After World War II and during the Korean War, private foreign trade was almost nonexistent apart ... more After World War II and during the Korean War, private foreign trade was almost nonexistent apart from a small amount of private barter. The government was the major exporter of a limited range of primary products, and imports were strictly controlled. Nearly all imports were financed by grant assistance or won redemptions by the United Nations Command during the Korean War, and the government itself was the major importer both before and during the war. A multiplicity of exchange rates applied to a variety of transactions, and a black market in U.S. currency and military payment certificates flourished. By the end of the Korean War, the official exchange rate • represented a serious over-valuation of the won despite six major devaluations since 1945. The official rate applied to a very narrow range of transactions and was less than one-quarter of the free market rate on export dollars. We would describe the period 1945 to 1953 as a Bhagwati-Krueger Phase I regime "characterized by heavy reliance on quantitative controls leading to an increasingly over-valued exchange rate." The first six or seven years after the Korean War brought sporadic growth of real GNP, widely fluctuating exports, rapidly growing imports, and an increasing trade deficit financed by UN and U.S. grant assistance. The trade and payments regime required increasingly complex measures to obviate an over-valued exchange rate. I 26 DEVELOPMENT OF THE TRADING AND EXCHANGE RATE SYSTEM the most important distinction being drawn between Japanese export dollars, and other export dollars. Foreign exchange was allocated by various auction and bidding procedures, by lottery, and by an exôhange tax system. Advance deposits were required for certain imports. A variety of export promotion schemes was used during this period: a deposit system to avoid exchange risk, an export-import link system, direct export subsidies, a variety of preferential loans for exporters and export ' producers, and tariff exemptions. An increasingly complex system for import quotas evolved and tariffs were raised in 1957. Thus the period 1953 to 1960 can be described, in terms of the Bhagwati-Krueger scheme, as Phase II. this chapter we attempt to describe the trade and exchange regime during the Phase I period, 1945-1953, and the Phase II period that followed.
Chapter 7 Foreign Capital and the Exchange Rate Regime Beginning in 1965, the South Korean econom... more Chapter 7 Foreign Capital and the Exchange Rate Regime Beginning in 1965, the South Korean economy became increasingly dependent on foreign borrowing. Foreign loan arrivals rose from $183.0 million to $787.4 million between 1966 and 1971, or clpse to 10 percent of GNP in 1971.1 In 1965, a heavy proportion of the loans came from public sources overseas. Between 1968 and 1971 more than two-thirds of all foreign loan arrivals were commercial, mainly suppliers' credits for import of capital equipment from the United States, Japan, France, the United Kingdom, and West Germany (tables 7-1 and 7-2). The sources of public loans also shifted markedly, from a heavy reliance in the early 1960s on United States AID grants and development loans on very soft terms to greater reliance in the later '60s on Japanese, IBRD, and Asian Development Bank loans on relatively hard terms. The increasing emphasis on commercial loans and the shift of sources of public loans has greatly increased the cost of foreign capital imports. All loans greater than one year are denominated in foreign currency, the dollar, the mark, the yen, the franc, or the pound. OFFICIAL ENCOURAGEMENT OF FOREIGN CAPITAL IMPORTS The rapid increase in foreign commercial loans and the shift to more expensive sources of public loans has recently become a matter of concern to Korean officials. Throughout most of the 1960s, however, the government had strongly encouraged the import of private foreign capital as a major policy tool in 101
r Chapter 10 190 THE FOREIGN EXCHANGE REGIME AND RESOURCE ALLOCATION composition of value-added a... more r Chapter 10 190 THE FOREIGN EXCHANGE REGIME AND RESOURCE ALLOCATION composition of value-added and profits after taxes. These subsidies are incorporated into a measure of effective subsidy in the following way: The total direct tax liabilities of all firms were reapportioned to each sector on the basis of its share in the total tax base; i.e., we assumed that each firm would have paid the average tax rate on its net income under a neutral tax policy. The difference between the reapportioned tax liability and a sector's actual tax liability is the estimated tax subsidy. The subsidy could, therefore, be negative as well as positive, depending upon whether the sector actually paid a higher or lower tax rate than the average; the algebraic sum of all estimated tax subsidies is zero,
Chapter 2 Economic Growth in South Korea since World War II ECONOMIC DISORGANIZATION FOLLOWING LI... more Chapter 2 Economic Growth in South Korea since World War II ECONOMIC DISORGANIZATION FOLLOWING LIBERATION The Japanese occupation of Korea ended on August 15, 1945 and was supplanted in part by a U.S. military government. The immediate postwar period was characterized by extreme economic disorganization and stagnation caused by the sudden separation of the Korean economy from the Japanese economic bloc, and by the partition of the country along the 38th parallel.
Two Liberalization Episodes and Their Short-Term Consequences, 1961 to 1966
Frank Jr., Charles R.; Kim, Kwang Suk; Westphal, Larry E..1975.Foreign trade regimes and economic... more Frank Jr., Charles R.; Kim, Kwang Suk; Westphal, Larry E..1975.Foreign trade regimes and economic development: South Korea(Chapter 4),Reports,[Cambridge, U.S.]National Bureau of Economic Research,15
Debt and terms of aid : a study of the mounting foreign debt burden of the developing nations: its dimensions, its causes, and how it might be relieved
Chapter 2 Economic Growth in South Korea since World War II ECONOMIC DISORGANIZATION FOLLOWING LI... more Chapter 2 Economic Growth in South Korea since World War II ECONOMIC DISORGANIZATION FOLLOWING LIBERATION The Japanese occupation of Korea ended on August 15, 1945 and was supplanted in part by a U.S. military government. The immediate postwar period was characterized by extreme economic disorganization and stagnation caused by the sudden separation of the Korean economy from the Japanese economic bloc, and by the partition of the country along the 38th parallel.
After World War II and during the Korean War, private foreign trade was almost nonexistent apart ... more After World War II and during the Korean War, private foreign trade was almost nonexistent apart from a small amount of private barter. The government was the major exporter of a limited range of primary products, and imports were strictly controlled. Nearly all imports were financed by grant assistance or won redemptions by the United Nations Command during the Korean War, and the government itself was the major importer both before and during the war. A multiplicity of exchange rates applied to a variety of transactions, and a black market in U.S. currency and military payment certificates flourished. By the end of the Korean War, the official exchange rate • represented a serious over-valuation of the won despite six major devaluations since 1945. The official rate applied to a very narrow range of transactions and was less than one-quarter of the free market rate on export dollars. We would describe the period 1945 to 1953 as a Bhagwati-Krueger Phase I regime "characterized by heavy reliance on quantitative controls leading to an increasingly over-valued exchange rate." The first six or seven years after the Korean War brought sporadic growth of real GNP, widely fluctuating exports, rapidly growing imports, and an increasing trade deficit financed by UN and U.S. grant assistance. The trade and payments regime required increasingly complex measures to obviate an over-valued exchange rate. I 26 DEVELOPMENT OF THE TRADING AND EXCHANGE RATE SYSTEM the most important distinction being drawn between Japanese export dollars, and other export dollars. Foreign exchange was allocated by various auction and bidding procedures, by lottery, and by an exôhange tax system. Advance deposits were required for certain imports. A variety of export promotion schemes was used during this period: a deposit system to avoid exchange risk, an export-import link system, direct export subsidies, a variety of preferential loans for exporters and export ' producers, and tariff exemptions. An increasingly complex system for import quotas evolved and tariffs were raised in 1957. Thus the period 1953 to 1960 can be described, in terms of the Bhagwati-Krueger scheme, as Phase II. this chapter we attempt to describe the trade and exchange regime during the Phase I period, 1945-1953, and the Phase II period that followed.
Chapter 7 Foreign Capital and the Exchange Rate Regime Beginning in 1965, the South Korean econom... more Chapter 7 Foreign Capital and the Exchange Rate Regime Beginning in 1965, the South Korean economy became increasingly dependent on foreign borrowing. Foreign loan arrivals rose from $183.0 million to $787.4 million between 1966 and 1971, or clpse to 10 percent of GNP in 1971.1 In 1965, a heavy proportion of the loans came from public sources overseas. Between 1968 and 1971 more than two-thirds of all foreign loan arrivals were commercial, mainly suppliers' credits for import of capital equipment from the United States, Japan, France, the United Kingdom, and West Germany (tables 7-1 and 7-2). The sources of public loans also shifted markedly, from a heavy reliance in the early 1960s on United States AID grants and development loans on very soft terms to greater reliance in the later '60s on Japanese, IBRD, and Asian Development Bank loans on relatively hard terms. The increasing emphasis on commercial loans and the shift of sources of public loans has greatly increased the cost of foreign capital imports. All loans greater than one year are denominated in foreign currency, the dollar, the mark, the yen, the franc, or the pound. OFFICIAL ENCOURAGEMENT OF FOREIGN CAPITAL IMPORTS The rapid increase in foreign commercial loans and the shift to more expensive sources of public loans has recently become a matter of concern to Korean officials. Throughout most of the 1960s, however, the government had strongly encouraged the import of private foreign capital as a major policy tool in 101
r Chapter 10 190 THE FOREIGN EXCHANGE REGIME AND RESOURCE ALLOCATION composition of value-added a... more r Chapter 10 190 THE FOREIGN EXCHANGE REGIME AND RESOURCE ALLOCATION composition of value-added and profits after taxes. These subsidies are incorporated into a measure of effective subsidy in the following way: The total direct tax liabilities of all firms were reapportioned to each sector on the basis of its share in the total tax base; i.e., we assumed that each firm would have paid the average tax rate on its net income under a neutral tax policy. The difference between the reapportioned tax liability and a sector's actual tax liability is the estimated tax subsidy. The subsidy could, therefore, be negative as well as positive, depending upon whether the sector actually paid a higher or lower tax rate than the average; the algebraic sum of all estimated tax subsidies is zero,
Chapter 2 Economic Growth in South Korea since World War II ECONOMIC DISORGANIZATION FOLLOWING LI... more Chapter 2 Economic Growth in South Korea since World War II ECONOMIC DISORGANIZATION FOLLOWING LIBERATION The Japanese occupation of Korea ended on August 15, 1945 and was supplanted in part by a U.S. military government. The immediate postwar period was characterized by extreme economic disorganization and stagnation caused by the sudden separation of the Korean economy from the Japanese economic bloc, and by the partition of the country along the 38th parallel.
Two Liberalization Episodes and Their Short-Term Consequences, 1961 to 1966
Frank Jr., Charles R.; Kim, Kwang Suk; Westphal, Larry E..1975.Foreign trade regimes and economic... more Frank Jr., Charles R.; Kim, Kwang Suk; Westphal, Larry E..1975.Foreign trade regimes and economic development: South Korea(Chapter 4),Reports,[Cambridge, U.S.]National Bureau of Economic Research,15
Debt and terms of aid : a study of the mounting foreign debt burden of the developing nations: its dimensions, its causes, and how it might be relieved
Chapter 2 Economic Growth in South Korea since World War II ECONOMIC DISORGANIZATION FOLLOWING LI... more Chapter 2 Economic Growth in South Korea since World War II ECONOMIC DISORGANIZATION FOLLOWING LIBERATION The Japanese occupation of Korea ended on August 15, 1945 and was supplanted in part by a U.S. military government. The immediate postwar period was characterized by extreme economic disorganization and stagnation caused by the sudden separation of the Korean economy from the Japanese economic bloc, and by the partition of the country along the 38th parallel.
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