Kim and seo 2003 analysed the dynamic relationship

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Finite Mathematics and Applied Calculus
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Chapter 5 / Exercise 34
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Kim and Seo (2003) analysed the dynamic relationship between FDI and economic growth and domestic investment in Korea for the period of 195-1999 using vector auto regression model. They found that there some positive effects of FDI on economic growth but insignificant. However, their findings show that domestic investment s negatively affected by FDI shock, and FDI does not crowd out domestic investment in Korea. Lall, 1990 as quoted by Dunning (1996) the experiences of four newly industrializing countries shows that economic success can be highly relied on TNCs (as in Singapore) or less reliance( as in South Korea). South Korea entered into complex areas of industry with the huge promotion of very large domestic firms, research and development and significant protection of local firms. This indicates that South Korea’s industrialization in 1970s was mostly pushed by government’s huge investment.
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Finite Mathematics and Applied Calculus
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Chapter 5 / Exercise 34
Finite Mathematics and Applied Calculus
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CHAPTER -3 (A) AN OVERVIEW OF SOUTH KOREAN ECONOMY 3.1.1 A brief Korean economic overview after 1950s South Korea got independence after over three decades Japanese colonial rule in 1945. The strategic economic development of South Korea started from 1960s onwards with the establishment of Economic planning Board in 1961 and commencement of 5-year state economic planning in 1962 (Bishop, 1997). The Korean War is an important incident in political and economic history of South Korea. The war between North Korea and South Korea (1950-1953) was a massive destructive in the Korean peninsula. The Korean War occurred due to the political interest of United States and USSR, leading capitalist way of American life and expansionary ambition of communist system of USSR. USSR supported North Korea where as United States supported South Korea. United States went into war because of the fear of increasing communism including in China and USSR and thought that if Korean peninsula becomes communist, Japan would be next. Savada and Shaw (1990) explain United States fought against communism without directly attacking to Russia. Chung (2007) South Korea’s government budget was dependent on foreign aid and US was the main provider of financial assistance. Government made efforts to establish industrial base for textile production and power generation after the end of war and started to produce fertilizers and steel domestically for import substitutions (bishop,
1997. Korea’s rapid economic growth was highly supported by stable political environment. CBO (1997) South Korea’s government from 1953-198 was mostly stable but largely authoritarian. Savada and Shaw (1997) Syangman Rhee ruled South Korea in 1950s until 1960 with iron fist. United Nations and member of the UN, mainly United States provided financial assistances. According to Savada and Shaw (1997) foreign aid constituted a third of total budget in 1954, rose to 58.4 percent in 1956, and was approximately 38 percent in 1960.

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