In the past two decades, Korea has been one of the fastest
developing nations in the world - both in economic and social terms. Rapid
industrial and economic growth has seen the Republic nearly reach developed
nation status in a remarkably short time. The Korean people also find
themselves in the midst of a new era of democratic development following the
birth of the civilian Administration of President Kim Young Sam on February 25,
1993. This wiped out the negative legacy of decades of military-backed
authoritarian rule. The country has since been implementing bold political and
economic reforms to eradicate corruption and revitalize and restructure the
economy with the goal of building a New Korea - a mature and vibrant industrial
This rapid economic and social development has brought Korea
increased international exposure and recognition, as the Republic begins to
expand its role on the international stage. Testifying to this was the
successful hosting of the 1988 Seoul Olympics, the largest held in history up to
that time. This was following by the 1993 hosting of an international
exposition, the Taejon Expo ‘93. Both the Seoul Olympics and the Taejon Expo
played an important role in deepening ties between Korea and countries all over
the world and gave an impetus to the Korean economy.
This era of stability and expanding international ties represents
the most exciting period in the country’s history - and yet, in retrospect,
Korea has, in its 5,000-year history, quite an enviable record for governments
of longevity and stability. The country’s last dynasty, the Yi Dynasty of the
Choson Kingdom, lasted 500 years.
The Koreans of today, while enormously proud of their country’s
past, look at Korea’s role and reputation from a more recent historical
perspective; but, in order to understand today’s Korea - its land, people,
culture, history, and recent economic and political transitions - it is
necessary to look at both the past and the present. “Korea In Focus” aims to
give you a brief overview to help in your general awareness of Korea today.
More detailed information can be obtained from individual organizations or
The Korean Peninsula, located in Northeast Asia, is bordered on
the north by China and Russia and juts towards Japan to the southeast. Since
1948, the 221,487 square kilometers which make up the entire Peninsula have
been divided, roughly along the 38th parallel, into the Republic of Korea in
the south and the Democratic People’s Republic of Korea in the north. The
Republic of Korea covers 99,221 square kilometers, a land area a little more
than twice the size of Switzerland.
Seoul is the capital of the country which is made up of nine
provinces; other major cities include Pusan, Taegu, Inch’on, Kwangju, and
The landscape is spectacular in its variations and about 70
percent of it is mountaneous. The oceans around the Peninsula are a major
source of livelihood and recreation for Koreans. The shoreline is dotted by
more than 3,000 islands.
The Peninsula’s longest river is the Amnokkang (790 km) in the
North. One of the South’s major waterways is the Han-gang River, which flows
through Seoul to the West Sea (Yellow Sea).
A look back at the 5,000 years of Korean history reveals triumphs
and tragedies, successes and struggles which have been instrumental in shaping
the Korea and Koreans of today. One remarkable fact that emerges from such a
historical examination is that Korea has largely been ruled by long-term,
stable governments. Korea’s kindoms and dynasties generally lasted about 500
years or more.
Although Korea’s traceable history began considerably earlier that
the seventh century, it was the Shilla Unification in 668 that Korea, as a
historical entity with a cohesive culture and society, came to occuðy most of the Peninsula as it exists today.
It was almost a decade after the end of the war before the
Republic of Korea had recovered sufficiently to establish stability and start
the momentum for its now remarkable recovery and development. The three decades
since then have been a time of spectacular progress which has seen the creation
of a modern, industrialized nation.
Korea is homogeneous society, although there have been historic
and prehistoric migrations of Chinese, Mongols and Japanese. Koreans are very
conscious of the ethnic differences and cultural distinctions which give them
their unique identity.
The population of the Republic of Korea was estimated at 44.1
million in 1993. Its population density is among the world’s highest and Seoul,
the capital, has more than 10 million inhabitants. The annual population growth
in the Republic has dropped from an average of 2.7 percent in the 1960-66
period to only 0.90 percent in 1993. The slowdown is also partly the result of
the increasing number of young working women.
The country’s rapid industrialization is responsible for today’s
concentration of population in urban centers. The proportion of Koreans living
in cities has jumped from only 28 percent in 1960 to 74.4 percent as of 1990 -
very similar to the 73 to 76 percent levels in the United States, Japan and
The Korean language is spoken by some 60 million people living on
the Peninsula and its outlying islands as well as some 1.5 million Koreans
living in other parts of the world.
Korean belongs to the Ural-Altaic language group, which is found
in an narrow band from Korea and Japan across Mongolia and central Asia to
Turkey. Korean is a non-tonal language, with agglutinative and polysynthetic
Religion in today’s Korea covers a broad spectrum of faiths and
beliefs. Buddhism, Christianity, Confucianism, Islam and numerous other
indigenous religions exist in Korea. Although none of them dominates, they all
influence contemporary culture.
Education has been at the heart of Korea’s growth by training and
supplying the manpower needed for rapid industrial and economic expansion.
A multi-tiered educational system is currently in use,
encompassing elementary school (six years), middle school (three years), high
school (three years), and college (four years), as well as various graduate and
The government has eased regulations on overseas study. This new
policy also encourages those in the teaching profession to take advantage of
opportunities for training abroad.
The tremendous pace of domestic economic growth in the past two
decades has been reflected in the expansion of transportation facilities and
the increases in Korea’s annual passenger and cargo volumes. The annual volume
of passenger transportation rose from 1.6 billion persons in 1996 to 14.24
billion in 1993.
Seoul has a well-developed mass transit system of subways, buses,
and taxis. Airport shuttles or city buses are conveniently available and
operate throughout the city. The subway system is the eighth longest in the
world, carrying 1,388 million people in 1993. Its four lines reach most major
locations in the city.
Korea has three international airports in Seoul (Kimpo), Pusan
(Kimhae) and Cheju (Cheju), all of which are equipped with modern air traffic
control facilities and support systems. Korean Air’s worldwide network serves
43 cities in 24 nations, including recently inaugurated flights to Rome. The
newly launched Asiana Airlines recently started international flights with
regular service to fourteen cities in Japan, the U.S., Singapore, Hong Kong,
Taipei and Bangkok.
All expressway system also connects Seoul with provincial cities
and towns, putting any place in mainland South Korea within a one-day round
trip of the capital. Express buses transport passengers to and from all
principal cities and resorts in the country.
The railway also serve the entire country through an efficient and
extensive network. The super-express train, Saemaul, runs 444.5 kilometers from
Seoul to Pusan in four hours and 10 minutes. There are also ordinary express
and local trains.
Ocean liners, cruise ships, and passenger-carrying freighters
visit Korean ports. A ferry service links Pusan with Chejudo Island and the
Japanese ports of Shimonoseki, Kobe and Hakada. Another ferry service recently
started between Inch’on and Tianjin China.
Telephone services have rapidly expanded during the last decade,
particularly during the last 5 Years (1988-”92). During these years, with the
investment of US$2.64 billion in communications annually, 1.76 million new
telephone circuits were installed each year, increasing the total number of
telephone lines to 10.14 million as of 1993. Virtually every home in the
country now has its own telephone and all the telephone circuits are connected
by automatic switching systems.
Also, through the launch of KOREASAT scheduled in 1995, Korea will
be able to provide satellite communication services by using its own satellite
from October 1995.
Looking Ahead to the 21st
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
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
Trends of Major Economic Indicators
Per Capita GNP
GNP Growth Rate
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 10-20
percent. Since 1982, Korea has managed to keep inflation down to a single
digit. The ratio of domestic savings to GNP grew from 3.3 percent in 1962 to
34.9 percent in 1993.
Beginning in 1989, the Korean economy began experiencing slower
growth, high inflation and a deterioration in the balance of payments. The GNP
growth 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 US$14.2 billion.
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 billion deficit 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
‘94. 1 ~ 6
Growth Rate in %
Growth Rate in %
Growth Rate in %
Growth Rate in %
Growth Rate in %
Balance of Payments
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 derived 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
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 order 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
As an initial step, the new Administration implemented a
short-term 100-Day Plan for the New Economy in March 1993, designed to promptly
create conditions conductive to revitalizing 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, strengthen 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 efficiency 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$14,076 in 1998.
Second, greater price stability should prevail as balance is
maintained between the more steadily rising demand and the more briskly
expanding supply, while wage increases are linked to rises in productivity. The
stabilization of the value of the won currency should help stabilize the prices
of imported goods and services. The net effect should be to hold down the rise
in consumer prices to an annual average of 3.7 percent, the increase in
producer prices to an annual average of 1.6 percent and the rise in the GNP
deflator to an annual average of 4.6 percent.
Targets of the 5-Year Plan for the New Economy
GNP growth, %
Per capita GNP, US$
Rise in producer prices, %
Rise in consumer prices, %
Rise in GNP deflator, %
Balance on curren account,
Exports 1) ,US$ billion
Rate of increase, %
Imports, US$ billion
Rate of increase, %
Note: 1) On a balance-of-payments basis
2) In terms of 1998 current market prices
The Real name Financial
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
With the introduction of the real-name financial transaction
system, it appears that financial dealings 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 another
economic 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 composite stock 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
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 join
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
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 of
the 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
Foreign-invested firms engaged in the manufacture of high-tech
products or banking and other services are currenlty allowed to induce foreign
credit repayable within three years. Beginning in 1997, the liberal inducement
of foreign credit by both domestic and foreign-invested enterprises will be
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 Socialist Countries
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.
Especially 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
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
With the United States, the Republic of Korea 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
With the dinamically growing Asian economies, such as China and
Southeast Asian Nations, the Republic of Korea will endeavor to 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 investment in these countries and make
efforts to build an industrial structure complementary with theirs.
The Republic of Korea is increasing its official development
assistance to developing countries proportionate to its economic strength. In
this, efforts are being made to combine such assistance with private 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.)
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-tariff
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 sectors 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
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 and public order, which began with high-ranking
government officials, is intended to ensure integrity and high ethical
standards 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
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
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
A unified land where the presently divided people live in peace as
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) the building 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 terrifying 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
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 initiative and
creativity will thus be allowed to flourish”. He went on to say. “The
Administration will be the first to tighten uts belt. Our 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
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 President
himself has made public his own assets and has said that he would not accept
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 quantitative growth in
the past three decades; now it needs qualitative development. In order to
develop New Economy, Korea must (1) establish a liberal market system, (2)
liberalize financing, (3) decentralize economic power and (4) promote economic
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 reason
the new Administration is sharply raising research and development
President Kim Young Sam announced 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 society 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 spontaneously take 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 the 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 North,
once the North Korean nuclear issue is resolved.
Reform backed by the Korean people
The Korean people’s 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
indicate that his reform policies continue to enjoy the support of a solid
majority of Koreans.
To maintain the 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 strong commitment 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 party figures to do
the same. A number of his government’s newly appointed officials were forced to
resign for their 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
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 were 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
involvement in domestic politics and directing it to focus solely on Korea’s
national security concerns.
President Kim has taken steps to reform the Office of the
President itself. The President’s residence and office complex, Chong Wa Dae,
better known 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 of 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
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 of rapid growth-oriented
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 curbed.
The funds that were channeled into political circles in the past as a result of
government-business collusion are now being invested in business activities.
As a result drastic changes are occurring in political, 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
Reform Legislation Promoting Clean Polities and Participatory
As President Kim’s urging, a package of three political reform
bills was 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
parties 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 instituted in 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 district chiefs,
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 new laws will enhance the ability of Korean citizens
from all walks of life to more fully participate in the democratic political