Question

Enforcement of export targets in the case of Korea is mostly moral or “cultural” in nature, but the evidence seems
persuasive that in Korea these have been among the most powerful incentives.
1.1 In that context, discuss the types of incentives being offered in South Korea as a way of motivating the industries and also highlight their impact.

Answer 1

South Korea has largely gained everyone's attention by having a commendable increase in their exports. A country is in a position to have increased exports if it produces enough to supplement the current demand of its respective economy. Considering Korea, it has always prioritized exports and the government has always been seen in a position to support the exporters. Following are some incentives being offered in South Korea as a way of motivating the industries:

1. Import substitution

The Korean government has taken all possible economic actions to make less of imports so as to bring an increase in net exports. The government has funded many small scale industries to grow well in order to produce more and export more.

2. More investment is seen in sectors having high growth

Sectors dealing in raw silk, cotton fabrics, plywood, leather, craftwork, potteries, rubber products, radio and electric appliances, fisheries and mushroom cans, wool products, clothes, and miscellaneous products are the sectors which contribute maximum to the economic development of South Korea. Incentives are made to investors who contribute towards the increment in the production of these goods.

3. Increased tax rebates

The economic policy of South Korea has focussed more on tax incentives, financial incentives, and the establishment of free trade zones and organizations that support trade.

Impact

These incentives and actions were taken by the government of South Korea n favor of exports led growth has enormously shown developing trends in the economy. Aim of the increase in exports has resulted in self-sufficiency in many sectors of the economy. More people are allowed to indulge themselves in manufacturing sector. Thus, we can say that this export led growth of the economy has the capability of absorbing the labor of a developing nation. South Korea has been one of such nations.