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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