Superior Economic Growth Policy Adopted by Korea

Discuss about the Development Of The Economy Policy Of Korea.

This paper provides huge scope to the researcher as it provides an overview about how growth policy integrated by Korea helps to enhance development of the economy. The paper also provides huge scope to the MNCs in Korea to analyse the significance of technological innovation in the business. The main argument offered in this paper is that whether growth policy adopted by the Korean government helps to enhance GDP of the nation. I addition, this study also reflects whether technological innovation enhances business growth of MNCs in Korea. The usual research work that is being published about this topic is new trends of technological innovation in the MNCs of Korea and superior economic growth policy of this nation.  The areas that are needed to be explored for this study are improvement in business operations owing to technological innovation and the economic performance over the past few years and challenges faced by the nation while implementing growth policy.

The study firstly reflects on the superior economic growth policy adopted by Korea. In fact, this country now serves as the framework for export –orientation development strategy which multilateral institutions are mainly urging on other nations. [1]Recent facts reflects that Korea enjoys low inflation, high growth and equal income distribution at the time when other developing nations are economically stagnant. The main drive behind this is the policy that facilitated to cope up with weaknesses. This nation is the huge debtor which has overcome debt issue with a vengeance. One of the major characteristics of Korean economy is increasing share of exports in gross national product (GNP) and changing composition of trade. In the last twenty years, this nation has moved from product exporter to net importer of goods. Moreover, the policies adopted by Korea have created upsurge in performance in trade. During the past few years, the GDP (gross national product) of Korea has increased at high rate and thus has been placed among the top developing nations.

Currently, union activity as well as labour unrest have not been main problems in Korea. The policy adopted by Korean government has facilitated to bring about equality in distribution of income, which in turn helped to avoid labour issues. In addition to this, improvements in income distribution of this nation led to outcome of strong employment growth and decreasing unemployment. The support of government policy for Korea’s growth goes beyond wage restraint and education. In particular, these policies adopted by Korean government have sustained financial stability by not permitting money financing deficit and real exchange policy which sustained profitability of traded products. [2]The policies adopted by Korea do not represent laissez faire approach, which means intervention in form of subsidies, credit allocation and trade restrictions is pervasive. Industrialization strategy in Korea that started as pure import substitution with the aid of financing trade gap, expanded to involve export promotion. This nation had exhausted possibility of huge growth through import substitution of nondurable consumer products as well as intermediate inputs. Korea has also used licensing as well as tariffs to create sheltered market for development of infants. As the industries have developed, this nation has turned towards world market by credit, exchange rate and subsidy policy.

Technological Innovation in MNCs of Korea

From the five year economic development plans, Korea identified that technology is an essential factor that enables a sector to produce for world market. However, the government of this nation made huge effort to adapt as well as adopt foreign technology. One of the main pillars of this nation’s science and technology development policy has been refining ability to recognize proper foreign technology, select and adapt it accordingly. The last element in this nation’s growth policy success is the globe economic environment. This country’s exposure to the world’s economic environment differs from that of other developing nations. Due to such difference in the economic environment, this nation has made fiscal as well as external adjustment. Wage policy has been considered as mainstay of this nation’s performance of trade. The restraint of huge rise in wage in face of external shocks has facilitated this nation to attain rapid as well as efficient adjustment. However, the labour relations recently have been varying rapidly.

The superior growth of Korea during the last few years has been the outcome of not any single policy but of several policies adopted at varied times. During the prevail of surplus labour and high unemployment, the government of this country opted for the support of labour- intensive sector and also pushed the education programs on huge  scale. When competitive edge in this sector started to be threatened, the support mainly switched to chemical sectors. Apart from this, when excessive misallocation and government intervention became apparent, the Korean government relaxed few control over this economy. In fact, they played vital role in structural adjustment. When the Korean economy had become complex for the central management, they yielded huge control on it. Thus, implementation of new growth policy led to liberalization of trade as well as capital markets and improvement in the economy.

This article also deals with technological innovation, which is considered as the main factor in growth and development of MNCs in Korea. This paper is in the light of current developments in role of developing technological capabilities in evolution and competitive emergence of MNCs in Korea. By challenging the reliability as well as validity of product lifecycle model can be linked to revisiting aspect. [3]Few researchers provide explanation of innovative capacities of MNCs in Korea by extending its framework of product life cycle framework. The framework of technological change reflects that third world companies have wider scope for innovation. This model of technological change mainly suggests that enterprises from the developing nations including Korea have huge capacity to follow independent technological course. This can be either by means of foreign technology adaptation, technological creation and other techniques that are usually used in developed nations. There are five kinds of manufacturing technology of MNCs such as- production execution functions, connection establishment functions, capital goods provision, skill transfer functions.

Product Lifecycle Model and its Relevance to Innovation in MNCs of Korea

According to view of product lifecycle, this form of technological change is not taken into account as innovation has been seen basically in form of creation of new commodities in high income nations. The industries as well as products becomes standardized as the sector matures and location of manufacture shifts from the nation of primary innovation. In fact, competition in price has become more vital relative to the product differentiation as barriers in entrance declines, sectors becomes highly competitive and commodity standardization proceeds. The MNCs in Korea are mainly based in standardized commodity industry with low commodity differentiation and R&D expenditures.  Few researchers are of the view that the MNCs of tis nation have several advantages which come from integrating foreign technology to situation of smaller plants and firm size. [4] They have also pointed out that descaling of this new technology in production of traditional goods and utilization of resources as inputs in production process amounts only to limited innovativeness on the part of MNCs as these activities are confined to the end of product life cycle.[5] The different kinds of innovation used by emerging multinationals needs empirical investigation which looks at creation of technology than sphere of research. Owing to this technological change, the companies based in the emerging markets have gained innovative capacity which is not copied by affiliates of MNCs in developing countries including Korea. It has evident from few facts that the MNCs in Korea have integrated new technologies for innovating disruptive products particularly to address the consumer requirements and preferences. This has led to success in business and improvement in business performance. Product lifecycle model is more vital in relation to other factors to explain why enterprise in developed nations retain comparative advantage. [6]An extended product lifecycle framework better describes existence of emerging multinationals pursuing world’s strategies whose strengths mainly derive from that operating at technology frontier as well as strong brands. Two other trends are closely associated to varying innovation nature in emerging markets. The MNCs in advanced economies whose innovation subsidiaries and R&D units in emerging nations are succeeding to undertake frugal innovation. The reverse innovation procedure also takes place since technological advancement to initial innovation for meeting specific requirements of the emerging markets forced growth of the business opportunities. The enterprise in Korea require business system and product innovation for leveraging business opportunities. [7]The MNCs in Korea has adopted several strategies for increasing their competitiveness in the market. The product life cycle impacts the strategies which the companies adopt for beating relentless competition from other MNCs. This involves developing of business framework to overcome obstacles, emphasising scope economies, customizing goods and services for meeting local requirements and gaining low- cost labour as well as training in- house for overcoming shortages of workers.

Strategies Adopted by MNCs in Korea for Improving Competitiveness

Different methods was adopted for conducting this study which includes- research approach, research design, research philosophy, data collection method.

• Descriptive research design is used for this study.
• The research approach used for this study is deductive approach
• The research philosophy used in this research is positivism philosophy
• Both secondary and primary data collection method is used for this study. The secondary data is collected from articles, journals etc while the primary data is collected from surveys, observations.
• The usual method used for doing this research is qualitative method. The data is collected from with the help of survey questionnaire procedure.

The Philippines growth policy is slightly different from that of Korean growth policy. The Philippine nation mainly focuses on high growth which is sustained, reduction on poverty and mass employment. The nation integrates new policy as that of Korea which mainly focuses on good governance, sustainable economic growth, improving the quality of people’s life, enhancing social cohesion as nation. Recent evidences also reflects that even though Philippine FDI outflows lags behind few of its ASEAN nations, there are rising number of transnational enterprise that are investing abroad for new technologies. Technological innovation has also brought about several changes in the MNCs of this nation as that of Korea. There has been huge development in MNCs of Philippines and thus this led to the expansion of market in this nation. Overall, technological innovation positively influences the MNCs of Philippines as that of Korea.

Conclusion

From the first article, it can be concluded that the government of Korea plays vital role in integrating new growth policy in the nation. Proper growth policy helps to enhance economic development of Korea. It has been evident from the second article that technological innovation has huge significance in the success of emerging MNCs in Korea. Moreover, it also helps the MNCs in Korea to enhance growth in business and expand their business globally.

References

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