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PART I
CHANGES IN THE ADMINISTRATIVE ENVIRONMENT
South Korea achieved a remarkable economic growth over the past 30 years, transitioning from an authoritarian country to a mature democratic country. In the process of development, social demands and needs constantly increased. The government has effectively responded to these changes and has led the changes. In this part, I will describe the changes in the administrative environment in Korea over the past 30 years, focusing on three themes: population, technology, and occupation. The government should make policy decisions based on the citizens’ demographic characteristics to meet the preferences and needs of society and respond appropriately. Furthermore, it is necessary to discuss the influence of technological advancement of our society. Today, South Korea has grown into a global leader in terms of information technology (IT), being sensitive to technological changes. Therefore, I would like to examine the development process of the IT industry and the resulting changes in personal life, such as changes in the occupational world, as well as the changes in government policy and public administration.
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CHAPTER 1
INTRODUCTION: A CONSTANTLY GROWING ECONOMY
The Han River’s miraculous economic development that had occurred since the 1960’s Park Chung-hee regime surprised the world. After the Korean War, Korea changed its economic structure from light industry to the one based on a heavy chemical industry and achieved an export-led growth, going from one of the world’s poorest countries to freeing itself from poverty. At the time, the now-disappeared self-deprecating expression “people of an underdeveloped country” was widespread in Korea.
However, since the 1980s, after the end of Park Chung-hee’s regime, the national per capita income has been steadily increasing, except during the period of the 1997 Asian financial crisis. Specifically, the Gross Domestic Product (GDP) per capita, which was less than $100 in 1960, has continued to increase to the present day (Fig. 1). The GDP per capita surpassed $30,000 in 2017, implying that it has grown more than 300 times in about 60 years. Notably, the Korean economy raised its capital in a unique way as it did not have a developed capital market in the 60s and had nearly no businesses that were appealing to foreign investments. Rather than the foreign direct investment method, capital was raised through the foreign indirect investment method whereby foreign investment was received by way of the country’s guarantee; thereafter, domestic companies loaned it back to domestic companies. The government would vouch for the financial institutions lending money from foreign countries, and domestic entrepreneurs would lend this money from domestic banks to run their factories. Through this method, raw materials were imported and goods were manufactured and exported, creating an export-dependent economic system. Under a foreign direct investment system, companies are responsible for individual foreign investments made. However, as the Korean economy was based on foreign indirect investment, the government had leverage on domestic companies. Due to this historical context, crony capitalism and the excessive market intervention of the government are still prevalent in the Korean economy and are under harsh reprimand.
Fig. 1. Korea’s GDP Per Capita ($1 in 2010 Price) and Trade-Service Balance ($100 Million in 2010 Price). Source: World Bank Open Data (http://data.worldbank.org), searched on July 23, 2021, reorganized by the author.
Due to its small domestic market size, the export-dependent Korean economy was bound to be significantly affected by the international economic environment. The oil shock in the 70s raised the raw material prices, affecting the domestic economy. A bigger threat was when the foreign capital tried to collect the debt lent to domestic banks. During the period of analysis in this book, there were two instances of financial crisis in which the loan could not be repaid, as foreign investors denied loan extension of domestic companies due to the lack of foreign exchange reserves. In 1997, after excessive investment by domestic companies, the foreign capital temporarily decided not to extend the repayment period, and a bailout was requested to the IMF. In return, the IMF called for a strong restructuring, which took a toll on our country’s businesses and households. The prescription of the IMF, which was focused on restructuring public sector and increasing labor force mobility, caused companies unable to repay their debt to go bankrupt. These companies were sold to agent overseas at a cheap price, and the overall unemployment rate increased. Compared to the rapid growth period, when the country showed a two-digit growth rate, this was the first time Koreans witnessed a negative growth rate. This experience became a psychological trauma for many Koreans and suicide rates increased accordingly. The second crisis was the credit crisis from the US subprime crisis in 2007, which the Lee Myung-bak government was able to overcome relatively well by remembering the valuable lesson learned from the first crisis. The Lee administration prepared for the crisis by making a currency swap agreement with Japan and increasing government expenditure and financial aid. The government had learned a lesson from the past experience.
Korea’s economy has continued to grow in and out of the top 10 in most indicators today, with increased GDP, higher national income, and increased export volumes. Notably, through exporting the goods manufactured with foreign capital, Korea moved from the stage of trade deficit to having a surplus in 1985 (Fig. 1). At this time, reform measures were taken considering the need for an open economy. However, in the early to mid-90s, trade services recorded deficits. This means that the labor-focused industry lost its international competitiveness as real wages increased as reforms were made to meet international standards. While the income and expenditure for trade service recorded a surplus since the 2000s, it can be seen that its amplitude has enlarged.
The aforementioned claims will be comprehensively reviewed, focusing on the analysis period of this book. Leaving the 1960s aside, seeing that the annual economic growth has been approximately 10% during the late 1980s and 2000, South Korea’s economic growth is incomparable to any other country’s economic growth in the world in terms of “continuous” growth. Afterwards, the speed of growth did slow down to one digit, but this is not a pessimistic situation considering the size of the Korean economy. Trade service recording a surplus means that Korean goods are being sold at a reasonable price in which the revenue can be generated. The spectrum of goods has widened, the quality has increased, and the structure of industry has been reformed.
Japan has also gone through a period of rapid economic growth which was but soon followed by a negative growth. However, Korea has not experienced economic stagnation for the past 30 years. Although different from the UN’s definition of the term today, it is an example of sustainable development. Now, in the era of $30,000 national income per capita that was once dreamed of, South Korea has indeed joined the ranks of developed countries.
As indicated in Table 1, there have been some fluctuations microscopically. Since 2001, the economic growth rate has declined to less than 5%, indicating that it has entered a stage of slow economic growth. This likely indicates that although Korea’s economic scale has grown and become more complex, the costs have increased due to the development of the labor welfare system, making it difficult to meet the growth rate of the past. In terms of administration and policies, there exists a need for more experts in each field rather than officials who are only good at increasing the economic growth rate. Nevertheless, some numbers have been steadily increasing over the past 30 years. As indicated in the table, the ratio of exports to GDP has been increasing by more than 100% in some years. This is because there are parts that cannot be caught in the denominator of the GDP as factories are established overseas. Another reason is that international trade is taking up more parts of the Korean economy. Increase in wages and the cost of shipment have also motivated factory owners to move their business abroad. What is produced outside of the country is included in the Gross National Product (GNP) but not in GDP. More specifically, there have been changes in the trade market of the world economy. For example, China sustained its economic growth of 10% for more than 30 years since the economic reform policy in 1979, creating economic ties with Korea. Korea also underwent changes such as transferring factories to Southeast Asian countries due to reduced product competitiveness caused by increased wages.
Table 1. Economic Growth of Korea.
Source: Bank of Korea National Account, Bank of Korea National Income, Statistics Office Life Table.
GDP and economic growth: Based on nominal GDP, economic growth rate is the real GDP growth rate.
Import and Export Ratio to GDP = {(Total Exports + Total Imports + Factor income from abroad + Factor income paid abroad) ÷ nominal GDP} × 100.
Life expectancy: The average survival years that a 0-year-old is expected to survive in the future.
One trend that has remained unchanged during this process is that the Korean economy has grown more and more into as an export-dependent country. This indicates that the role of the Korean government should have expanded internationally rather than being restricted to the country itself. This is because various other factors are needed to increase exports, rather than only through the comparative advantage of producing good products. This suggests that there were changes in foreign relations from various perspectives such as information about other countries, trade disputes, and resolution of cultural disparity that placed government ministries and individual public officials in a position where they were forced to globalize.
Returning to the issue of the slowing economic growth after 2000, this should not be viewed only in terms of slowing economic growth. When economic growth is achieved to a certain extent, it cannot be viewed only as a change in the economic growth rate. In the past, the policy goal was to mobilize all administrative power to increase the economic growth rate; however, now, other policy goals are pursued simultaneously. This means that the tasks of the government have become larger and more complex which requires us in-depth understanding in approaching regarding issues.
It is necessary to consider what changes the Korean government has brought to the people through such an economic growth. As only having more money does not mean all is good, there is a need for a multidimensional analysis. In other words, throughout the process of achieving this level of growth in response to changes in economic conditions, the outcome shows how competitive our government is compared with those of other countries. The outcome or impact refers to the changes that have occurred in the lives of the people, which are the final and fundamental target of a government policy.
However, it is difficult to display the actual results of how the government’s policy enforcement affected people’s lives. This is because there are various assumptions required, and there are many variables that cannot be considered when inferring causal relationships. However, it would be better than nothing to see through rough indicators that have such meaning. For example, it can be measured with an index of life expectancy.
As the level of diet, medical care, welfare, and culture changes in the process of economic growth, the human lifespan changes as well. Notably, as can be seen in the table, the life expectancy of Koreans has steadily increased. Approximately 14 years have been extended from about 69 years in 1985 to about 83 years in 2018. These figures mean that Korea has become a long-living country with no significant difference in the figures compared with those of Western developed countries. This is somewhat persuasive as there have been numerous truly surprising changes that can be observed in our society, families, and personal lives over the past 30 years. It can be said that today’s Korean society has marked a sea change compared with what it was 30 years ago.
Transformation of Korean Politics and Administration: A 30 Year Retrospective
Public Policy and Governance, Volume 35, 1–5
Copyright © by Tobin Im, 2022
This edition published under exclusive licence from (Jininjin), by Emerald Publishing Limited
English language translation copyright © 2022, Emerald Publishing Limited
Translated by Tobin Im
The moral right of the author and translator has been asserted
ISSN: 2053-7697/doi:10.1108/S2053-769720220000035023 ![]()
CHAPTER 2
CHANGES IN DEMOGRAPHIC STRUCTURE
The major change in the past 30 years of Korean Society is the change in its demography. As of 2019, Korea’s birth rate is 0.92, the lowest among the OECD countries. What is even more problematic is that the birth rate is continuing its downward trend. Only 20 years after the abolishment of the birth control policy, which was implemented to prevent rapid population growth, we are at the stage of population decline.
In addition, the prediction that Korea will become a super-aged society with more than 20% of the population being above 65 years around 2025 adds to the seriousness of the problem. This is because a low birth rate is not simply a problem of population decline, but rather a decrease in the youth population who will support the elderly. Therefore, the government is focusing more on the low birth rate and aging population than any other change in policy environment. Another characteristic of the demographic changes in Korea is the increase in the foreign population. With the increasing number of foreign residents in Korea, such as foreign workers and marriage immigrants, new social problems have emerged, raising voices on diversity policies.
1. LOW BIRTH RATE AND AGING
The population is one of the three major elements of the state. The demographic characteristics of the population are of great importance. The most prominent features of Korea’s demographic changes in the last 30 years, from the Roh Tae-woo administration to the Moon Jae-in administration, are low birth rate and aging. The population of the Republic of Korea exceeded 40 million in 1983 and 50 million in 2012. However, under the current situation in 2020, the outlook for population growth is not bright, with the absolute number of populations starting to decrease, both in the number of births and in the number of deaths.
The birth rate continues to decline due to the increase in women’s participation in economic activities, the increase in private education costs, the increase in nuclear families, and single-person households. As illustrated in Fig. 2, the total birth rate increased from 1.53 in 1987 to 1.76 in 1992 and started to decline to 0.98 in 2018, indicating that couples did not give birth to even one child. A birth rate of 1.3 is required in order to maintain the status quo of the population. Therefore, the birth rate of 0.98 means that a decrease in the absolute population is currently an inevitable trend in Korea. The low birth rate itself is a problem, but a more concerning issue is the speed of the decrease. Population is a core factor that determines various aspects of a country. The problem is that the decrease in the pop...
