Steel Industries in Japan and South Korea

207). To this end, the Japanese government utilize policies designed to promote the using of these industries, of which the make persistence was one, and to discover the profitability of these industries.

American economic doctrine decries the creation of cartels and the radiation diagram of vertical integration (Blinder, 1990, p. 21). In Japan, however, each concept is evaluate and incorporated into the market structure of the economy. The keiretsu is a vertically combine megacompany (Blinder, 1990, p. 21). This type of structure was introduced into the Japanese steel industry, and that structure carrys to entertain in the industry. Major Japanese manufacturers seldom seek by the lowestcost supply source. Rather, they look to their regular supplier, who kinda probably is a member of their keiretsu. Similar practices are followed in obtaining capital, and in the retail marketing of their produces. According to the Japanese, these practices explain trusty longterm relationships, which cut costs "as production line partners learn from and help one another" (Blinder, 1990, p. 21).

Through an industrial policy characterized by high levels of cooperation by government and industry, cartels are not only permitted in Japan, they are encouraged (Sarathy, 1989, pp. 132160). Cartels flour

Metraux, Daniel A. (1992). The economy. South Korea: A country study. chapiter: U.S. Government Printing Office, 135196.

Nakarmi, L. (1989, 10 April). It's time for the main bout: Roh vs. labor. Business Week, 4546.

Korea's industrial policy provides several(prenominal) incentives for manufacturing firms, including steel firms. Among these incentives are tax reductions, ready access to credit, subsidise interest rates, foreign loan guarantees, and direct subsidies, all of which fool been used by Korea's steel industry. The Korean government, soon subsequently the cease fire in the Korean War, adopted a policy of formal national economic planning (Metraux, 1992, p. 144).

The maturation of a major steel industry in Korea was a part of the country's Second FiveYear Economic ripening Plan that became effective in 1967 (Metraux, 1992, p. 144). The first modern steel plant was built in Korea in 1968 (Metraux, 1992, p. 150). Somewhat ironically, the bills to fund the initial development of the Korean steel industry was provided by the Japanese ExportImport Bank as a part of Japan's plan to sell the machinery to Korea that was required to develop Korea's new steel industry (Metraux, 1992, p. 150).

Industrial evolution in Korea in the 1980s occurred at an annual average 15.0 percent, and growth in manufacturing, which is a component of the industrial sector, was nearly as high at 14.8 percent. This growth was funded by a perfect(a) domestic investment which accounted for 29.0 percent of the gross domestic product (gross domestic product). The export of goods and nonfactor services during the 1980s accounted for 41.0 percent of the GDP (The World Bank, 1992, p. 251). Thus, without the strong export activity, Korea could not have achieved the immense industrial and manufacturing growth levels recorded in the 1980s and that continue in the 1990a.

In great part, however, Korea's rapid economic development over the past decade has depended on many of the similar ingredients employed by the Japanes
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