South Korea is located between China and Japan the north and south of Korea had been in a war for three years (from 1950). The population of the Republicof Koreawas approximately 5.
9 million in 1997, and the capital city, which is Seoulhas more than 11 million inhabitants. Since 1950 it has developed rapidly (and is known as a tiger ecomony) and as a result there has been a lot of migration from the rural to the urbanised parts of the country.There has also been a great shift in industry, presently there are many more people in the country working in the secondary sector that before whereas prior to the 1950s the majority of people were employed in the primary sector or subsistence farming (for themselves). This influx of people moving into the urbanised areas is due to higher wages being paid by TNCs and also by the higher standard of living and quality of life.
The TNCs were interested in locating in Korea for a number of reasons, Firstly there was a large pool of cheap (for them) labour, although the wages that they paid to the were quite high relative to other jobs available.Also the government backed investment by TNCs. This meant that the environmental laws were lapse, there were no trade unions (to campaign for better working conditions and pay) and the import taxes were made high to encourage spending on local goods. The position of South Korea makes it very accessible to eastern markets. Due to these factors the products made in Korea were cheaper and so they become very competitive in the world markets. Leading Chaebols in Korea dominate much of the market and produce 60% of the country’s manufactured products. Such companies include Samsung, Hyundai, Daewoo and LG.Positive effects of these investments by the TNCs are that the money earnt means that GNP and GDP levels of South Korea rise and the government has extra cash to invest back into the country, in areas such as infrastructure, health and education.
These foreign companies also provide new technology and raw materials to the host country which are limited anyway with natural resources. With the increased output of the countries due to the involvement of TNCs there also came negative factors. The incentives that attracted the TNCs also bring problems.For example, as there are no trade unions there are huge differences between the pay of females and immigrants compared to the wages of males.
Females were paid 75%, and immigrants only 50% of an equivalent male’s wage. Also lapse laws on working conditions have resulted in the unrest of workers. The environment has also been negatively affected by the TNCs and lapse laws. The rapid industrial growth has led to river and air pollution, which in turn has led to poisoning of water supplies and, in turn, deaths. These TNCs are prime examples of deindustrialisation in MEDCs.
The secondary industries are being moved to countries where is more cost effective to produce the goods. The reason for such movement has already been described above (they are same as the incentives). There has been an evident multiplier effect in South Korea. The higher wages of the workers encourages more people to set up shops as they know more people are likely to buy them. These people then pay taxes and then the development of infrastructure, such as transport ect.
builds up a higher need for work and so more people migrate from the rural areas to the urban areas to take up these jobs.This then causes entrepreneurs to set up their own businesses and through this they employ more people, and the process repeats itself. There are three major industries in South Korea; they are steelworks, shipbuilding and car manufacture.
The steel production plants run by the government (POSCO) have increased their production from one to thirty million tonnes. The government is keen to protect this industry as it is a major overseas currency earner for Korea. Another major industry is shipbuilding. At the moment South Korea is the leading producer of bulk carriers and controls a third of the world hipbuilding trade. The reason for its proficiency is the cheap, pool or work and the modern shipyards which aid manufacture. This allowed South Korea to get many orders but it is facing competition from China. Car manufacture has become more important since 1950.
Since the country is becoming more industrialised there is a high demand for cars. The cars are produced in league with multinational companies and the cars of companies based in South Korea are more popular due to their low cost brought about by high import taxes for cars from other countries.These firms include Hyundai, Kia and Daewoo. Recently there has been more development of Chaebols due to much support by the governments. The Chaebols encourage their workers to work hard my giving them promotions for doing so. As well as this many of the workers live in and around the complex as the company gives them cheap housing to ensure that little time is lost getting to and from work. The complexes are generally self supported areas which contain any facilities that the workers need to reduce the need of leaving the complex.
The Chaebols have become multinational companies quickly in order to remain competitive in their markets on a global scale economy. The social effects are that families become desperate at not earning enough money and so they send their children out to work in the factories. The owners of such companies deny that they are using child labor. There are no local taxes for the big TNCs, tax holidays and subsidized services therefore the workers are exploited, they work long hours for little pay and the women and immigrants find themselves even worse off getting paid less than the men as has already been explained.The workers are not allowed to talk or take breaks and can easily be sacked if they don’t meet work deadlines. This can lead to demoralization of the people. As well as this health problems arise from working in terrible conditions like eye ailments and breathing difficulties. Also because a lot of jobs are dangerous due to their being no restrictions and no unions to fight the cause injuries and even deaths are common.
The Korean way of life is being lost through theses changes to the society.Environmental problems include the fact land has been cleared to make way for new businesses and industries. Also the factories produce harmful emissions that affect the local areas. An increase in the population in the urban areas has resulted in an increase in the number of cars on the roads which also pollute the air and also makes it unsafe. Often the industrial waste is discharged into the rivers, usually without being treated first. This results in serious health issues and also kills wild life and causes pollution.The economic growth has risen from $100 in 1963 to over $10,000 in 1997. The growth rate of GDP is also 9% with GDP per capita at $16,100 and the industrial production growth rate is 17%.
The rapid industrialisation has led to South Koreahaving the 12 largest economies in the world. From this we can conclude that for Korea has industrialised but with the sacrifice of it’s environment, and its traditional way of life. As well as this there will be long term problems with the intervention of unions.