KOREAN ECONOMY CREDIT 3 INSTRUCTOR Professor Doowon Lee OFFICE Rm# 606, College of Commerce and Economics OFFICE HOURS TIME 3:20~5:00 CLASSROOM LOCATION E-MAIL T.A.: [COURSE INFORMATION] COURSE DESCRIPTION & GOALS The purpose of this course is to improve the understanding of the Korean and the other East Asian economy in the global perspective. Also, in doing so, the instructor will help the students to enhance their knowledge about theories of macroeconomics, international trade and economic development in the light of the Korean and the other East Asian experiences. Upon reviewing major models of economic development, this course will examine the century-old economic development of Korea and East Asia. Most of the emphasis will be given to the period after the WWII. The first half of the course will be devoted to review the evolution of the Korean economy during the last several decades in comparison with other East Asian economies. Major characteristics as well as the most important policy change of each decade will be explained. During the second half of the course, more specific topics such as macroeconomic management, fiscal and monetary policy, role of financial market, firms and industrial policy, external economic relation, and social issues will be studied. In each subject, relevant theoretical backgrounds will be introduced. Also, international comparisons based on various sources of references will be made as much as possible to enhance the understanding of the lectures. One or two lectures can be conducted by invited speakers. Students are expected to read required reading materials (those with ** ) and encouraged active participation in the class. In the end of the semester, each group of students will make a presentation in the class. The topic of the presentation can be anything that is related to the Korean economy. Each group would be composed of 7 to 10 students. This class is conducted as a FC (flipped classroom). It means that students are supposed to watch video lectures before they come to the classroom. Each week, the instructor will deliver lectures from Monday to Wednesday, and students will watch video lectures at Thursday. The instructor will assume that every student has already watched the lecture video, and will not
repeat lecturing the video. Each student has to ask a question and raise issues related to the lecture video before he/she comes to the classroom. These questions and issues will be collected by the T.A. in the YSCEC. In the classroom, the instructor will answer questions raised by students, and will cover issues that are not lectured by the video. The instructor will frequently ask questions to students, and will encourage students to raise questions. PREREQUISITE This course is supported by FC (flipped classroom) program of OSE (open smart education) center of Yonsei University. Principles of Microeconomics & Principles of Macroeconomics COURSE REQUIREMENTS GRADING POLICY TEXTS & REFERENCES INSTRUCTOR S PROFILE - Mid-term exam: 30% - Final exam: 30% - Class attendance: 10% - Presentation: 30% Lecture materials will be uploaded in the YSCEC homepage (http://yscec.yonsei.ac.kr), Refer to lectures at Coursera: https://www.coursera.org/learn/korean-economy/home/welcome Also, refer to www.archieves.go.kr Doowon Lee Professor, School of Economics, Yonsei University, Korea Office address: Room 606, Daewoo Hall T.A. [LY SCHEDULE] LY TOPIC & CONTENTS July 3 (Tue) Quiz on Economics and Korean Economy & Introduction of Key Terminologies 1 (7.3~7.5) Introduction (1) Introduction of class schedules and references Refer to www.imf.org (world economic outlook database), www.cia.gov (the world fact book), World Bank (www.worldbank.org), ADB (www.adb.org), ** Krueger, Anne, Ch. 7 Korean Industry and Trade over Fifty Years in KDI (Korea Development Institute), The Korean Economy 1945-1995 (1997). ** Part I, World Bank, The Growth Report, Strategies for Sustained Growth and Inclusive Development (2008) * Overview of World Bank, The East Asian Miracle: Economic Growth and Public Policy, A World Bank Policy Research Report (Oxford University Press, 1993).
LY TOPIC & CONTENTS Penn World Table: http://pwt.econ.upenn.edu, OECD (www.oecd.org, OECD Economic Surveys Korea), UN (http://data.un.org) The Economist (www.economist.com), Financial Times (www.ft.com) For Korean references, refer to Bureau of Statistics (www.stat.go.kr), Bank of Korea (www.bok.or.kr), * The Economist, Nov. 12, 2011, South Korea s Economy, What do you do when you reach the top? Preview of the Korean Economic Development (1) Three Major Achievements (2) How to Explain the Success? July 4 (Wed) Review of Economic Development Theories (1) Linear Stage Theory of Rostow & Harrod- Domar Model (2) Dual Economic Structure Model of Lewis, Fei and Ranis ** Chapter 3 of Michael Todaro and Stephen C. Smith, Economic Development, 9 th Edition, (Pearson Education Limited, Harlow, England, 2006). 2 (7.9~ 7.12) July 5 (Thu) Watch video lectures on 1950s and 1960s Part II. Evolution of the Korean and East Asian Economies July 9 (Mon) Before Industrialization: Pre-modern Society, Opening, and the Colonial Legacy: Comparison between Korea and Japan July 10 (Tue) Beginning of Industrialization: Import Substitution Policies (1) Import Substitution Policy (2) Dominant Role of the foreign Aids **Ch. 1 (An Overview of Industrial Development During Japanese Colonial Rule, 1910-1945) of Kim, Kwang-Suk, and Michael Roemer, Growth and Structural Transformation, Harvard University Press, Cambridge, 1979 **Fei, John, Gustav Ranis, and Kazushi Ohkawa. Economic Development in Historical Perspective: Japan, Korea and Taiwan, in Japan and the Developing Countries, Edited by Kazushi Ohkawa and Gustav Ranis, London: Basil Blackwell (1985)
3 (7.16~ 7.19) LY TOPIC & CONTENTS July 11 (Wed) The Export Promotion Policy of the 1960s(I) (1) IS (Import Substitution) vs EP (Export Promotion) (2) Transition to EP policy (3) Five Year Economic Development Plans (4) International Comparisons: Japan, Southeast Asia and Latin America July 12 (Thu) Watch video lectures on 1970s and 1980s July 16 (Mon) The Secondary IS Policy: Heavy and Chemical Industry (HCI) Drive (1) Backgrounds of the HCI Drive (2) Achievements and Side-Effects of the HCI Drive (3) Comparison with Taiwan and Japan (4) Overcoming the Oil Shocks July 17 (Tue) Liberalization and Structural Reforms of the 1980s: From 3 Highs to 3 Lows(I) (1) Stabilization Policies (2) Structural Reforms and Trade Liberalization (3) Favorable External Environments and 3- lows (4) Democratization and the Korean Economy July 18 (Wed) Mid-Term Examination July 19 (Thu) Watch video lectures on 1990s and crisis **Ch. 3 (The Transition to an Export-Oriented Economy: 1961 to 1965), Ch. 4 (Emergence as a Major Exporter: 1966 to 1975), and Ch. 5 (The Allocative Efficiency of Trade and Aid) of Krueger, Anne, Harvard East Asian Monographs 87, Studies in the Modernization of The Republic of Korea: 1945-1975, The Development Role of the Foreign Sector and Aid, Harvard University Press (1982). **Ch 3 (The ABCs of Japanese and K Accumulation) of Amsden, Alice H. Asia s Giant: South Korea and Late Industrialization (O University Press, 1989, pp. 62-63) ** Ch. 6 (Foreign Trade and the Incentive System) and ** Creating an Export Push of Ch. 3 of World Bank, The East Asian Miracle: Economic Growth and Public Policy, A World Bank Policy Research Report (Oxford University Press, 1993). **Ch. 2 (Macroeconomic Policy through the First Oil Shock, 1970-1975) and Ch. 3 (From the Heavy Industry Plan to Stabilization: Macroeconomic Policy, 1976-1980) of Haggard, Stephan, Richard N. Cooper, Susan Collins, Choongsoo Kim and Sung-Tae Ro, Macroeconomic Policy and Adjustment in Korea: 1970-1990 (Harvard institute for International Development, 1994). Ch. 17 (The Heavy and Chemical Industries Promotion Plan) of Cho, Lee-Jay and Yoon Hyung Kim, Economic Development in the Republic of Korea (University of Hawaii Press, 1991) **Ranis, Gustav, The Political Economy of Development Policy Change: A Comparative Study of Taiwan and Korea KDI Working Paper No. 8916 (1989)
4 (7.23~7.26) 5 (7.30 ~8.2) LY TOPIC & CONTENTS July 23 (Mon) The Early Half of the 1990s: Growth through High-Costs and Low-Efficiency Economic Structure July 24 (Tue) The 1997 Asian Financial Crisis (1) Causes and Recovery of the Crisis (2) Implications and Side-Effects (3) International Comparisons July 25 (Wed) The 2008 Global Financial Crisis and East Asia July 26 (Thu) Watch video lectures Part III. Sectional Analysis of the Korean Economy July 30 (Mon) Macroeconomic Management (1) Macroeconomic Management of East Asia (2) Macroeconomic Balance and Saving/Consumption Hypotheses (3) Capital Accumulation and Investment **Ch. 4 (The Political Economy of Adjustment in the 1980s) of Haggard, Stephan, Richard N. Cooper, Susan Collins, Choongsoo Kim and Sung-Tae Ro, Macroeconomic Policy and Adjustment in Korea: 1970-1990 (Harvard institute for International Development, 1994). **Cheng, T. J. and Lawrence Krause, "Democracy and Development: With Special Attention to Korea," The Journal of Northeast Asian Studies (1992) **Doowon Lee, "Korea's Development Strategy Changing International Environment: Three Past and Present," Korea Observer: A Qua Journal, Vol. 23, No. 4, pp. 415-435, Winter 199 **Chopra, Ajai, Kenneth Kang, Meral Karasulu, Liang, Henry Ma, and Anthony Richards ( From Crisis to Recovery in Korea: Str Achievements, and Lessons, IMF Working Pap 01/154). ** Cho, Yoon Je, Economic Adjustment Progr Korea After the Crisis: What Have We Learned the Korean Economic Adjustment Program?, K Crisis and Recovery, edited by David T. Coe an Jik Kim, IMF & KIEP (2002) **Reinhart, Carmen M and Kenneth S. Rogoff Equal Opportunity Menace, American Eco Review (2008). *Refer to www.imf.org (International Mo Fund). **Ch 3 (Macroeconomic Stability and Export Gr of World Bank (1993) **Ch 5 (Strategies for Rapid Accumulation) of Bank (1993) July 31 (Tue) Fiscal Policy **Ch. 5 (Fiscal Policy in Korea) of Haggard, Ste Richard N. Cooper, Susan Collins, Choongsoo and Sung-Tae Ro, Macroeconomic Policy
6 (8.6~8.9) LY TOPIC & CONTENTS (1) Effect of Fiscal Policy (2) Structures of Tax Revenues and Government Expenditures (3) Problems and Challenges Aug 1 (Wed) The Financial Market (1) The Role of Financial Sector in Economic Development (2) The Korean Financial Market Structures and Reforms (3) International Comparisons of the Financial System Aug 2 (Thu) Watch video lectures Aug 6 (Mon) Market Structure and Industrial Policy (1) Market Structure and Concentration of Economic Power: issue of Chaebol (2) Industrial Policy Aug 7 (Tue) The North Korean Economy and Inter- Korean Economic Relation (1) The Evolution of the North Korean Economy (2) Recent Status and Prospects for Change (3) Inter-Korean Economic Relation (4) Unification Scenarios and Unification Cost (5) Comparison with German Unification Aug 8 (Wed) Presentation by student group Adjustment in Korea: 1970-1990 (Harvard institu International Development, 1994) **Feyzioglu, Tarhan, Michael Skaarup, and M Syed, Addressing Korea s Long-Term Challenges IMF Working Paper, WP/08/27 (200 *Refer to www.mosf.go.kr (Ministry of Strateg Finance) and www.kipf.re.kr (Korea Institute of Finance). **Summary & Ch. 3 (The Evolution of Fin Sector Policies and Directed Credit Program Korea) of Cho, Yoon Je and Joon Kyung Kim, Policies and the Industrialization of Korea (December 1997) * Refer to www.bok.or.kr (Bank of K www.mosf.go.kr (Ministry of Strategy and Fin and www.kif.re.kr (Korea Institute of Finance) Ch. 7 (Industrial Structure and Policy) and Ch. 11 (Understanding the Korean Management System) of Song (2005). ** Leipziger, D. M. and Peter A. Petri, Ch. 19 Korean Industrial Policy: Legacies of the Past and Directions for the Future of Cho and Kim (1994). ** Ch. 1 (Introduction) of Komiya, Ryutaro, Masahiro Okuno, and Kotaro Suzumura, Industrial Policy of Japan (Academic Press, 1988). * Refer to www.ftc.go.kr (Fair Trade Commission), Korea Economic Research Institute (www.keri.org), an affiliation of the Federation of Korean Industries (www.fki.or.kr). Also refer to www.mke.go.kr (Ministry of Knowledge Economy) and www.smba.go.kr (Small and Medium Business Administration). August 9: Final Exam Final exam will be taken at the classroom ** Ch. 8 (The Implications of North Korean Collapse) of Noland, Marcus, Avoiding the
LY TOPIC & CONTENTS Apocalypse (2001). * Refer to www.unikorea.go.kr (Ministry of Unification), The world factbook of www.cia.gov