A COMPARATIVE STUDY OF THE ECONOMY

OF SOUTH KOREA AND PHILIPPINES

Final Requirement in Economic Development

Zarina Luz R. Bartolay

BSA 2-8
 COMPARATIVE STUDY OF SOUTH KOREA AND PHILIPPINES
COMPARATIVE STUDY OF SOUTH KOREA AND PHILIPPINES
SOUTH KOREA
I. HISTORICAL BACKGROUND COLONIAL HISTORY:
a. Japanese Colonization
Japan had built an extensive
infrastructure of ports, railroads,
roads, and buildings that would
facilitate the modernization of Korea’s
economy and Japan’s control on the
modernization process.
Most of the programs drafted in
Korea were from the policies that were
drafted in Japan during the Meiji
period.
As a matter of fact, the colonizers
had located numerous heavy
industries such as chemicals, steels,
and hydroelectric power across Korea.
1
PHILIPPINES
COLONIAL HISTORY:
a. Spanish Colonization
Before, in the Pre-Hispanic
societies, there are indications that the
indigenous land-tenure arrangements
were characterized by communal
ownership of land. However, after the
arrival of the Spaniards here in the
Philippines, they introduced one of the
most significant changes to the
economy of the country and that is the
change in the land tenure system or
the private land tenure. Wherein they
introduced the idea that individuals,
could own a land and that land would
be considered as their source of
wealth. With this system, it did not only
changed the Filipino land relations but
also it allowed the private land
ownership by the Spaniards, thus
leading to agricultural enterprise.
Beginning 1571, the Spanish crown
was said to have made around 200
land grants which marked the start of
the colonial estates. Ranching and
Agriculture were the two main uses of
these landed estates. There had been
24 cattle ranches in Manila during
1606 but the number declined as early
as 1659 in favor of the agriculture
sector. “Most agricultural estates
COMPARATIVE STUDY OF SOUTH KOREA AND PHILIPPINES 2

produced rice, although small amounts

of land were dedicated to fruit,
tobacco, and sugar.” During the late
19th century, three crops namely
abaca, tobacco and sugar had
dominated the Philippine exports.
“Philippine abaca, which was
considered the best material for ropes
and cordage, grew in importance and
after 1850 alternated with sugar as the
islands' most important export.”

Another economic effect that the

Spanish colonization brought to the
country is the Manila-Acapulco
Galleon Trade. This was once
considered as the “most significant
pathway for commerce and cultural
interchange between Europe and Asia.
At its simplest form, it linked both
China and Mexico through the
Philippines. In a span of 250 years,
from 1565 to 1815, the galleons
travelled between Manila and
Acapulco carrying goods and
exchanging these goods to those from
the East. Thus allowing the Spaniards
to earn huge amount of profits. This
system did not involve the raw
materials of the Philippines, the
country only served as a point of
exchange for goods. So, during the
1590s, a total of 12 million pesos were
already traded at an average of 2-3
million pesos a year where most of
which were headed for China.
 COMPARATIVE STUDY OF SOUTH KOREA AND PHILIPPINES 3

b. American Colonization

Under the rule of the Americans,

Filipinos were allowed to own up to 24
hectares of public land under the
Homestead Act in 1924.

Moreover, Filipino products were

able to enter the United States without
the need to pay custom tariffs.

By this time, the country has

entered the industrial age. It favored
the usage of machines as well as the
mass production of goods in large
factories.

c. Japanese Colonization

During the Japanese

occupation, the Japanese military
authorities confiscated the enemy
assets owned by the American army
and by others enemy. With this,
several investments in industry,
agriculture, commerce, infrastructure
and mining were then taken as “war
booty”.
II. ECONOMIC STRATEGIES AGRICULTURE
IMPLEMENTED
 COMPARATIVE STUDY OF SOUTH KOREA AND PHILIPPINES
During the late 1940s, under the
Syngman Rhee Regime, they enacted
a Land Reform Law having two core
provisions. These are the limitation of
farm ownership to no more than 3
hectares and the banning of tenant
farming. Because of this, the number of
tenant-farmer households had
decreased from 86.2% in 1945 to
26.4% in 1960. However, this land
reform law was only seen as a political-
management program instead of it
being as an integrated policy of
economic development. The banning of
tenant farming weakened while the land
redistribution was a failure as owners
disguise themselves as registered land
titles to their sons or to their other
relatives. Moreover, during this regime,
they had one policy which is the
keeping grain prices low however, this
was achieved partly because of the
indiscrimination in the importation of
U.S. agricultural surpluses.
On the other hand, during the
administration of Park Chunghee, he
developed the Four Pronged Rural
Development Program. The following
are the revitalization of the rural credit
system, new double pricing policy, plant
miracle rice and lastly, Saemaul
Undong.
Under the rural credit system, the
National Agricultural Cooperatives
4
Several laws and policies were
implemented in the Philippines to
support the Agricultural sector of the
economy.
During the term of Former
President Manuel L. Quezon, the
National Rice and Corn Company was
created which established the price of
rice and corn thus helping the poor
tenants as well as consumers. He
implemented the Rice Share Tenancy
Act of 1933 which aimed to regulate the
relationship between the tenant and
landowners by having 50-50 sharing in
rice.
Former President Ramon
Magsaysay enacted the Land Reform
Act of 1955 or R.A. No. 1400 that led to
the creation of the Land Tenure
Administration whose function is to
govern the acquisition and distribution
of large tenanted corn and rice land to
individuals and corporations.
In 1963, during the administration
of Former President Diosdado
Macapagal, he enacted the Agricultural
Land Reform Code or the Republic Act
No. 3844 of August 8, 1963. This law
abolished share tenancy, invested the
rights of redemption and preemption for
the tenant farmers, oversee the credit
system of services of farmer
beneficiaries and many more.
 COMPARATIVE STUDY OF SOUTH KOREA AND PHILIPPINES
Federation are tasked to govern the
allocation of government credit. As a
matter of fact, their power strengthened
by the monopoly over two other critical
government functions which are the
management of pricing and delivery of
the fertilizers and pesticides, and
buying grains from the farmers during
the harvest time. Because of this they
were able to regain something from
what they have offered to others.
The second prong is the new
double pricing policy. With this policy,
the government would buy grains from
the farmers at high prices during
harvest time then resell it to urban
customers during the off-season on a
subsidized basis.
The third prong is the planting of
miracle rice which resulted to almost
70% of the paddy land being planted
with Tongil rice. However, when the
campaign failed, officials were then
forced to meet quotas. Under Park’s
command capitalism, incentives were
mixed with sanctions. This planting of
miracle rice lead to higher yields
however it also incurred higher costs
due to additional need of fertilizers and
pesticides in which the government
controlled its prices. Because of this,
the Korean farmers were buried with
debt.
5
Former President Ferdinand
Marcos established the Masagana 99
program in 1973. This program was
called “program for national survival”
after the country suffered from rice
crisis due to the effects of the 28
typhoons that happened over the 4-
month period in 1971, an outbreak of
tungro virus in 1972 and a killer flood
that happened in Central Luzon in
1973. With this, the national average
palay had increased 10% during the
wet season and 25% in the dry season.
However, this program was
discontinued after several small
farmers weren’t able to repay and such.
Under the former president
Corazon Aquino administration, signed
into law R.A. No. 6657 known as the
Comprehensive Agrarian Reform Law
on 1988. As this was instituted as the
major program of the government, it
provided for a special fund called the
Agrarian Reform Fund in order to cover
the estimated cost of the project from
years 1987 to 1992. The CARP
recognizes all workers in the land as
beneficiaries of the program as long as
they are willing to till the land and that
they are landless.
During the 10-year term of former
president Gloria Macapagal Arroyo, the
administration developed and
established the following programs:
 COMPARATIVE STUDY OF SOUTH KOREA AND PHILIPPINES 6

Lastly, the fourth prong namely Land Tenure Improvement, Provision of

Saemaul Undong or the New Support Services, KALAHI ARzone and
Community Movement. At first, this Agrarian Justice, to name some.
program only aims to improve the
household living conditions but as time The Agrarian Reform Community
goes by, it worked on construction Connectivity and Economic Support
projects as well as focused on Services was created under the
economic concerns. This was the administration of former president
driving force that helped South Korea to Benigno Aquino III, which aims to
overcome their suffering from the contribute to reduce rural poverty
difficulties. From expansion of roads, especially in the agrarian reform areas.
replacement of thatched roofs to
construction of village bridges, all were
supported by the government. As a
matter of fact, during the year 1973, the
government differentiated the support
based on the development levels; Basic
Village, Self-help village and Self-
reliance village. Another project under
the Saemaul Undong are the income
increasing projects. They provided
support to increase the farmer’s
incomes as well as by providing
agricultural technology education. From
the conventional farming, they were
able to developed to combined farming
in which they also began to grow other
special crops such as mushrooms,
vegetables, tobacco and many more.
And so, from rural areas, this movement
expanded to numerous cities,
workplace and schools.
 COMPARATIVE STUDY OF SOUTH KOREA AND PHILIPPINES
INDUSTRY
As the country pursues a high speed
industrialization, it had sacrificed its
agriculture thus creating policies that
would favor the industry sector more
instead of the agricultural sector.
They developed an export
oriented strategy which were led by the
government. Wherein, the Korean
government have targeted the creation
of some of the domestic industrial
capacities in the country such as
infrastructure building together with a
mixture of export promotion and import
controls. For this strategy to work
effectively, the government had
targeted public investments for specific
locations where they would host
industrial complexes, and scientific
and technological centers. And so, the
national policies were geared towards
nurturing investments in the capital
region and some strategic locations for
exports.
Throughout the years, South
Korea is on the path of the Regional
Development Policy with each different
administrations have developed,
improved, or changed some of the main
projects but is still consistent with its
export-oriented strategy.
7
INDUSTRY
In the year 1949, when a balance
of payment crisis is happening, the
country responded with an
Industrialization Policy of Import
Substitution. This industrialization
strategy was also created when the
country is aiming to pursue an
economic transition from an
agricultural economy to an industrial
economy.
Moreover, the country adopted a
Trade Liberalization program under a
World Bank structural adjustment loan
during Marcos’ administration. The aim
was to combine the incentive
measures to exports and investments.
However, it resulted to a dramatic
decrease in exports and a high
increase in imports.
Furthermore, the country also
imposed the Philippine Inclusive
Innovation Industrial Strategy or the i3s
which prioritizes the development and
growth of the twelve major industries in
the country namely electronics and
electrical, automotive, chemicals,
aerospace parts, textiles, shipbuilding,
agribusiness, construction and many
more.
 COMPARATIVE STUDY OF SOUTH KOREA AND PHILIPPINES 8

III. PROBLEMS/CHALLENGES/ISSUES 2. High-speed industrial growth 1. Corruption

FACED OR ENCOUNTERED sacrificing agriculture
One of the consequences faced in
South Korea was the negative impact it
had on the rural areas as well as on the
environment. They suffered from a
fertilizer pollution, water contamination
etc.
One of the most problematic issues
in the Philippines is CORRUPTION.
Despite the efforts in improving the
economy of the country, one cannot
neglect the fact that one of the
reasons why the Filipinos are
suffering from extreme poverty is due
to corruption.

3. Incurred higher costs 2. High Inflation Rate

3. Land Reforms
With the programs and policies the Numerous land reform programs
country implemented, many farmers were allowed for the transferring of land to
buried in debt as several changes would poor Filipinos. However, the
require higher costs despite of the higher recipients were not allowed to sell
yields it would give in return. these lands or buy additional land
thus, triggering them to resell their
land to agricultural elites under
shadowy agreements.
4. Uneven growth and job creation

IV. SUMMARY/CONCLUSION/RECOMMENDATION
Both countries, South Korea and Philippines began as an agricultural economy. Wherein, it had developed policies,
programs and even strategies as to how it would help in improving its rural areas. The countries had implemented numerous
land reforms and agrarian reform program for a rural development. But as time went by, both pursued to gear towards an
economic transition, from an agricultural economy to industrialized economy. This shift led to short-term problems while some
experienced long-term problems. South Korea had sacrificed its agriculture just to achieve its economic prosperity. With this,
the country has became one of the powerful economies in the world. It’s strategies worked well which lead them to success up
to this day.
However, if we would look at the history of both countries, Philippines was once richer and powerful than South Korea.
Yet, if we would look at today, Philippines is nowhere in the list of the once powerful economies in the world. Several years have
 COMPARATIVE STUDY OF SOUTH KOREA AND PHILIPPINES 9

passed since the country had shifted to an industrialized economy however, at some point we are still in a loss. How did it work
for them (South Korea) and why did it not work for us (Philippines)? Since both countries are in the export-led industry, the
differences could be noticeable. One of these is what South Koreans were trying to export are the already finished products.
They are importing raw materials from Japan, processing it in South Korea, and then would sell and export these to foreign
countries. On the other hand, what we’re doing (Philippines) is that we are exporting our raw materials to foreign countries and
then once these raw materials were manufactured, these would be sold here in the country at a price higher than the amount
that we originally sold it for. An example of which are the shoes from Marikina which will be sold to foreign brands. And then
these brands, would improve the design and of course, add its signature logo and then finally will sell it back to us at an expensive
price. It also worked for them as the government were fully supportive to them in achieving its goals toward an industrialized
economy.
If there could be one way to help bring back our country’s economic prosperity, it is to once again support our agriculture
without leaving behind our industries. The country is lucky enough to be surrounded by lots of natural resources. We had lots of
island and because of it, we could have maximized our water resources. Moreover, bring back the glory of the agriculture sector
by improving the rural areas as well as providing benefits and incentives to our farmers as they grow lots of agricultural products.
Minimize the importation of rice from other countries and start to maximize our rice industries.

V. REFERENCES

 Hays, J. (n.d.). SPANISH GALLEON TRADE BETWEEN THE PHILIPPINES AND MEXICO. Retrieved October 24,
2019, from http://factsanddetails.com/southeast-asia/Philippines/sub5_6a/entry-3835.html.
 Hays, J. (n.d.). PHILIPPINES UNDER SPANISH RULE: LIFE, COLONIZATION, TRADE AND CHINESE. Retrieved
October 24, 2019, from http://factsanddetails.com/southeast-asia/Philippines/sub5_6a/entry-3836.html.
 Merchant, P. (n.d.). Economic Effects of the Spanish Conquest of the Philippines and Mercantile Theory. Economic
Effects of the Spanish Conquest of the Philippines and Mercantile Theory. Retrieved from
https://web.stanford.edu/group/journal/cgi-bin/wordpress/wp-content/uploads/2012/09/Merchant_SocSci_2009.pdf
 Industrial Policy in Philippines. (n.d.). Retrieved October 24, 2019, from https://www.sociologyguide.com/international-
economy/industrial-policy-in-philippines.php.
 Agrarian Reform History. (n.d.). Retrieved October 24, 2019, from http://www.dar.gov.ph/about-us/agrarian-reform-
history/.
 (n.d.). Retrieved October 25, 2019, from http://countrystudies.us/south-korea/46.htm.