for Export Promotion(monthly)


Establishment of KOTRA
Creation of TRADE SPECIAL ACCOUNT FUND

Industrial structure
1962

1972

43%

45%

27%

Primary
Secondary
Tertiary

Secondary

51%

Tertiary
22%

12%

Primary

Wage increase loss of competitive edge


Economic recession due to the 1st Oil Shock
Limits for sustainable growth

Transformation of Industrialization Strategy


Labor intensive light industries Capital intensive
heavy and chemical industries

The Presidents annual State of National Message in1973


Announcement of export target of $10 billion ($2 billion in
1973): advanced structure of trade
Achievement of income of $1,000($400 in 1973): realization
of advanced industrial structure for sustainable growth
Improvement of independent national defense capability

Designation of strategic industries (petrochemical, steel,


shipbuilding, machinery, electronics, nonferrous metals)
Creation of industrial estate(Ulsan, Pohang, Geoje, Changwon,
Gumi, Onsan)
Construction of infrastructure(road, railroad, harbor,
electricity, water)

Industrial structure
1972

2011
3%
27%

30%

Primary
Secondary

51%

Tertiary
22%

Primary
Secondary

67%

Tertiary

Trade structure
1972

2011
3%

40%

60%

Light

Light

Industry

Industry

Heavy

Heavy

Industry

Industry
97%

Securing labor forces needed for development


Improvement of education & technical training
Improvement of infrastructure
Active role of Government