We have examined in the past and present status of the South Korean economy. As you can see, the South Korea economy has made a remarkable and profound transformation in the past 60, 70 years. And what factors have been responsible for such in a profound transformation? I would argue that the most important factor, not most, but the most continuing factor is international pact factors. Several international factors have made significant contribution to the transformation of South Korean economy. First. Colonial modernity matters. There is ongoing debate on colonial modernity whether South or the Japanese colonization of Korea was a positive effect and negative effect, okay. Conservative scholars argued that the Japanese colonial rule of Korea made a, by some, important contribution to the South Korean economy. Liberals and Progressives argued that, that was not the case. Japanese colony were colonial rule, was nothing but a mechanic for the exploitation, of Koreans. But there's contending inner views on undevelopedJapanese Japanese colonial period. However, but we cannot deny the fact that Japan made infrastructural investments such as railroad system, road system and irrigation system and land cultivation system, and etc. And also, we cannot deny the fact that the Korean capitalist were cultivated during the Japanese colonial rule, okay? Whether they worked for the Japanese or not, it is true the Japanese colonial authority cultivated some sort of local and national capitalist to gain the Japanese colonial rule. And also, I would say that the South Korean bureaucracy was greatly influenced by the Japanese. Therefore as a result, by imitating for the Japanese colonial period, South Koreans adopted a Japanese system of bureaucracy. And training competent bureaucracy had something to do with Japanese colonial leaders. And also, a scholar like Bruce Covings argues that the later stage economic take up of South Korea had something to do with regional division of labor which Japan created during the colonial period. The likewise, Japanese colonial in the past made us some kind of contribution to transformation of South Korean economy. Another important factor I would add is it's American factor but I'd who have discussed in our first class. It is American occupation which made completely divergent past dependence of the political and economic system in North and South Korea. It was the American military government which implanted the capitalist system in South Korea. American occupation authorities inject the market system in South Korea. And also United States during the Korean War and after the Korean War, come up with a quite extensive economic military assistance to South Korea. Without which the South Korea could have never enjoyed [INAUDIBLE] status of becoming transformation. United States was not only to simply a provider of economic and military assistance, but also The United States intervened in the South Korean policy, economic policy making. South Korea pushed for the standardization of South Korean economy in late 1950s and early 60s. And also it was the United States who pushed the fore in economic liberalization, such as a liberalization of trade, okay? And also liberalization of interest rate, liberalization of exchange rate. All these things are really masterminded by American government within the context of aid given to South Korea. And perhaps the most important factor is this. It was the United States which designed export led growth strategy for South Korea. Other people argue that the South Korean economic miracle was the product of export led growth strategy. The very export led growth strategy word initiated by American government. Not for the sake of South Koreans but for the sake of Americans. Because every time American, a donor thought that the unless South Korea found its own way of economic take-up and revenue and had [INAUDIBLE] generate economy. The United States could not get away from the aid giving to South Korea. Therefore, as a way of getting away of aid burden to South Korea, American officers pushed the South Korea to adopt export radical strategy, during period.. It was true that the United State, South Korea was able to join the GAT, general agreement and tariffs and trade at the time. Which later become WTO- World Trade Organization. By joining GATT System, South Korea could accelerate export radical strategy in a regular manner. And also, equally important was South Korean market access to the United States. When South Korea joined the GATT system, South Korea could have really asymmetric access to the American market. In other words, South Korea was pursuing rather trade policy yet we could have access to American market. Therefore later in the 1980s that became the source of disputes over the unfair trade practices by South Korea. The South Korean unfair trade practices were crafted by the United States. But again, our open economy, outward looking economy was a product of American policy design and intervention. But apart from the American factor is another Japan factors, too. South Korea normalized diplomatic ties with Japan in 1965. And afterwards, South Korea first South Korea was able to get financial compensation from Japan for ways past in our history of these atrocities and whatever. But apart from that, once diplomatic normalization took place between Japan and South Korea, a large number of Japanese firms were making investments in South Korea. In fact, at that time, President Park Chung-Hee created Masan Export Joint, a free trade joint in Masan Gyeongsannando. And Japanese exporters came there create offshore production site, and use the Masan expert join as kind of, offshore, in a hub for their export promotion. Their facades create a lot of benefit, from that kind of Japanese investment pattern. Okay. And also, another important issue is what? Japanese general trading companies began to hire South Korean firm as a OEM, so-called original equipment manufacturers. Therefore, they were giving subcontracting to South Korean firms, okay. And then they, South Korean firms, manufacture those goods and supply to the Japanese general trading companies. In that sense, Japanese are sogo shosha. General trading companies were the windows to South Korean and their funds. Here I didn't write down. But there's another important factor. That is the horizon to learning from Japan. If you look back Industrial policy and expert promotion policies inducting government in mid 1960s up to no, mid 1970s. Very interesting pattern you see that South Korea has copied industrial policies from Japan, okay. >> Electronic promotional, and steel, semi-conductors, consumer electronics. If you look at all the important industry sectors, our industrial policy was nothing but an imitation of Japanese industrial policy. That kind of horizon learning from Japan regarding industrial policy and export promotion. South Korea was able to orchestrate it's own heavy chemical industrialization plan and export promotion strategy. Those are the so-called the historical factors. They're from the colonial legacy and colonial legacies have positive and negative factors. American factors, and contemporary Japan factors. They're all combined, created initially very preferable conditions for South Korean economy transformation. But another important factor is market factors or what we call the neoclassical explanation. Therefore, economic transformation in South Korea, what is important factor? This neo-classical economists would argue that it has something to do with market vectors more than anything else, okay, market vectors. Then what kind of market vectors, obviously we should look into factors of production. The prime factor of production is labor. In other words, neo-classical economists argue that availability of abundant qualified manpower was a key factor. Okay, without manpower South Korea could not have pushed for the strategy. But they argued though that this human capital was important factor. At the time, really, was an abundance of highly qualified manpower in mid 1960's. College graduate in South Korea could not get a job. Therefore, they were exported to Germany as coal miners. College degree students as a coal miner in West Germany, it's quite unthinkable, but that is what happened. It is very common in Frankfurt, Deutschland you can show that those are the Korean college graduate going to Germany as coal miners and Korean nurses going to West Germany. But another important market factor has something to the succesful land reform. President Syngman undertook major land reform on June 21, 1949, that really helped emancipating peasants. Transforming land load into industry capitalists. All though things served as important counter-measures to communists during the Korean war. But anyways, successful land reforms mean what? The words great space for equity, and great productivity in the farm sector. And further on is what the neoclassical economists know. It's a major dictum that is what, getting the prices right. Now the South Korea pursued market conforming policies such as economic stabilization, economic liberalization and other kinds of institutional changes that were conducive to market function. Obvious that include the protection of property right too. Another important market factor is what? Shorter duration of import-substituting industrialization. And time transition to acts outward looking in a policy or timely transition to an export-led growth strategy. That means what? If you look at the Latin Americans cases, most of Latin American countries suffered from what? Longer duration of import substitute industrialization. Import substituting industrialization was a designed to reduce dependency on advanced industrialized countries by developing manufacturing sector at home. Therefore, they impose trade barriers to the importation of manufactured goods from advanced industrialized countries, okay? And once they pursue this strong currency policy and also they protected the so called nationalist sector. They protected industrial sectors in which National bourgeoisie and so-called Inward-looking in the industrial sectors formed a coalition. But once ISI continues longer then there is a kind of creation of rent for those inward-looking social and political forces. But that in turn undercut economic transformation and international competitiveness. But in the case of South Korea, the duration was very short, less than even five to ten years. Therefore South Korea's pursuit of ISI in 50s and early 60s did not lead to the formation of domestic culturalistic coalition that would systematically opposed or undermined outward-looking economic strategy. You'll find a time to transition to an export-led growth strategy another important factor that contributed to economy transformation, okay. And also, perhaps I would argue that in the market the most important heroes are entrepreneurs. South Korea was full of risk-taking entrepreneurs. Here we have the founder of the Hyundai Group, Chung Ju-yung. He's really risk taking and entrepreneur who built Hyundai empire. But he ventured in automobile, ship building in all these area and then he contributed to transforming South Korean economy. Another person is what Lee Byung-chul the founder of the Samsung Group now Samsung Electronics was his own creation. He was in fact, Lee Byung-chul was really in the inward-looking economic sectors. He was manufacturing, you know, sugars, textiles, whatever, which became the source of ransacking. But since 1970's he transformed inward looking industrial sectors into the outward looking industrial sectors. And Samsung get into semiconductors, consumer electronics and other kind of so called export sectors. He played a very important role and third person is Kim Woo-jung, the founder of the Daewoo Group, okay? Kim Woo-jung was, he was just a senator then creating a small trading company called the Hansung Seoul. And the trading company, the Hansung Trading Company later evolved into Daewoo Group. The gigantic general trading Corporation with numerous subsidiaries. Of course, during the 1997 financial and foreign exchange crisis his company could not survive because of quite excessive leverages, okay? But Kim Woo-jung is still remembered as one of the most entrepreneur and business leaders in South Korea.