In the last quarter century, Korea’s economic growth has been among the
fastest in the world. The country has overcome obstacles and challenges
to transform itself from a subsistence-level economy into one of the
world’s leading newly industrialized countries. Today, however, the
Korean economy faces the new challenges of internationalization and
globalization in an increasingly complex global economic environment.
Past Performance and Policies
Since Korea launched its First Five-Year Economic Development Plan in
1962, the country’s real GNP has expanded by an average of more than 8
percent per year. As a result, Korea’s GNP has grown from US$2.3 billion
in 1962 to US$328.7 billion in 1993; per capita GNP has increased from a
meager US$82 in 1962 to US$7,466 in 1993 at current price levels.
The industrial structure of the Korean economy has also been
completely transformed. The agricultural sector’s share of GNP declined
from 37.0 percent in 1962 to 7.1 percent in 1993. The manufacturing
sector’s share has increased from 14.4 percent to 27.1 percent in the
same period. The service sector accounted for only 24.1 percent of GNP
in 1962 but grew to 40.0 percent in 1993.
Korea’s merchandise trade volume increased from US$500 million in 1962
to US$166 billion in 1993. The nation continuously posted trade deficits
until 1985 when its foreign debt reached US$46.8 billion, the fourth
largest in the world. From 1986 to 1989, Korea recorded current account
surpluses and its debt declined.
Inflation in Korea was one of the major economic problems in the 70s
and early 80s, during which consumer prices rose at annual rates of
10-20percent. Since 1982, Korea has managed to keepinflation down to a
single digit. The ratio of domesticsavings to GNP grew from 3.3 percent
in 1962 to 34.9 percent in 1993.
Beginning in 1989, the koreaneconomy began experiencing slower growth,
high inflation and a deterioration in the balance of payments. The
GNPgrowth rate fell to 6.7 percent in 1989 from the 12 percent level of
previous years. A slump in the growth of the manufacturing sector, from
18.8 percent in 1987 and 13.4 percent in 1988 to 13.7 percent in 1989,
contributed largely to this decline in GNP growth rate. The export
growth rate on a customs clearance basis, which was 36.2 percent in 1987
and 28.4 percent in 1988, fell to just 2.8 percent in 1989. Reflecting
this fall in the export growth rate, the current account surplus lowered
to around US$5.1 billion, a significant drop from the 1988 surplus of
In 1991, the economic growth rate showed signs of recovery. The GNP
grew during the year 9.1 percent. However, most of this growth was
attributed to an increase in domestic demand, particularly domestic
consumption. Exports increased 10.3 percent compared to 1990, while the
growth rate of imports increased 17.7 percent. The trade balance
deteriorate rapidly to a US$7.0 billiondeficit in 1991 from the US$4.6
billion surplus in 1989. In addition, price stability, which had served
to boost Korea’s competitiveness, weakened. Consumer prices, which had
risen on an annual average of 2-3 percent between 1984 and 1987, rose
9.3 percent in 1991.
Recent Economic Trends
‘91 ‘92 ‘93 ‘94. 1 ( 6
GNP Growth Rate in % 9.1 5.0 5.6 8.5
Manufacturing Sector Growth Rate in % 9.1 5.1 5.0 10.0
Private Consumption Growth Rate in % 9.5 6.6 5.7 7.2
Investment Growth Rate in % 12.6 0.8 3.6 10.3
Equipment Growth Rate in % 12.1 1.1 0.2 17.7
Producer Price % 4.7 2.2 1.5 2.2
Consumer Price % 9.3 6.2 4.8 6.2
Balance of Payments
7.0 2.2 1.9 1.6
Export US$ bil. 69.6 75.1 81.0 43.1
Imports US$ bil. 76.6 77.3 79.1 44.7
Balance US$ bil. 8.7 4.5 0.4 2.7
In 1992, the Korean economy rapidly cooled off, with the GNP growth rate
dipping to 5.0 percent, influenced chiefly by blunted investment in
capital goods. The consumer price index rose just 6.2 percent, and the
deficit in the balance of payments also dropped to US$4.5 billion.
At that time, the Korean economy faced many challenges on both the
internal and external fronts. Part of the economic slowdown may be
explained by the cyclical adjustment of the economy after three
consecutive years of rapid growth. However, the stagnation was more
likely the result of a structural deterioration in competitiveness, due
to a combination of the lingering legacies of the past government-led
economic management system, which had now become inefficient, and the
disappearance of the advantages dericed from the once ample availability
of low-cost labor: Thus the country was forced to search for a new
driving force sufficient for sustained economic growth.
Major Tasks and Policy Directions
To revitalize the economy the Kim Young Sam Administration, which was
inaugurated in February 1993 as the first civilian democratic
government in over three decades, is endeavoring to construct a new
developmental paradigm called “the New Economy”. This signals a clean
departure from the past, when the government directed and controlled
the concentrated investment of capital, labor and other resources in
selected “strategic” industrial sectors to achieve rapid economic
growth. Instead, the New Economy will promote the autonomy and
creativity of all economic actors in oreder to maximize efficiency,
while ensuring the equitable distribution of income. In that way, it
seeks to enable the nation to leap into the ranks of the developed
nations within the next five years.
As an initial step, the new Administration implemented a short-term
100-Day Plan for the New Economy in March 1993, designed to
promptlycreate conditions conductive to revitalazing the economy. This
was followed by the development of a new five-year economic development
plan. Formally announced in July 1993, the Five-Year Plan for the New
Economy was conceived primarily to lay the basis for joining the ranks
of advanced countries and thus to effectively prepare for the eventual
unification of the Korean Peninsula.
The Government will continue its efforts to ensure the effective
implementation of the five-year plan through the spontaneous
participation of the people by reforming economic institutions including
the improvement or simplification of existing financial and tax systems
and administrative measures. Furthermore, the Government will continue
to endeavor to fully realized the nation’s economic growth potential,
streigthen its international competitiveness, and improve the economic
conditions of the public.
If the plan is implemented as intended, the Korean economy is projected
to change as follows:
First with increased efficency and greater realization of growth
potential, the gross national product should rise at an average annual
rate of about 6.9 percent, raising per capita GNP to US$14,076 in 1998.
Second, greater price stability should prevail as balance is maintained
between the more steadily rising demand and the more briskly expanding
supply, while wage increases are linked to rises in productivity. the
stabilization of the value of the won currency should help stabilize the
prices of imported goods and services. The net effect should be to hold
down the rise in consumer prices to an annual average of 3.7 percent,
the increase in producer prices to an annual average of 1.6 percent and
the rise in the GNP deflator to an annual average of 4.6 percent.
On August 12, 1993, the president took a decisive step toward
revitalizing the economy and eliminating corruption by announcing the
inplementation of the long-anticipated real-name financial transaction
system. In the past, it had been possible to open accounts and conduct
business transactions under false names, directly and indirectly
fostering institutionalized-corruption and illegal financial
dealings.deeming this reform as the most important in the creation of a
New Korea, the President announced this action in a Presidential
Emergency Decree, stating that the real-name system was essential for
cutting the dark link between politics and business.
With the introduction of the real-name financial rtansaction system, it
appears that financial dalings are becoming fully transparent and
underground economic dealings and nonproductive land speculation are
diminishing. It is hoped the funds that had been channeled into
political circles in the past as a result of government-business
collusion are now available for more productive activities.
The implementation of a real-name financial transaction system, the
easing of administrative controls, expanded capital investment by major
enterprises, and increased financial and administrative support for
small-and medium-sized enterprises all combined to lay a solid
foundation for anothereconomic take-off. Exports rose 7.6 percent in
1993 to US$82.4 billion, while imports grew just 2.5 percent. Korea was
thus able to register a US$600 million trade surplus last year for the
first time in four years. The current account also yielded a surplus of
US$200-300 million. Industrial production has been growing at about a
10 percent rate during the first half of 1994. Furthermore, labor
disputes decreased markedly last year, while the compositestock index of
the Seoul Stock Exchange climbed markedly. In view of these indications,
the Korean economy seems to be well on the way to revitalization.
External Policies for Greater International Cooperation
Korea is committed to fulfilling its international responsibilities. It
positively supports the trend toward openness and utilizes it as a
catalyst for further enhancing the international competitiveness of
industry and thus speeding the advancement of the economy, so that it
can jopin the group of advancedcountries.
Since 1980, Korea has made continuous efforts toward import
liberalization. The import liberalization rate increased from 68.6
percent in 1980 to 98.1 percent in 1993. The average tariff rate
decreased from 24.9 percent to 8.9 percent during the same period and is
expected to be only 7.9 percent by the end of 1994, the same average
level of tariffs found in OECD member countries.
In October 1989, Korea decided to relinquish GATT balance of payments
protection which mostly covers agricultural products. According to the
decision Korea will move to eliminate its remaining restrictions or
otherwise make them conform with GATT rules by July 1, 1997.
Liberalizing Foreign Exchange Transactions and Capital Markets
In June 1993, the Korean Government made public the third-phase od
blueprint for financial liberalization and internationalization, which
was implemented from the second half of 1993. Under the plan, procedures
for various foreign exchange transactions are being gradually
simplified. Beginning in 1994, the ceiling on foreign investment in the
stock market will be gradually raised, and the bond market will also be
gradually opened to foreign investment. Initially, from 1994 foreign
investors will be allowed to purchase convertible bonds, even those
issued by small-and medium-sized domestic enterprises.
Foreign-invested firms engaged in the manufacture of high-tech products
or banking and other services are currenlty allowed to induce
foreigncredit repayable within three years. Beginning in 1997, the
liberal inducement of foreign credit by bith domestic and
foreign-invested enterprises will be allowed.
Increasing Opportunities for Foreign Investors
In June 1993, the Korean Government also announced a five-year plan for
liberalizing foreign investment. under the plan, 132 of the 224 business
lines currently being protected from foreign competition will be opened
to foreign investment in five phases, over a period of five years
starting from July 1993. With the implementation of this plan, of the
total 1,148 business lines under the standard industrial classification
of Korea, 1,056 will be open to foreign competition. This means that the
foreign investment liberalization rate will rise from 83 percent as of
June 2, 1993 to 93.4 percent by 1997.
Included among the business lines to be opened to foreign competition
under the plan are most of the service industries including distribution
and transportation, hospital management, vocational training and
The business conditions for foreign-invested firms will also be greatly
improved through various measures, including relaxed control on the
acquisition of land by foreign-invested firms, the augmented protection
of foreign intellectual rights, and other similar steps.
Cooperation with the Rest of the World, Including Developing Nations and
Expanding Trade and Economic Exchanges
The republic of Korea has emerged as a major global trader by steadily
pursuing freer trade and greater openness, while promoting its business
presence around the world. In the past, Korea’s foreign trade
concentrated on the developed world- mainly the United States, Japan and
the EU. In more recent years, however, it has rapidly expanded trade and
capital cooperation with Southeast Asia, former and present socialist
countries and Third World nations as well.
Espesially since the 1988 Seoul Olympics, economic interactions with
the former Soviet republics have been brisk. The Republic of Korea is
also increasing its support of economic development efforts in the Third
World on the basis of its more than three decades’ experience with
successful domestic development.
The nation will continue to pursue expanded and more diversified trade
and to promote economic cooperation on a long-term basis with the rest
of the world, taking into consideration the individual economic
characteristics of each country.
With the United States, the Republic of Koera will pursue not only
expanded bilateral trade and increased mutual private investment and
technological cooperation but also government-to-government cooperation
in industrial technologies. As for Japan, the Republic will pursue
Forward-lookoing practical economic relations and will, in particular,
strive to attract Japanese investment more effectively. Since korea does
not have serious trade issues with the EU it will focus on promoting
overall economic cooperation, including mutual investment and industrial
and technological cooperation.
With the dinamically growing asian economies, such as China and
Southeast Asian Nations, the Republic of Korea will endeavor ti continue
to expand two-way trade, especially by helping to meet their expanding
needs for capital goods and intermediate products to support their
continuing rapid development, while increasing imports from them as much
as possible. The nation will also encourage Korean business ionvestment
in these countries and make efforts to build and industrial structure
complementary with theirs.
The Republic of Korea is increasing its official development assistance
to developing countrie proportionate to its economic strength. In this,
efforts are being made to combine such assistance with rpivate Korean
investment, with the aim of maximizing its effect, while developing
two-way trade and other economic ties on a long-term basis.
Economic ties with the Commonwealth of Independent States and East
European countries will continue to focus on commercial applications of
their high technologies and other forms of technological cooperation and
joint development of natural resources.
Korea Trade with and Investment in Various Countries and Regions
Country or Region Trade (US$ bil.) Investment (US$ mil.)
Southeast Asia 8.9 (10.1) 27.8 (16.7) 130.5 (31.8) 179 (14.3)
Note: Figures in parenthesis represent percentage of the total.
Active Participation in Multilateral Economic Forums
Korea has actively participated in virtually all major multilateral
forums. During the Uruguay Round of trade talks, finally concluded in
December 1993, Korea tried to make conrtibutions commensurate with its
capabilities as a major world trading power, and play a mediating role
between the developed and developing countries. Korea introduced various
proposals in the Uruguay Round negotiations to reduce tariffs, eliminate
non-taruff barriers, liberalize the textile trade, improve safeguards
and reduce subsidies and countervailing duties.
The republic of Korea is actively participating in global efforts to
protect the environment, a crucial task facing all of humanity. In
recent years it has joined the Convention on Climate Change, the Basel
Convention on the Control of Transboundary Movements of Hazardous Wastes
and their Disposal, the Convention on the Prevention of Marine Pollution
by Dumping of Wastes and Other Matter, also called the London Dumping
Convention, the Convention on International Trade in Endangered Species
of Wild Fauna and Flora, and the Convention on Biological Diversity.
Korea has also begun an informal dialogue with the Organization for
Economic Cooperation and Development (OECD) and has expanded
participation in its various committees . Korea hopes and intends to
improve its economic systems to the level of advanced countries so as to
join the OECD in 1996.
One organization in which the Republic of Korea has played a
particularly critical role has been the Asia-Pacific Economic
Cooperation (APEC) forum, a forum for multilateral discussions on
economic issues concerning the Asia-Pacific region.Two examples of
Korea’s valuable efforts have been the “Seoul Declaration” adopted at
the third APEC Ministerial Meeting hosted by the Republic which laid the
foundation for the institutionalization of APEC, and its diplomatic role
in bringing China, Taiwan and Hong Kong, three key regional economic
powers, into the APEC fold,giving the forum a new impetus. Subsequently,
the Republic played a leading role at the first APEC Leaders Economic
Meeting in Seattle in November 1993, which coincided with the fifth APEC
Ministerial Meeting, and was elected the chair member of the Committee
on Trade and Investment (CTI).
The rise of the Korean economy over the past several decades, often
called the “Miracle of the Han”, has been an inspiring model of modern
economic development. The rapid pace with which the Koeran economy rose
from the ashes of war and expanded stunned the outside world. However,
this rapid growth was not unaccompanied by growing pains which began to
manifest themselves in all sector of society particularly during the
late 1980s. Excessive wage hikes, high capital costs and an overly
bureaucratic administration, not to mention institutionalized
corruption, served to weaken Korea’s international competitiveness, and
this was aggravated by unfavourable external circumstances. In the past
year, though, strenuous efforts have been made to overcome these
impediments and through this, as well as improving international
economic climate, it appears that the Korean economy is regaining its
former vigor. The upcoming years pose severe challenges for the
Republic in light of the December 1993 conclusion of the Uruguay Round
and the rise of the Asia-Pacific region as the new global economic
center, but with the increasing emphasis in both the public and private
sector on globalization and internalization, the Republic seems braced
to meet these challenges.
REFORM TOWARD A NEW KOREA
The Basic Goals and Reform Process of the Kim Young Sam Administration
What are the vision and goals of the Administration of Kim Young Sam,
inaugurated on February 25, 1993. In a nutshell, the answer is the
“creation of a New Korea” through “Reform Admist Stability.” This
concept was the keynote of the President’s inaugural address as well as
the main slogan of his presidential election campaign in december 1992.
“I have a dream. It is the creation of a New Korea in which a new
politics, a new economy and a new culture will bloom. This is my dream
and vision; it is the dream and vision of all our people.” This
quotation appears in the book, “Kim Young Sam: New Korea 2000,”
published in Korea in October 1992 prior to the presidential election.
In his inaugural speech on February 25, 1993, President Kim Young Sam
defined the three major priorities of his policies to create a New
Korea: the eradication of social injustice and corruption, the
revitalization of the national economy and the establishment of
official discipline and public order.
The president declared that the eradication of corruption was a vital
foundation for reforms in every sector of the country, and that there
would be no sanctuary from the investigation of misconduct. The movement
to establish official discipline anmd public order, which began with
high-ranking government officials, is intended to ensure integrity and
high ethical syandards by “purifying the upper reaches of the stream,”
i.e., the upper levels of government and society.
The main purpose of these reforms is to revitalize the nation and
elevate the overall standard of living. president Kim Young Sam has thus
pushed ahead with firm determination since his inauguration, bringing
about enormous changes in this country.
From the very start of his Administration, President Kim Young Sam
concentrated on eliminating corrupt practices and behavior which arose
from decades of authoritarian rule. This kind of housecleaning was
unhead of in the past. President Kim believes, and popular opinion
supports him on this, that such reform must be carried on without
letting up in the interest of the long-term stability and economic
development of Korea.
The Concept of a New Korea
The creation of a New Korea means the building of unified, fully mature
democratic state. To that end, drastic changes and reforms are being
pursued to raise the quality of life for all those who were sacrificed
in the blind quest for rapid growth over the past 30-odd years.
What will the future New Korea be like? Korea’s first non-military
President since 1961, President Kim in his inaugural address said the
New Korea will be:
A freer and more mature democratic society.
A community where people share, work and live together in harmony. A
higher quality of life will flourish and the dignity of the individual
will be upheld.
A state where justice flows like a river throughout the land. In other
words, it will be a just society in which honest and earnest individuals
A new country in which human dignity is respected and culture is valued.
A unified land where the presently divided people live in peace as one.
And, it will stand tall and proud on the center stage of the civilized
world, making vital contributions to global peace and progress.
Curing the Korean Disease
The problems which are widespread in Korea today are often referred to
as the Korean disease: (1) Korean industriousness and ingenuity - long
the envy of the world - seem to be evaporating, (2) values continue to
erode, due to injustice, corruption, lethargy, bigotry, inertia, strife
and confrontation, and narrow self-interests, and (3) self-confidence
has been lost and defeatism has set in.
to create a New Korea, the new Administration has been vigorously
addressing these symptoms through drastic change and reform. The
President outlined the goals of these changes and reforms in his
inaugural address: (1) the establishment of a new era of courage and
hope by shaking off frustration and lethargy, (2) the replacement of
bigotry and inertia with openmindedness and vitality, strife and
confrontation with dialogue and cooperation, mistrust with trust, and
(3) thebuilding of a society which sees all citizens not only living
together but also truly carring about one another, discarding narrow
The President outlined three essential tasks in his inaugural address.
First, misconduct and corruption must be rooted out. he defined
misconduct and corruption as the most terrifyinh enemies attacking the
foundation of society, and called for an end to all manner of
impropriety and graft, allowing no sanctuary. He called for immediate
reform starting from the very top.
Second, the economy must be revitalized. He vowed that the new
Administration would do away with unwarranted controls and protection
and instead guarantee self-regulation and fair competition. “Private
intiative and creativity will thus be allowed to flourish”. He went on
to say. “The Administration will be the first to tighten uts belt. Oue
citizens must also conserve more and save more. extravagance and
wastefulness must be eliminated... Only when the Government and the
people, and labor and business work together with enthusiasm will it be
possible to turn our economy around...”
Third, national discipline must be enhanced. “Respect for authority
must be reestablished... Freedom must serve society... The true meaning
of freedom is in using it to plant a flower in the park rather than
picking a flower from the park.” The President also said, “Ethics...
must be made to prevail. to this end, education must henceforth
cultivate wholesome character and unwavering democratic belief, as well
as equip our young people for the future with knowledge and skill in
science and technology...”
Four majot Goals of the New Administration
The four major goals of the Administration are clean government, a
sound economy, a healthy society and peaceful unification.
Clean government means a government free of corruption and injustice.
there is a saying that the lower reaches of a river will be clean only
when the upper reaches are kept clean. The president is determined to
keep the upper reaches of the stream clean, and all the Cabinet members
and high-ranking public officials will join in this effort so that the
public will have confidence in the Government.
the campaign to keep the upper reaches of the stream clean means
reforms from the top.The new Government has required high-ranking public
officials to register and make public their personal assets to
discourage the illegal accumulation of wealth under the Public
Officials’ Ethics Law. The Prsident himself has made public his own
assetsand has said that he would not accept political contributions.
A sound economy means a New Economy free of unwarranted controls and
protection - an economy which guarantees self-regulation and fair
competition and encourages the private initiative and creativity
necessary for economic revitalization. The economy has been marked by
quantitativegrowth in the past three decades; now iut needs qualitative
development. In order to develop New Economy, Korea must (1) establish a
liberalmarket system, (2) liberalize financing, (3) decentralize
economic power and (4) promote economic reforms.
The New Economy emphasizes concentrated efforts for the renovation of
science and technology. In the 21st century, the strength of nations
will be measured by the development of science and technology. It is for
this reasin the new Administration is shrply raising research and
President Kim Young Samannounced on August 12, 1993, implementation of
real-name system for all financial transactions to assist in the
realization of economic justice and clean government. The new
Administration also has a firm position to control speculation in real
estate and institute tax reforms.
By effecting all these changes, it is predicted that the inflation rate
as measured by the consumer price index will fall to the 3-4 percent
range by the end of 1994 from the usual past level of nearly 6 percent,
while the balance on current account will shift into the black. The
economy as a whole should grow at an average annual rate of 6.9 percent,
boosting per capita GNP to US$14,076 in 1998 from US$7,466 in 1993.
A healthy siciety means a society in which all people work hard and
receive just rewards. it is obvious that a clean government and sound
economy alone cannot create a New Korea. A healthy society is
absolutely required as well. Everyone must spontaneouslytake
responsibility for keeping society healthy. Each and every person must
be honest, courageous and dignified.
Peaceful unification is the supreme task for Koreans. the Republic’s
Korean national Community Unification Formula envisages a Korean
Commonwealth, an interim arrangement designed to build political,
economic and military trust and restore national homogeneity, leading
to full national integration through free general elections throughout
the Korean Peninsula. president Kim will consistently pursue this
unification formula, widely regarded as being very realistic. He will,
however, flexibly adapt it to changes in thye international situation.
In a liberation Day speech on August 15, 1994, he thus prpoposed
South-North joint projects for national development, including
light-water nuclear reactor construction in the Morth, once the North
Korean nuclear issue is resolved.
Reform backed by the Korean people
The korean’s people deep support of President Kim’s comprehensive
reform agenda has been reflected in the Korean leader’s strong public
approval rating. president Kim has fared consistently well in public
opinion polls which indicatethat his reform policies continue to enjoy
the support of a solid majority of Koreans.
To maintainthe public’s trust, President Kim has pledged to create a
corruption-free political environment by establishing high ethical
standards for the members of his administration and political party.
Symbolizing his strongcommitment to this goal on February 27, 1993, just
two days after his inauguration President Kim disclosed all of his
financial assets to the public, and encouraged all senior cabinet and
ruling part figures to do the same. A number of his government’s newly
appointed officials were forced to resign for thir past unethical
financial conduct and President Kim declared that there would be “no
sanctuary” from his clean-up campaign. He stressed that the new ethical
standards “must be internalized and become a way of life” for all
In order to institutionalize the disclosure of public officials’
assets, the existing Public Officials’ ethics Act as revised in June
1993, and ranking government officials are now required to register and
disclosure their assets under this law. As a result of the clean-up
drive resulting from the asset disclosure, 1,363 public officials aere
dismissed for malfeasance and 242 were forced to resign due to
improperly acquired wealth.
President Kim’s inauguration brought to an end the deep involvement of
the military in Korea’s political arena. Corruption in the armed forces,
long a taboo subject, became a focus of the new reform drive. promotion
kickback scandals were uncovered, and a number of senior military
officers have been removed from their posts. The Administration has also
investigated and taken legal action against defense procurement
irregularitites. At the same time, Prsident Kim has moved to
depoliticize the government bureaucracy. In particular, he has reformed
the nation’s intelligence apparatus, ending its envolvement in domestic
politics and directing it to focus solely on Korea’s national security
President Kim has taken steps to reform the Office of the President
itself. The President’s residence and office complex, Chong Wa Dae,
better khown as a Blue House, has been made more accessible to the
public. For the first time in decades, the avenue in front of the Blue
House is now open to traffic, as are the scenic mountain hiking trails
adjacent to the presidential residence. Gone are the lavish Blue House
meals once served to staff and guests. Instead, everyone, including the
president himself, dines on simple yet traditional Korean cuisine.
Following this reform to require the disclosure od personal assets by
public officials, President Kim Young Sam boldly introduced a real-name
financial transaction system in order to achieve fundamental structural
reform that will greatly assist in the realization of economic justice
and clean government.
This real-name financial transaction system, which was put into effect
by an emergency presidential decree on August 12, 1993 is the core of
the entire reform movement, “the reform of all reforms.” This reform is
helping eradicate misconducts and realize economic justice by rectifying
the distorted economic structure and income distribution caused by
underground economic activities and real estate speculation and by
cutting shady financial ties between politicians and businessmen. In
order to join the ranks of advanced countries, Korea must eradicate the
corruption and irregularities stemming from certain aspects of past
administrations’ pursuance f rapid growth-oriented economic development.
With the introduction of the real-name financial transaction system,
all financial dealing have become transparent, underground economic
dealings have diminished, and nonproductive land speculation has been
cuebed. The funds that were channeled into political circles in the past
as a result of government-business collusion are now being invested in
As a result drastic changes are occurring in polotical, economic and
social activities in virtually every sector of Korean society. Business
investment is actively increasing, and the past distorted economic
structure and income distribution is being rectified.
President Kim’s declaration not to receive any money from businesses so
as to maintain a clean government and to build a clean society, combined
with his political philosophy, laid the foundation for the introduction
of the real-name financial transaction system. The success of the
real-name financial transaction system is serving as a stepping-stone to
a New Korea.
Reform Legislation Promoting Clean Polities and Prticipatory Democracy
As President Kim’s urging, a package of three politival reform billswas
unanimously passed by the National Assembly on March 24, 1994.Marked by
heavy penalties for offenders, the Law for Electing Public Officials and
Preventing Electoral Irregularities is designed to ensure the
transparency of campaign financing, limit campaign expenditures while
encouraging freer campaigns, and ban “premature electioneering,” as well
as all other electoral misconduct. The amended Political Fund Law is
intended to control fund raising by political parties and individual
politicians with the aim of stamping out “money politics” and
“politics-business collusion,” while encouraging relatively small
contributions by individuals and groups to the coffers of the perties or
politicians that they support. Together, these two laws are aimed at
ensuring free, fair, clean and frugal politics in general. The revised
Local Autonomy Law provides for the election of the chief executives of
local governments in addition to the local councils already institutedin
1991 to restore local autonomy after a 30-year hiatus.
Under the new Local Autonomy Law, four kinds of local elections are
scheduled to be conducted on June 27, 1995, to choose 15 provincial
governors and metropolitan mayors, 866 members of provincial and
metropolitan councils, 260 city mayors, country executives and municipal
districtchiefs, and 4,304 members of lower-level local councils - for a
total of 5,445.
In line with the key goals of President Kim’s political reform, the
enforcement of these nwe laws will enhance the ability of Korean
citizens from all walks of life to more fully participate in the
democratic political process.