Taxation and Economic Development among Pacific Asian Countries

By Richard A. Musgrave; Ching-Huei Chang et al. | Go to book overview

14
A New Role for Fiscal Policy
and Tax Finance in Korea

Kye-sik Lee


1. Introduction

Since the launching of the First Five Year Plan in 1962, Korea has experienced rapid growth and tremendous structural transformation it its economy. On average, real GNP has increased more than 8 percent per year, and annual export earnings often have exceeded 30 percent. At the same time, Korea's economic structure has been significantly transformed. For example, the agriculture, forestry, and fishery sectors fell from 36.5 percent of GNP in 1962 to 10.8 percent of GNP in 1988; the manufacturing and mining sectors grew from 16.2 percent of GNP to 32.3 percent of GNP during this period. These statistics illustrate Korea's rapid transformation from a traditionally agricultural society into a newly industrializing country during a period of 26 years. In 1987, Korea's GNP was seventeenth and its trade volume was fourteenth in the world. Thus, Korea has become one of the leading middle-income economies. Although Korea lacks sufficient resources, capital, and technology, several factors have enabled it to achieve this rapid growth, including diligence, persistence, manpower development through education and, to quote Professor Arthur Lewis, "the will to economize."

Korea's past economic strategy, characterized as government-led and export-oriented, has played a significant role in its rapid industrialization. This strategy, which placed the highest priority on economic growth, mobilized the energy of the entire nation to boost growth in the 1960s by stressing the export of labor-intensive, light industry goods; by optimizing Korea's comparative advantage; and by placing strong reliance on the inflow of foreign capital under the prevailing economic conditions such as a low savings rate, a small domestic market, and insufficient natural resources. In the 1970s, the focus of the economic strategy

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Taxation and Economic Development among Pacific Asian Countries
Table of contents

Table of contents

  • Title Page iii
  • Contents v
  • 1 - Introduction 1
  • Notes 10
  • 2 - Indonesian Tax Reform, 1985-1990 11
  • Notes 41
  • References 42
  • 3 - The Tax System and Economic Development in Japan 44
  • Notes 61
  • References 62
  • 4 - Tax Reform in the Philippines 64
  • Notes 80
  • 5 - Tax Reform in Malaysia: Trends and Options 82
  • Notes 100
  • References 101
  • 6 - Property Taxation as a National Policy Tool in Taiwan 104
  • Notes 116
  • References 116
  • Notes 137
  • References 138
  • 8 - Effective Corporate Tax Rates on Capital Income in Hong Kong 140
  • Notes 153
  • 9 - Tax Policy and Business Investment: Taiwan's Manufacturing Industry 156
  • Notes 165
  • References 167
  • 10 - The International Dimension of Korean Tax Policy 168
  • Notes 191
  • References 192
  • 11 - Tax Incentives for Export Promotion in Japan, 1953-1964 194
  • Notes 207
  • References 208
  • 12 - International Aspects of Income Taxation in Taiwan 210
  • Notes 221
  • References 223
  • 13 - Financing Social Security in Singapore Through the Central Provident Fund 225
  • Notes 255
  • References 255
  • 14 - A New Role for Fiscal Policy and Tax Finance in Korea 259
  • Notes 275
  • References 276
  • About the Book 280
  • About the Editors and Contributors 281
  • Index 283
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