Term Paper - Balloga,1 Abram Balloga ECON 4450 Term Paper...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Balloga,1 Abram Balloga ECON 4450 Term Paper 5/5/2009 American National Champions Outline: Intro/background Talk about Korean emerging economy and fostering of national champions in industrial parks. In pre-competitive research, Korea has in place such institutions as government research institutes in information technology. With regard the size and distribution of firms the policy in Korea is for promoting national champions, where they receive the comparative advantage by pre-competitive industrial policy. It is important to continually upgrade industries to fentd off competition from low wage economies. Here it is necessary to accumulate human capital and establish brand names linked to high value-added industry. Say this method had to be altered to jump start the economy after the Korean crisis of 1997 Introduce topical similarities between that and American national champions, Describe Korean crisis Lee, Seung-Hyun. In 1997 the thriving newly industrialized economies (NIEs) of southeast Asia fell into an economic crisis, for many it was the most severe in the past 50 years. 1 In Korea, this recession may be attributed to a liquidity crisis resulting from massive amounts of debt accumulated from its national champion firms heavily investing in industrial upgrading in sectors like semiconductor and automobile production. Low returns and constant borrowing led to unusually high debt to equity ratios in chaebol firms like Samsung and Hyundai, making them extremely vulnerable in the event of recall of those debts. 2 In light of this situation, Seung-Hyun Lee studied the effects of industrial policy on various firms as well as the efficacy of real options investments in chaebol firms versus smaller companies. His research supports the notion that “real options take on their greatest value during periods of abnormally high uncertainty faced by firms, since these constitute the circumstances under which managers require the most flexibility.” 3 Real options are investments which offer firms ‘outs’ or a variety of directions 1 Lee, Seung-Hyun. The Value of Real Options Investments Under Abnormal Uncertainty: The Case of the Korean Economic Crisis. pp 2 2 Lee, Seung-Hyun. The Value of Real Options Investments Under Abnormal Uncertainty: The Case of the Korean Economic Crisis. pp2 3 Lee, Seung-Hyun. The Value of Real Options Investments Under Abnormal Uncertainty: The Case of the Korean Economic Crisis. pp3
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Balloga,2 management can pursue when presented with obstacles. Lee points out six different types of real options investments made by Korean firms prior to the 1997 crisis – capital, R&D and patents, international sales base, human capital, firm and product reputation, and network relationships. R&D was found to be the most effective of these strategies for providing flexibility in the event
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 12

Term Paper - Balloga,1 Abram Balloga ECON 4450 Term Paper...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online