From: shlee@jhunix.hcf.jhu.edu (Seunghun Lee)
Subject: Re: KOREAN ECONOMY
Organization: HAC - Johns Hopkins University, Baltimore
Date: Wed, 23 Dec 1992 22:51:57 GMT

First thanks for your thoughtful reply.


In article <1992Dec22.232241.8176@u.washington.edu> yeonwook@hardy.u.washington.edu (Mark Choi) writes:

>
>Korea has failed to do this, this is why there are so many financial short
>falls and structural problems. The Korean economy is based on "giantism",
>where nearly 60% of Korea's economy is controlled by the chaebol (Hyundai,
>Goldstar, Samsung, Daewoo, etc.). These chaebols are always dependent on
>small parts from Japan, that is what makes up a large part of the trade 
>deficit, not because of Korean consumers buying Japanese consumer products,
>but because of Korean large businesses being dependent on Japanese parts.
>
>Some people look at Japan and see huge companies much like in Korea. Then
>why do their keiretsus not have huge deficits with part supplier nations?
>Because for years, the Japanese version of "huge business conglomerate" is
>different from the Korean chaebol. Korean chaebols are made up of several
>huge companies, Japanese chaebols are made up of several huge companies plus
>their suppliers. Also, small business didn't have to compete with large
>businesses. Most of the components you find in Nikons, Sonys or Toyotas 
>are from Japanese suppliers.
>
>
>I think Korea is good on R&D spending. From what I've read, most Korean

excuse me, but i don't know what R&D stands for.
is it  research and something?

>chaebols are cutting down facility expansion for this year, but keeping 
>the projected investments in R&D, although I am not sure what the exact
>statistics are. In any case, there remains many structural problems which
>the government must face. In order to promote the growth of the small 
>business sector, the government must lure the small business sector to 
>participate in many infrustructure projects. For example, the new airport
>off Kangwha will do nothing to the economy unless small business and large
>business participate in its construction. The government must also make
>investment an attractive choice by increasing interest rates and allowing
>small businesses to have many tax breaks. 
>

Do you happen to know what present tax policy of our government is ?
and what would it be under next regime?
many tax breaks on technology ?
and high tax on excessive possesion of land?

>What is also necessary is a central R&D facility where all small 
>businesses can cooperate. Small businesses are usually in charge of 
>creating the parts from raw materials. These raw materials are made by
>machines created by large companies. And the machines are made with parts
>from the small sector, so it is like a circle. The winning nation 
>economically will have the strongest small business sector that finds
>ways to efficiently extract parts from raw materials. The central R&D 
>facility should be only used by the government, since the government
>will have the most financial resources. Of course, the small businesses
>can also set up their own R&D labs, etc., but because they are small,
>and their financial power indirect, they will not have enough to actively
>invest. So, the government must seek cooperation between state or
>chaebol R&D labs and small businesses, large businesses and small businesses, 
>and a general cooperation between all business sectors so the financial
>R&D resources can be evenly spread. The problem with the Korean economy
>is that the R&D research money is concentrated in only the big business
>sector.
>

right, a central R&D would help our companies not to waste 
precious time and money
doing same things and competing each other uselessly.

>I'm interested in hearing the opinions of others, too.
>
>
>
>
>-- 
>    .  .      +---------------------------------+
>  --|--|      | Mark Yun Wook Choi              |
>   /.\ |      | yeonwook@hardy.u.washington.edu |
>  --|--|      +---------------------------------+  

one more question.
now many korean GeaBul try to invest in china,
what effect would it be on our korean economy
and in what way they should invest in china to make korean economy better
without costing many job in korea?

Sincerely
Seunghun