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