South Korea and Argentina

Contributions of Alternative Approaches

to Development
Presented By:
Anjandeep Kaur (440)
Darpan Bajaj ( )
Neha Rai (292)
Kanwarpreet Sangha ( )
Pandya Ashish Yogesh Bhai ( )
Ravi Vijay Gupta ( )
Rishab ( )
Pre-Crisis
South Korea Argentina
• Exponential growth from 1960s to • Rapid economic stability from 1860-
1980s. 1930.
• Huge debt acquired during National
• South Korea's GDP expanded by an
Reorganization Process(1976-1983)
average of more than 8 percent per
• Creation of a new currency  Austral in
year.
1983, for which new loans were
• They adopted outward-looking required.
strategy in the early 1960s.
• Hyperinflation: in the year 1989
• 4 Main industry which contributed to inflation reached 200%
the growth were: • In 1991 Argentinean peso was legally
– Shipping pegged to the dollar, on a one-to-one
– Automobile basis.
– Construction • Argentina's foreign investment and
– Armaments
exports dried up
During Crisis
South Korea
• The Korean Won started to heavily
depreciate in October 1997.
• Non-performing loans at many of
Korea's merchant banks.
• By December 1997, the IMF had
approved a USD $21 billion loan.
• Throughout 1998, Korea's economy
would continue to shrink quarterly at
an average rate of -6.65%.
• Korean chaebol Daewoo became a
casualty of the crisis as it was
dismantled by the government in
1999 due to debt problems.
Argentina
• Huge flight of money from the country
• Froze all the banks in the year 2001,
limiting withdrawals to $1,000 a month.
• State of emergency declared
precipitating the violent protests.
• In 2001 Government defaulted on the
larger part of the public debt, totaling
$132 billion.
• GDP fell by a record 16 percent in the
first quarter of 2002 .
• Proportion of the Argentinean
population living below the poverty line
increased to 57%
Post-Crisis
South Korea
• By the first quarter of 1999, GDP
growth had risen to 5.4%, and strong
growth there after combined with
deflationary pressure on the currency
lead to a yearly growth of 10.5%.
• Foreign investment and export played
an important role in boosting growth
which later on declined.
• other fields.
Growth moderated to about 4-5%
annually between 2003 and 2007.
• Due to export growth, low interest
rates, and an expansionary fiscal
policy has not affected much in 2008
crisis.
Argentina
• The devalued peso made Argentine
exports cheap and competitive abroad,
while discouraging imports.
• The government encouraged import
substitution and accessible credit for
businesses.
• aggressive plan to
improve tax collection setting aside
large amounts of money for social
welfare while controlling expenditure in
• By December 2005, foreign currency
reserves had reached $28 billion
• The exchange rate had been stabilized
near a reference value of 3 pesos to the
dollar.
• The GDP jumped 8.8% in 2003, 9.0% in
2004, 9.2% in 2005, 8.5% in 2006 8.7%
in 2007, 5%in 2008 & -2.5% in 2009
PESTLE – South Korea
POLITICAL ECONOMICAL SOCIAL
• Government involvement • USD $21 billion loan. • Family run business
in chaebol. • Export oriented country environment.
• Continuous intervention dependent on USA and • High level of corruption.
by the govt. in banking other countries. • Large labour force.
sector.
• Unstable political
environment.
TECHNOLOGICAL LEGAL ENVIRONMENTAL
• Low Quality Image • Government control • Climate of Korean
• R&D expenditure kept • Forced conditionalities company was secrecy.
increasing. laid down by IMF. • Lack of transparency in
regulatory system.
PESTLE – Argentina
POLITICAL
• Argentine governance
fluctuated between civilian and
military rule.
•Highly unstable until 2002.
Now a politically stable
democratic state.
•Economic and political crisis
of 2001
TECHNOLOGICAL
• Significant technology gap
with leading economies
•private sector investments in
R&D are low
•Hampered by a low number of
researchers holding advanced
university degrees
ECONOMICAL
• High level of unemployment
•Since 2002, the country has
embarked on a path of gradual
economic recovery
•Unresolved and pressing
issues of inflation and energy
shortage
LEGAL
•Mixture of US and West
European legal systems; has
not accepted compulsory ICJ
jurisdiction
•The current government
generally has a good track
record on human rights.
SOCIAL
• High level of corruption
•State of emergency declared
in 2001, leading to protests and
intense rioting.
•Enormous regional disparities.
ENVIRONMENTAL
• Staunch commitment to
limited government regulation
and corruption during 1990’s
•Wide gap between those
sectors linked to transnational
financial sectors and the rest of
the economy.
Future
South Korea Argentina
• Low birth rate and aging population. • Economic indicators in Argentina point
• Erosion of tax base. to a severe downturn.
• • Argentina has experienced an increase
Hindrance to the security of the
in capital flight since mid-2007,
nation.
totaling $26 billion till 2009.
• Low productivity.
• The country has experienced a severe
decline in the volume of imports
• Severe contraction in investment in the
manufacturing and production sectors
• Real wages in both the public and
private sectors have increased by 2.1%
Recommendation
South Korea
• There should be transparency and less
secrecy to increase the profitability.
• Market discipline should be there for
financial institutions.
• Reduce government control in foreign
exchange market.
Argentina
• Fiscal improvement is needed
• Negotiate wage policies with unions,
and reduces its public expenditure
• Reform agenda would help Argentina
demonstrate transparency and strong
fiscal policies
• A depreciation of the peso may help
Thank You