North Korea and South Korea: Different Perspectives on Globalization and Its Effects

Andras Konya

Adam Schlegel

Amanda Baldwin

Introduction

Compare the effects of globalization (or lack thereof) on two comparable countries with similar culture, history, and definite point of separation. Pinpoint

strengths/weaknesses of globalization

Method, not apples/oranges

History: Korean War

Soviets and Americans decide to divide Korea into their own sphere of influence North and South (1948)

Secretary of State Dean Acheson neglected to include Korea in the US sphere of influence in Asia. Kim Il Sung took initiative to invade the

South (1950) not Stalin but Stalinist

War ends ends in stalemate, 38th parallel, DMZ Both countries are ruined in the similar

manner Ideal comparison Each embraces different ideology:

totalitarian vs. authoritarian

Path to Globalization

Following the Korean War, a decade of political turmoil begins

First President Syngman Rhee ousted from office (1960) rigged elections for vice president cause student riots

Democracy not initiated military coup d’etat, Park Chunghee takes over

Park Chunghee begins to build South Korea into economic power stablity but still not democratic tool: chaebol

Chaebol System

Conglomerate large corporation with

many unrelated subsidiaries

centrally planned though private

lack of input from minor shareholders

financial security for all companies involved

Park’s Economic Plans for Chaebols

creation of export-oriented industries

creation and fostering of heavy industry

maintenance of anti-union behavior protection of domestic market

pegging won to dollar chaebols are major force in the

South Korean economy 1960’s to 1990’s big enough to utilize limited

resources effectively government contracts and subsidies

Top Chaebols in South Korea

Hyundai Automobiles Engineering, construction,

shipbuilding and industrial activity Finances

Samsung Electronics Petrochemicals Construction (Petronas Towers in

Malaysia) LG

Home appliances and electronics Petrochemicals and chemicals

Emerging Globalization (Advantages)

Through the chaebols, South Korea emerged as an export leader of the world Import raw materials to

manufacture exports Industrialization and

Service Economy Higher standard of living

better education more material possessions increased leisure time GDP skyrockets from third

world equivalent to Western European standards

Emerging Globalization (Disadvantages)

Profits appease populace as long as they are positive economic downturn leads to

civil disobedience and revolution

no democratic process or structure to deal with problems

political stability dependent on economic situation

authoritarian until 1987, numerous revolutions, undemocratic

chaebols are undemocratic by nature

Decline of Chaebols

Ultimate decline of chaebols Too big to manage effectively Core competency (unrelated

industries) Decline

rise in labor cost standard of living

competition from other Asian countries (China)

cheaper workforce

Effect lower of standard of living to

match competitiveness contributed to South Korea’s

economic crisis (1997)

Globalization (Financial Crisis)

Convergence of misfortunate economic events banking sector was burdened

with non-performing loans excess debt lower credit rating chaebol oversight and

accountability low Democracy swiftly corrected

recession 1998: GDP: -6.6% 1999: GDP: 10.8% 2000: GDP: 9.2% allowed for greater input of

populace

South Korea Conclusion

Globalization started to higher wages demands for social reforms South Korea became less competitive Ironically, the good of globalization

caused the bad

History: North Korea After Korean War, Kim Il Sung takes

over Nationalization versus Chaebol

“people’s” property versus the highly private chaebol

while abuses in both, higher standard of living obvious only in one

Juche (self-reliance) closed all capital flow "the hermit kingdom”

Militarization versus Chaebol to secure power Kim Il Sung diverted a

third economy for military instead of economic reform (South Korea, 3%)

22 million population, 1.2 million military

wastes the most able-bodied men of society with unproductive job

famines every year, starving people

North Korea: Economics

Refusal to join global markets through Juche lower standard of living police state: complete lack of

democratic institutions army needed for government’s

lacking legitimacy: massive famines

Notable exceptions to global markets Drugs Arms Trade Significant portion of GDP

used for making the military bigger, not food

Conclusion

North Korea is control group for complete nonacceptance of globalization

While South Korea experienced problems, it is now on a democratic path with an economy that is substantially better in every aspect