South Korea and Argentina
Contributions of Alternative Approaches
to Development
Presented By:
Anjandeep Kaur (440)
Darpan Bajaj ( )
Neha Rai (292)
Kanwarpreet Sangha ( )
Pandya Ashish Yogesh Bhai ( )
Ravi Vijay Gupta ( )
Rishab ( )
Pre-Crisis
South Korea Argentina
• Exponential growth from 1960s to • Rapid economic stability from 1860-
1980s. 1930.
• Huge debt acquired during National
• South Korea's GDP expanded by an
Reorganization Process(1976-1983)
average of more than 8 percent per
• Creation of a new currency Austral in
year.
1983, for which new loans were
• They adopted outward-looking required.
strategy in the early 1960s.
• Hyperinflation: in the year 1989
• 4 Main industry which contributed to inflation reached 200%
the growth were: • In 1991 Argentinean peso was legally
– Shipping pegged to the dollar, on a one-to-one
– Automobile basis.
– Construction • Argentina's foreign investment and
– Armaments
exports dried up
During Crisis
South Korea Argentina
• The Korean Won started to heavily • Huge flight of money from the country
depreciate in October 1997. • Froze all the banks in the year 2001,
• Non-performing loans at many of limiting withdrawals to $1,000 a month.
Korea's merchant banks. • State of emergency declared
• By December 1997, the IMF had precipitating the violent protests.
approved a USD $21 billion loan. • In 2001 Government defaulted on the
• Throughout 1998, Korea's economy larger part of the public debt, totaling
would continue to shrink quarterly at $132 billion.
an average rate of -6.65%. • GDP fell by a record 16 percent in the
• Korean chaebol Daewoo became a first quarter of 2002 .
casualty of the crisis as it was • Proportion of the Argentinean
dismantled by the government in population living below the poverty line
1999 due to debt problems. increased to 57%
Post-Crisis
South Korea Argentina
• By the first quarter of 1999, GDP • The devalued peso made Argentine
growth had risen to 5.4%, and strong exports cheap and competitive abroad,
while discouraging imports.
growth there after combined with • The government encouraged import
deflationary pressure on the currency substitution and accessible credit for
lead to a yearly growth of 10.5%. businesses.
• Foreign investment and export played • aggressive plan to
improve tax collection setting aside
an important role in boosting growth large amounts of money for social
which later on declined. welfare while controlling expenditure in
• other fields.
Growth moderated to about 4-5%
• By December 2005, foreign currency
annually between 2003 and 2007. reserves had reached $28 billion
• Due to export growth, low interest • The exchange rate had been stabilized
rates, and an expansionary fiscal near a reference value of 3 pesos to the
dollar.
policy has not affected much in 2008
• The GDP jumped 8.8% in 2003, 9.0% in
crisis. 2004, 9.2% in 2005, 8.5% in 2006 8.7%
in 2007, 5%in 2008 & -2.5% in 2009
PESTLE – South Korea
POLITICAL ECONOMICAL SOCIAL
• Government involvement • USD $21 billion loan. • Family run business
in chaebol. • Export oriented country environment.
• Continuous intervention dependent on USA and • High level of corruption.
by the govt. in banking other countries. • Large labour force.
sector.
• Unstable political
environment.
TECHNOLOGICAL LEGAL ENVIRONMENTAL
• Low Quality Image • Government control • Climate of Korean
• R&D expenditure kept • Forced conditionalities company was secrecy.
increasing. laid down by IMF. • Lack of transparency in
regulatory system.
PESTLE – Argentina
POLITICAL ECONOMICAL SOCIAL
• Argentine governance • High level of unemployment • High level of corruption
fluctuated between civilian and •Since 2002, the country has •State of emergency declared
military rule. embarked on a path of gradual in 2001, leading to protests and
•Highly unstable until 2002. economic recovery intense rioting.
Now a politically stable •Unresolved and pressing •Enormous regional disparities.
democratic state. issues of inflation and energy
•Economic and political crisis shortage
of 2001
TECHNOLOGICAL LEGAL ENVIRONMENTAL
• Significant technology gap •Mixture of US and West • Staunch commitment to
with leading economies European legal systems; has limited government regulation
•private sector investments in not accepted compulsory ICJ and corruption during 1990’s
R&D are low jurisdiction •Wide gap between those
•Hampered by a low number of •The current government sectors linked to transnational
researchers holding advanced generally has a good track financial sectors and the rest of
university degrees record on human rights. the economy.
Future
South Korea Argentina
• Low birth rate and aging population. • Economic indicators in Argentina point
• Erosion of tax base. to a severe downturn.
• • Argentina has experienced an increase
Hindrance to the security of the
in capital flight since mid-2007,
nation.
totaling $26 billion till 2009.
• Low productivity.
• The country has experienced a severe
decline in the volume of imports
• Severe contraction in investment in the
manufacturing and production sectors
• Real wages in both the public and
private sectors have increased by 2.1%
Recommendation
South Korea Argentina
• There should be transparency and less • Fiscal improvement is needed
secrecy to increase the profitability. • Negotiate wage policies with unions,
• Market discipline should be there for and reduces its public expenditure
financial institutions. • Reform agenda would help Argentina
• Reduce government control in foreign demonstrate transparency and strong
exchange market. fiscal policies
• A depreciation of the peso may help
Thank You
