THE
Introduction and Policy Recommendations
To learn more about MIEPA, click here
Several foreign born students living in California have completed a study of their home country governments' economic policies as compared to the MIEPA list of policies as outlined above. The study on Korea is shown below. The ratings herein are based on the following rating scale:
RATING SCALE
5.0 Perfect Facilitation of Wealth Creation
4.0 Midway between Perfect and Neutral
3.0 Neutral Effect on Wealth Creation
2.0 Midway between Neutral and Obstructionist
1.0 Perfectly Obstructionist to Wealth Creation
[Rating scale copyright Mike P. McKeever, 2009. Used herein with permission]
To read a disclaimer about the analysis in this file, scroll to the bottom of the file.
KOREA:
Comparison of Korean economic policies to MIEPA criteria as prepared by native student of Korea, David Kim, studying in San Francisco in Spring, 2009.
RATING SUMMARY
POLICY NUMBER RAW SCORE ADJUSTED SCORE POSSIBLE PERCENTAGE
1 5.0 15.0 15.0 100%
2 4.5 13.5 15.0 90
3 5.0 15.0 15.0 100
4 5.0 15.0 15.0 100
5 5.0 15.0 15.0 100
6 5.0 15.0 15.0 100
7 5.0 15.0 15.0 100
8 4.0 12.0 15.0 80
9 3.5 10.5 15.0 70
10 4.5 13.5 15.0 90
11 4.5 13.5 15.0 90
12 5.0 15.0 15.0 100
13 5.0 10.0 10.0 100
14 5.0 10.0 10.0 100
15 5.0 10.0 10.0 100
16 4.0 8.0 10.0 80
17 3.5 7.0 10.0 70
18 5.0 10.0 10.0 100
19 5.0 10.0 10.0 100
20 3.5 7.0 10.0 70
21 4.0 8.0 10.0 80
22 5.0 10.0 10.0 100
23 4.5 9.0 10.0 90
24 3.5 7.0 10.0 70
25 4.5 9.0 10.0 90
26 4.5 9.0 10.0 90
27 4.0 8.0 10.0 80
28 4.5 9.0 10.0 90
29 4.5 4.5 5.0 90
30 4.5 4.5 5.0 90
31 4.5 4.5 5.0 90
32 3.5 3.5 5.0 70
33 5.0 5.0 5.0 100
34 5.0 5.0 5.0 100
TOTAL 153.5 336.0 375.0 89.6%
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INDIVIDUAL POLICIES
1. Freedom from Internal Control: 5.0
Korea is a nation built upon its citizens' abilities to be entrepreneurs. This traditional disposition is still relevant and practiced today. It is evidenced by the ease in conceptualizing and operating a business, with strong support from the government and financial sector. This can readily be seen in the quantity of small businesses which blanket the country. As a result, a very competitive marketplace is created with government regulating only to protect the general population from harm.
Heritage Foundation http://www.heritage.org/Index/Country/southkorea UNHCR http://www.unhcr.org/cgi-bin/texis/vtx/refworld/rwmain?page=search&docid=3ae6a7d60&skip=0&query=south%20korea
2. Freedom of Speech: 4.5
With the advent and rapid expansion of information technology in Korea, the effects of free speech results in a multiplied effect on information dispersal. Not in regards to its merit, the Korean government has increasingly regulated material that is deemed illegal or harmful to citizens. This has resulted in world wide web site omissions to prosecution. In a differing example, Koreans have been well known to often publicly gather and protest issues within the government and business environment. This method of speech is highly tolerated; even though most protests are peaceful, some protests end violently. Regardless, it never results in the illegalizing of public protest.
Privacy International http://www.privacyinternational.org/article.shtml?cmd%5B347%5D=x-347-103782 Law Library of Congress http://www.loc.gov/lawweb/servlet/lloc_news?disp1_801_South%20Korea
3. Effective, Fair Police Force: 5.0
During the intermission of post-Korean War and modern day Korea, the Korean National Police was used politically to such an extent that mistrust of the single policing force in the country was common. Currently, the police force has evolved through trust encouraging actions, to resulting an organization which receives appreciation from its citizens. As the Korean National Police was raised to ministerial level, the realm of its responsibilities also expanded. The Korean National Police now enforce rule in intellectual and cyber crime in addition to the traditional white-collar, violent, public disorder and property crimes. The current National Police has become technologically advanced relative to its predecessors to maintain order and legality within the ever-growing high-tech sector which constitutes much of modern day white collar business.
Within traditional crimes, such as homicide, Korea maintains a low rate relative to the United States. The past decade has revealed that the level of homicide is double the level in Korea per capita.
Korean National Police http://www.police.go.kr/pictorial/pictorial.pdf Crime and Society, A Comparative Criminology Tour of the World http://www-rohan.sdsu.edu/faculty/rwinslow/asia_pacific/south_korea.html Crime at a Glance http://ataglance.wordpress.com/2006/12/24/murder-rate-in-south-korea-1990-2005/ FBI Uniform Crime Reports http://www.fbi.gov/ucr/ucr.htm#cius
4. Private Property: 5.0
Real property is protected by the national government to be secure and fully owned when obtained legally. This protects citizens' rights to their property from businesses, government and influential individuals who wish to obtain the property through unrighteous methods. Property is clearly protected through a court backed titling system, overseen by the Korean Property Court system. Regulations on private property are stipulated in the Korean Commercial Code, which form the rules of economic activities. Utilizing the Korean Commercial Code, the domestic courts are able to enforce set rules which guide the nation's commerce.
Heritage Foundation http://www.heritage.org/index/country/southkorea Constitutional Court, Korea http://www.ccourt.go.kr/home/english/introduction/pdf/08.pdf Korea Law http://www.korealaw.com/node/16
5. Commercial Banks: 5.0
Korean banks have traditionally practiced lending methods utilizing the idea that credit is readily available to suitable borrowers, taking into consideration generally sound banking practices. The ease in credit availability is evident as an incentive for individuals to become entrepeneurs or take part in the financial sector. However, after the current global financial situation, lending has slowed; but this can only be expected of precautious insitutions.
World Bank, IFC http://www.doingbusiness.org/ExploreEconomies/?economyid=104 China View http://news.xinhuanet.com/english/2009-02/27/content_10911547.htm
6. Communication Systems: 5.0
Technology has been used as the main platform for Korea's economic growth. Currently leading the world in information and communication technology, Korea continues to provide evolving products which increase the speedy transit of knowledge. Korea gained its largest single modernization with the construction of the world's largest and most complex internet network, including next generation broadband. The success of Korean mobile phones in the international market may be due to the overwhelming demand for mobile products and services domestically. This advent of leading technology has substantially influenced the future of all communication and information products globally.
Economic and Social Research Insititute http://www.esri.go.jp/jp/prj/seminar/seminar058b.pdf Korea.net http://www.korea.net/news/News/NewsView.asp?serial_no=20080327012&part=107&SearchDay= Korea.net http://www.korea.net/korea/kor_loca.asp?code=R04
7. Transportation: 5.0
The majority of domestic trade uses ground transportation, utilizing the intricate highway systems initially built through public works project. Korea's geographical location as country surrounded mostly by water nearly predicts the nation's current standing as one of the world's foremost ship manufacturers. In addition, following in path of modern commerce, Korea has constanly expanded its aviation structure to accomodate increased air traffic of goods and travelers. However, the form of transportation most used by the majority of Koreans is the rail system. This is to include the highspeed KTX system, metropolitan subway systems and the still effective common rail system. Within these three rail methods millions of Korean commuters and travelers reach there destinations in a timely manner that rivals the French, Swiss and Japanese.
New World Encyclopedia http://www.newworldencyclopedia.org/entry/Transportation_in_South_Korea Asianinfo http://www.asianinfo.org/asianinfo/korea/pro-transportation.htm
8. Education: 4.0
Within Asian communities, the prowess of the Korean educational system is well known. Following the government leaderships' realization of education's unique future role in the nation, schools have swelled to high capacity levels to accomodate large student age populations. The current issue being addressed is the educational systems ability to provide the most effective education rather than simply the most education overall. A main argument against the current system is the usage of a knowledge banking method, which only instructs students on how to achieve the correct answers rather than encouraging knowledge through creative thought. With these issues being addressed, the level of education in Korea maintains a relatively high knowledge base which drives the economy.
Life in Korea, Education http://www.lifeinkorea.com/Information/education.cfm Ministry of Education, Overview http://english.mest.go.kr/main.jsp?idx=0401010101
9. Social Mobility: 3.5
Despite the ability education offers citizens in achieving a better standard of living, the most highest levels of business and politics are generally reserved by interconnected persons. This concludes that while the pursuit of personal betterment is not without merit, rising to the highest eccolades of any system is usually predetermined by extensive family, political or business ties.
International Education Media http://www.internationaleducationmedia.com/korea/ Applet-Magic, Thayer Watkins http://www.sjsu.edu/faculty/watkins/chaebol.htm PRLog http://www.prlog.org/10035303-politics-determine-occupational-opportunity-and-social-mobility-in-east-asia.html
10. Freedom from Outside Control: 4.5
Korea is especially wary of external control without domestic input. It is because of this societal norm Korea remains a nation eager to be governed only by it's government. However, an exception to this case is the ability of foreign courts to put forth an order on Korean courts if the foreign government is in an agreed upon alliance with the Korean government. These actions are also effective in reverse to foreign governments. This aside, Korea is firmly set in its beliefs on singular, self-government.
Encyclopedia, The Economist http://www.encyclopedia.com/doc/1G1-15172660.html The Law Society http://international.lawsociety.org.uk/node/5747 Korea Law http://www.korealaw.com/node/37
11. Foreign Currency Transactions: 4.5
Regardless of Korea's position as a hub of international business, within Korean borders financial transactions must use the Korean Won. This may result from the relative unease in conversion and the constant differentiation in domestic and international currency value. In modern business there are examples of negotiations made using foreign currency, this however is generally in use of foreign currency held in reserves domestically or as assets. Regardless, within the market only the Korean Won maintains usage.
Bank of Korea Extract http://www.bok.or.kr/broadcast.action?menuNaviId=779 HSBC Premier http://www.hsbc.co.kr/1/2/hsbcpremier/worldwide-assistance/banking-and-investing-korea
12. Border Control: 5.0
The Korean border has minutely reduced in tension regarding military attacks since the Korean War. This may be in part because of the extensively heightened technological advantages use in modern day. These same technologies aid the Korean Customs Services in maintaining a very controlled border along its extensive coastlines. Internationally, Korea remains at the forefront of controlling intellectual property traffic; this is certainly the case with incoming anti-copyright agreement material and outgoing technology information. These regulations are merely expansions on Korea's existing regulations enforcing the historically important maritime and trading activites.
Migration Policy Institute http://www.migrationinformation.org/Profiles/display.cfm?id=272 Sybase http://www.sybase.com/detail?id=1045450
13. Currency: 5.0
In terms of Korean currency, only notes supplied by the Bank of Korea are accepted and given monetary authority. Since its inception, the Bank of Korea has regularly changed the the form of physical currency. However, it remains that older forms no longer produced by the Bank are still acceptable in regular use. The unified use of currency from a single source has not facilitated any confusion in business or any other monetary transaction
Bank of Korea, Currency in Circulation http://bok.or.kr/broadcast.action?menuNaviId=774 Bank of Korea, Article 47 http://bok.or.kr/broadcast.action?menuNaviId=779 Maps of World http://www.mapsofworld.com/north-korea/economy/currency.html
14. Cultural, Language Homogeneity: 5.0
Korea has sustained a culture of remaining homogeneous for some time. Although this is currently being analysed in regards to the effect this view may have on the international community, Koreans have relished in their ability to remain a nation of Koreans. This outlook is not particularly used in a negative view of other ethnicities, rather prideful intrinsic value. This extent of uniform population is dehomogenized only by a small group of ethnic Chinese and Mongolians.
CIA World Factbook https://www.cia.gov/library/publications/the-world-factbook/geos/ks.html All Academic http://www.allacademic.com/meta/p_mla_apa_research_citation/0/9/8/0/1/p98011_index.html
15. Political Effectiveness: 5.0
As Korea becoms increasingly involved in the world economy, the number of proposals for free trade agreements also increase. In the domestic economy, a particular sector greatly influenced by these agreements is the agricultural sector. Being dominantly located outside of major city borderlines, the rural areas have come to governing, couseling, and proposing issues themselves under the national government. This allows for the formerly underrepresented rural areas to be heard amongst the powerhouse, knowledge based industry driven metropolitan cities.
As Korea experiences various natural disturbances and disasters, the need for a formal nationwide infrastructure for relief was found necessary. The National Emergency Management Agency was formed to create a nationwide system that interconnects localities with disaster issues. This system insures that timely action is taken in response to disasters regardless of location or magnitude. In practice, police forces and military personnel have been used in addition to disaster response personnel in response to disasters which require high levels of manpower. This dedication to addressing life threatening natural processes in an expediant manner guarantees the livelihood of its citizens.
Ministry of Public Administration and Security http://www.korea.go.kr/eng/Webzine/webzine.jsp?vol=200702&paper=services_01&no=1184725845099 Relief Web http://ocha-gwapps1.unog.ch/rw/rwb.nsf/db900sid/ACOS-64BMM5?OpenDocument
16. Institutional Stability: 4.0
The historic origins that most Korean organizations are rooted from reveals the stability capable of modern society. Resulting from generational influences of Confuscianism and Taoist ideals, Korean society remains very stable except in the most extreme circumstances. One such circumstance is in politics, in which political parties are often greatly divided in ideals. This, on some occasions, results in repeated revamping of political systems, although typically not influencing the stability of other organizations far too negatively. This may be in part to the cooperation amongst Korea and the United States. This cooperation, mainly since the Korean War, has resulted in modernized organizations, including schools, police and justice system, which have assimilated successful methodology.
Ministry of Education, Science and Technology http://english.mest.go.kr/main.jsp?idx=0201010101# East-West Center http://www.eastwestcenter.org/news-center/east-west-wire/new-administration-heralds-south-koreas-return-to-stability-and-growth/
17. Honest Government: 3.5
Korea has a substantial history of corruption within the government. This has resulted in multi-organizational committees on anti-corruption policy. In the past, initially working with the best intentions, politicians have been well known to fall prey to money and other influences. Due to the majority protest of citizens, effective, neutral organizations have been formed to combat these occurences.
Korean Independent Commission Against Corruption http://www.icac.org.hk/newsl/issue18eng/button2.htm Korean Pact on Anti-Corruption and Transparency http://www.pact.or.kr/english/sub/menu_01_01.php
18. Common Laws: 5.0
The legal system and enforcement system of the laws are simplified in Korea. This means that there is only one legal system, with the Supreme Courts at the head and municipal courts serving common cases. In addition, there is only one policing system through the Korea National Police, which carries out the objectives of prosecutors and legal investigators. Although there may be unique laws pertaining to specific areas, there is a general law that oversees all laws within the country. An aspect of the judicial system which negatively impacts the sanctity of the law is the willingness of judges to lessen sentences for guilty corporate executives if the impact of their vacancy would have detrimental effects on the economy. This irregular process seems to occur due to the massive conglomerate chaebol system which employs many of the nation's citizens.
Supreme Court of Korea http://eng.scourt.go.kr/eng/judiciary/introduction.jsp Ministry of Justice http://www.moj.go.kr/HP/ENG/eng_02/eng_2040.jsp Korea Law http://www.korealaw.com/node/17
19. Central Bank: 5.0
As in the United States, the Korean government maintains the independant services of the central bank, Bank of Korea. The Bank of Korea is charged with the broad task of influencing the economy in the utmost positve manner and controlling the currency of business and trading. Due to its strong influence, the Bank of Korea has been overall successful in maintaining a positive business environment, with citizen well-being, through effective policies.
Bank of Korea, Issuing Banknotes and Coins http://www.bok.or.kr/broadcast.action?menuNaviId=807 Bank of Korea, Formulating and Implementing Monetary and Credit Policy http://www.bok.or.kr/broadcast.action?menuNaviId=871 Bank of Korea, Acting as the Bankers' Banker http://www.bok.or.kr/broadcast.action?menuNaviId=811 Bank of Korea, Financial System Stability http://www.bok.or.kr/broadcast.action?menuNaviId=811 Bank of Korea, Revision of the Bank of Korea Act http://www.bok.or.kr/contents/total/eng/boardView.action
20. Domestic Budget Management: 3.5
In the recent years, Korea has faced annually increased deficit spending. Although a comparatively low deficit to GDP, the national budget has constantly grown into the red. At 22.6 trillion Won in the first half of 2007, deficit spending was far higher than the predicted 13.6 trillion Won. The most widely accepted explanation for this phenomena has been the nationwide tax cuts for specific tax classes. Tax reductions were instated for middle and low class households, which constitute the largest population class, thereby significantly lowering national revenue. This occurred while general funding and expenditure increased expectedly. Therefore, the national budget continues to traverse into a deeper deficit, albeit an insignificant deficit to GDP ratio, at less than 2%, compared to most developed nations worldwide.
Ministry of Strategy and Finance, Korea, Economic Indicators, http://english.mofe.go.kr/statistics/daily.php The Korea Times http://www.koreatimes.co.kr/www/news/biz/2007/08/123_8842.html
21. Government Debt: 4.0
As a defense against the global economic recession, Korea has increased domestic spending to stimulate their economy and support job growth. This is done at the expense of national debt, which will grow to approximately 38 percent of GDP this year. National debt remained sound at 32.5 percent last year, making current debt calculations the highest since the Asian Economic Crisis of the 1990's. However, the necessity of increased debt at present may be justifiable due to weakened global economies. Therefore, the increase in national debt as an internal mechanism to sustain the domestic economy may be a positive aspect that will show returns of a wealthier economy in the near future. As a short-term goal, the national government has already set plans in motion to reduce debt to 30 percent of GDP by 2012.
Korea Development Bank, Market Data & Research http://www.kdb.co.kr/weblogic/Board?BID=25&NID=34871&ACTION=VIEW&NPAGE=5 IMF, Data & Statistics, Korea http://www.imf.org/external/np/fin/tad/exfin2.aspx?memberKey1=550&date1key=2009-05-12
22. Economic Statistics: 5.0
Established in 1948, the Korean National Statistical Office declared a mission for "Leading advancement of national statistics, and producing reliable statistics." Since initiation the office has grown to provide near-comprehensive statistics and information on population & housing, economic trend, social trend, price & household economy, wholesale & retail trend, business activities, agriculture, forestry & fishery, national wealth, etc. In cooperation with other domestic statistical groups, the Office is currently generating quality statistics on the nation's generatibility of quality statistics. The in-depth and inclusive statistics produced provide a far reaching base of information that is amply used for national improvement and growth.
National Statistical Office, Republic of Korea, Statistical Activity Survey http://www.nso.go.kr/eng2006/e02___0000/e02h__0000/e02hd_0000/e02hd_0000.html National Statistical Office, Republic of Korea http://www.nso.go.kr/eng2006/emain/index.html IMF Dissemination Standads Bulletin Board http://dsbb.imf.org/Applications/web/dsbbhome/
23. Protection of Public Health and Safety: 4.5
Due to the evolution of many high-density areas, the Korean government has enacted many laws to regulate the health and well-being of its citizens. Through the Ministry for Health, Welfare and Family Affairs the national government is able to implement rules which govern food safety, healthcare, social services, senior & child issues and a form of social security. This competent system has enable Korea to raise its standards of citizen care from the dismal levels of historically recent war to the internationally high standards enjoyed today.
However, these high standards are ironically the same reasons why Korea suffers from TB infection levels higher than the United States. This is due to quickly evolving drug resistant TB, which is typically not the issue in other TB infested nations. This has, however, raised the standard of medical and pharmaceutical care internationally due to the extent of research done within Korea's flourishing bio-technology sector. An aspect of public health which has only gained in positivity is the ever-lowering infant mortality rate; at in internationally low level of 4.29 deaths per 1,000 infants born, Korea maintains an infant mortality rate much lower than the United States at 6.3 deaths per 1,000 births.
WHO Statistical Information System http://apps.who.int/whosis/data/Search.jsp?indicators=%5bIndicator%5d.%5bSDEC%5d.Members UN Statistics Division http://unstats.un.org/unsd/demographic/sconcerns/health/hel2.htm Ministry for Health, Welfare and Family Affairs, Korea http://english.mw.go.kr/front_eng/jc/sjc0101mn.jsp?PAR_MENU_ID=1003&MENU_ID=10030101 Orange County Health Clinic http://www.ochealthinfo.com/docs/public/tb/factsheet.pdf Index Mundi http://www.indexmundi.com/south_korea/infant_mortality_rate.html http://www.indexmundi.com/map/?v=29
24. High Wage Policies: 3.5
Korea maintains a moderately high income disparity among the education levels of workers. While corporate businesses pay entry level university graduates a comparatively high wage to relatable developed nations, the minimum wage is set very low to US standards. The low minimum wage, therefore, reserves most low-end jobs for students. As an initially unexpected result, most citizens thus aspire to complete university and be corporately employed. As an end result, Korea may in fact hold significant lack of productivity due to wages set to high compared to industry standards. However, the high level of entry level wages allow generous affordability of common goods needed on a regular basis. Although these issues of too high wages compared to affordability are being addressed, the results of changes have yet to be seen.
Official Korea Website http://www.korea.net/news/News/NewsView.asp?serial_no=20070225009&part=104&SearchDay= JSTOR http://www.korea.net/news/News/NewsView.asp?serial_no=20070225009&part=104&SearchDay=
25. Environmental Protection: 4.5
Modern history of Korea reveals that the environmental health and concerns of the nation was considered less important than the progress of industrial and social development. Without a formal and functioning environmental department of the national government until the 1960's, companies were able to freely develop new properties without concern for the environment. As the impact of development on public health and well-being became increasingly evident, a section for environmental protection originated within the Ministry of Health. As the need for a more comprehensive and enforcing environmental law increased, the Ministry of Environment was established in 1990.
The current level of environmental protection far exceeds previous levels, with the Ministry possessing the ability to enforce mandates on other ministries and departments; often ministries of significant and historical importance, such as military and maritme affairs. Current major concerns of the Ministry are of the quality of air as a result of air and ground traffic and industrial pollution, water quality rehabilitation, natural landscape preservation, resource conservation, and waste management. This level of enforceability by the Ministry of Environment ensures that all bodies within the nation, government or private, abide by a universal standard, which balances the need for environmental protection and progressive develpment. The last remaining obstacle to environmental security remains the willingness and attitude of citizens who have struggled to keep pace with the quickly improving Ministry of Environment.
Republic of Korea Ministry of Enviroment http://eng.me.go.kr/docs/sub1/history.html? topmenu=A&cat=130 KCL Law Group http://www.bakernet.com/NR/rdonlyres/1298A282-673A-4E4E-9D2B- C3552030E375/40219/Korea.pdf
26. Strong Army: 4.5
Following the Korean War(the Democratic People"s Republic of Korea and the Republic of Korea are technically still at war with a standing arms truce), the financial budgets of the military and related industries experience substantial growth, often more than 100% per fiscal year. This was a result of the general outlook that the nation needed to be independantly far more capable of protecting itself. However, this growth was manageable due to the tremendous growth of the GDP and the national budget, which revealed that the greatest amount of funds allocated for national defense was at maximum 30% of the national budget. This growth is in addition to the strong political, and economic ties to the United States. This relationship has resulted in a continued military presence in support of the Korean military. Since the 1970's, Korea has increased its defense spending substantially annually. However, comparative to the growing economy and national budget, spending has gradually decreased by percentage, resulting in the current level of allocation at 15% of the national budget. In addition to the United States forces present in Korea, the 15% of the national budget affords the nation over 5 million military personnel. This does not include the male population, which is required to serve in the military for atleast two years by laws put in place in response to the state of war.
National Assembly of the Republic of Korea http://korea.assembly.go.kr/int/aut_02.jsp?leftid=CB Global Security http://www.globalsecurity.org/military/world/rok/budget.htm Global Firepower http://www.globalfirepower.com/country-military-strength-detail.asp? country_id=South-Korea
27. Foregn Trade Impact: 4.0
The benefits of developing a strong trade environment in Korea is evident in the economic spurt that the country has experienced since the 1970's. From that time, Korea has increased its foreign trade percentage from 10% to nearly 38% of GDP with industry leading products. This positive growth in incoming international monies is offset by the growing dependance on foreign interest, regardless of product popularity. Foreign trading has reached the point in which the security of international economies begins to significantly impact the growth of GDP.
CIA World Factbook https://www.cia.gov/library/publications/the-world- factbook/geos/ks.html#Econ Economy Watch http://www.economywatch.com/world_economy/south-korea/export-import.html
28. Protection of Foreign Currency Earning Enterprises: 4.5
Korea has historically been known as a protectionist nation; one that, before all else, ensures that its own constituents are secure in achieving their goals. This attitude towards the success of its domestic bodies is evident in its actions regarding foreign trade. Directly connected with Korea's increasing export quantity is the government's actions within international negotiations, which have insured the competitiveness of their products abroad while maintaining a strong tax on similar imported products. These actions are clear in the export of motor vehicles, IT/high- technology, and agricultural products.
Embassy of the Republic of Korea in the USA http://www.dynamic-korea.com/fta/fta_current.php Economy Watch http://www.economywatch.com/world_economy/south-korea/export-import.html
29. Management of Foreign Currency Budget 4.5
The current status of the foreign currency budget has improved as export trading increases the in -flow of foreign cash. Korea has, until recently, been concerned with their ability to repay foreign debts with foeign currency currently on hand. This problem has reduced in priority as domestic banks' ease in borrowing across borders and out-flux in exports has swelled the amount of foreign currency stores.
In the recent past, the lack of foreign currency negatively affected the domestic market as it caused the Korean Won to weaken; however, this affect has been improved upon to result in a more stable monetary environment.
Market Data & Research, Korea Development Bank http://www.kdb.co.kr/weblogic/Board? BID=25&NID=35572&ACTION=VIEW International Reserves & Foreign Currency Liquidity, IMF http://www.imf.org/external/np/sta/ir/kor/eng/curkor.htm
30. Layers of Collective Action: 4.5
The current governmental structure of South Korea is a young system relative to the country's leadership history. In the recent past, the leadership had comprised of all powerful monarchs, with throne rights often vested in them by gods, to others with successful military prowess. The present democratic organization is therefore a newly adopted concept in comparison to governments of the entire Korean history.
Presently in South Korea, a complex system of governance is in place with the president and prime minister at the head, with leaders of small townships, villages, and relevant committee leaders and the bottom. Each level of leadership is responsible to a higher jurisdiction (with federal government responsible to all citizens), while entertaining governing freedoms of its pertinent constituents. With this system is place a specific governing body is able to maintain self-developed budgets financed according to its locale, while additionally receiving funds from higher jurisdictions, available by the collection of taxes. At the extreme limit of hierarchal government, decisions made by Seoul may influence the adjacent and lower governments, as well as the higher federal government, due to the overwhelmingly high level of population, economy, political dynamism and embodiment of national interest.
In the past, in order of importance, the special districts of Seoul and Pusan, and the provincial governments had their leaders appointed by the president; next, the mayors of cities and county chiefs were appointed with the recommendation of the provincial governor. The initial proposal for local self governance was first approved in 1949, with elections belatedly commencing in 1960. It was then that the elections of provincial governors, mayors (including Seoul and Pusan), and local councils occurred for the first time in Korean history.
United States of America Library of Congress http://lcweb2.loc.gov/cgi-bin/query/r?frd/cstdy:@field(DOCID+kr0135) Official Website of the Republic of Korea, Government Agencies http://www.korea.net/
31. Pro-Business Climate: 4.5
Taking the path to become an entrepreneur is highly encouraged in Korea. With a very diversified and competitive market, a solid idea or innovation would easily immerse into the market with healthy returns. The incentives to become a business owner are fundamentally supported by the public and private sector. While celebrating being one of the most developed countries in the world, Korea mandates the low national minimum wage of 4000 won, or approximately $3.80, for 2009. Although this is actually a 6% increase from 2008, it hardly secures start-up investment. However, the ability to finance a new business is aided by the ease of receiving credit. This, in addition to a straight forward government regulatory system and no sales tax, provides the strong motive for proprietorship as opposed to remaining in the labor force. The opportunity cost for starting a business is very low, allowing for creative and niche ideas and products to be realized.
Korea International Labour Foundation http://www.koilaf.org/KFeng/engStatistics/bbs_read_dis.php?board_no=126&page=3&keyField=&keyWord= Doing Business - The World Bank http://www.doingbusiness.org/ExploreEconomies/?economyid=104 Asia Trade Hub http://www.asiatradehub.com/s.korea/tax1.asp
32. Government Enterprises: 3.5
Within the last decade, many of the wholly government owned industries have since been semi-privatized or entirely transferred to the private sector. This was to insure the efficient operation of companies, to filter out inefficient companies or to secure continuous investment without the use of public funds. The current president, Lee Myung-Bak, has a background as a corporate executive and former mayor of the nation's capital and economic hub, the special district of Seoul. He has stated his intentions to the National Assembly to privatize the public industries which would benefit in operational efficiency due to it. He reiterates the need to divest from certain industries in favor of protecting the nation's public funds. This outlook on the government's role in the industrial sector promises continued competitive ventures by healthy companies.
In the 1960's, as Korea gained independence from colonial Japan after nearly half a century, the newly formed Korean government realized it lacked the educational and labor experience based foundations amongst its citizens necessary to fuel a dynamic economy. Therefore, major utilities, and all industries deemed key to the country's national security and development were government owned or government invested (50% or more government ownership). The public ownership of the selected industries were essential in the catalyzed development of the nation; by providing affordable products and services to its citizens and international clients, and generating much needed income in large quantities which were reinvested into the nation through various methods. Although utilities must generally be kept under some government control to ensure stability and security of supply at reasonable rates, the industries are open to scrutiny using capitalistic methodology and manipulation.
Korean Consulate General in Los Angeles http://www.koreanconsulatela.org/english/sub_index03.htm?pg=030201&newsid=000086 Asian Organisation of Supreme Audit Institutions http://www.asosai.org/R_P_accountability_control/chapter_10_korea.htm
33. International Security Agreements: 5.0
Although the United States of America is not the chief trading partner with Korea in terms of product quantity, the shared relationship is a special one. Starting with World War II, the U.S. has supported Korea in matters of military, trade, finance and politics. Over 40 treaties regarding an array of matters have been signed with the U.S. federal government alone since 1948.
In addition, Korea has signed many multinational treaties, especially within Asia, for cooperative development, mutual peace, and political unity. Most importantly, Korea has signed treaties of cooperation with Japan, its past colonial aggressor, and North Korea, its cultural brethren and political enemy. The mutual agreements with North Korea and Japan mark the beginning of reconciliation from over 50 years of colonization or war, political and military unease, or near blind hatred. Security treaties that have been signed have come in the form of agricultural, military and monetary exchange. Annually, food supplies and agricultural products are exchanged with the U.S. and China. This foundation of trade has development the mutual trust of nations. The U.S. has been fundamentally important in Korea's development, with the support of monies and arms. There are currently 29,000 U.S. troops stationed in Korea as per agreed, to protect Korean interests, thereby protecting U.S. interests. Trade amongst Asian nations continues to reach new heights yearly, with ever increasing demand for products produced by close neighbors. Many summits amongst Asian nations have resulted in treaties agreed upon for collusion in development, to raise the living standards of the region with help of one nation to another. The ever increasing number of treaties signed by Korea shows the reality the nation has seen. Its development in all aspects of the nation is better served by working together with neighboring countries and distant nations.
United Nations Treaty Collection/Treaty Series http://treaties.un.org/Pages/UNTSOnline.aspx?id=3 The Center for Arms Control and Non-Proliferation http://www.armscontrolcenter.org/policy/nonproliferation/articles/major_np_treaties/
34. Protection of Domestic Enterprises From Government Mandated Costs: 5.0
As the years progress, Korea increasingly proceeds toward free trade agreements with other economies in hopes of raising export levels. These agreements are met with the expectations of receiving increased imports which would directly compete with domestic products. This may be viewed as excluding certain industries from prospering as they are exceptionally reliant on domestic sales.
To cope with the influx of foreign products, qualifying industries are offered subsidies for exported products. Much like the agricultural sector of the United States, these Korean industries are able to maintain prices and income without necessarily selling their products. Although this may not insure strong competitiveness in the long term, a company's ability to offset the losses incurred through a freer trade system is minimized while increasing foreign product variety within Korea and domestic products abroad.
United States Department of Agriculture - Foreign Agricultural Service http://www.fas.usda.gov/info/factsheets/korea.asp UN ESCAP - Effects of Preferential Trade Agreements on Agricultural Liberalization http://www.unescap.org/tid/artnet/mtg/consult2_s3gloria.pdf ROK - Ministry of Foreign Affairs and Trade/FTA Issues http://www.mofat.go.kr/english/econtrade/fta/issues/index.jsp
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