JC History Tuition Online - When was Acer founded - Asian Tigers Notes

When was Acer founded?

Topic of Study [For H2 History Students]: 
Paper 1: Understanding the Global Economy (1945-2000)
Section B: Essay Writing
Theme II Chapter 3: Rise of Asian Tigers from 1970s to 1990s [South Korea and Taiwan]

Retrace the steps and find out how Acer was formed in the 1970s [Video by Acer]

The Origins: MultiTech
In 1976, Stan Shih (施振榮) founded MultiTech with six others, including his wife Carolyn Yeh (葉紫華). The company began its journey as an Original Equipment Manufacturer (OEM) by producing video games and distributing electronic imports. In the 1980s, MultiTech expanded its production by involving Amex as its first international distributor.

Multitech… it’s not just another new computer company. It is a leading manufacturer in the computer age, and its Taiwan manufacturing facility is the largest for personal computers. Since 1976, Multitech has been a pioneer in microcomputer technology. Today its products are sold in more than 40 countries. Earning a world-wide reputation for consistent high-quality, Multitech products have captured the loyalty of large OEMs, VARs and distrubtors.

An excerpt from “Multitech – the computer family that carries many famous names” by PC Mag, 13 May 1986.

The Rising Star: Acer
In 1987, MultiTech was renamed to Acer, signifying its entry as a key player in the Personal Computer (PC) industry. Shih capitalised on the low labour costs in Taiwan to accelerate export production. By 1991, more than two-thirds of Acer’s sales were accrued from foreign markets. Although Acer sought to position itself as a full-line PC supplier, about a third of its sales was still derived from OEM in the mid-1990s.

In addition, Acer had the support from the Taiwan government to engage in a joint-project with Texas Instruments (TI) to produce semiconductors in the famed Hsinchu Science Park. Joint ventures proved advantageous as Acer acquired technology to broaden its scope of production and improve quality.

Because technological capabilities were seen as necessary core competence and proximity to sophisticated customers was important to building these capabilities, Acer invested abroad to be near these customers. Initially, Acer penetrated OECD markets in Europe and North America. By 1993, Acer had moved from assembling PCs in Taiwan and Malaysia and shipping to European and US customers to assembling abroad with strict quality standards.

… By 1995, Acer, with a market value of US$2 billion, began to split itself into 21 public companies, listed on stock exchanges around the world, to open the company to foreign investment.

An excerpt from “Multinationals and East Asian Integration” by Wendy Dobson & Chia Siow Yue.

What can we learn from this article?
Consider the following question:
– Assess the importance of government intervention in shaping the rise of Acer.

Join our JC History Tuition to learn more about private businesses in Taiwan as part of the Rise of Asian Tigers topic. The H2 and H1 History Tuition programmes feature online learning lessons that cover content review and the development of answering techniques for essay and source based case study.

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JC History Tuition Online - Why is Hyundai so successful - Asian Tigers Notes

Why is Hyundai so successful?

Topic of Study [For H2 History Students]: 
Paper 1: Understanding the Global Economy (1945-2000)
Section B: Essay Writing
Theme II Chapter 3: Rise of Asian Tigers from 1970s to 1990s [South Korea and Taiwan]

Learn more about the history of Hyundai to find out how it grown to become a dominant Korean automaker [Video by Hyundai]

Humble beginnings
Chung Ju-yung was born in poverty-stricken family that relied on farming to make a living. After the end of the Second World War, Chung established the Hyundai Engineering and Construction Company (HECC). The HECC began its operations as a civil engineering subcontractor that provided maintenance and repair work in the 1950s.

A turn of events: The Korean War
During the Korean War, the HECC took on projects by the United States Army, enabling it to expand into one of the leading construction companies in South Korea. Furthermore, Chung worked with the Rhee administration to secure construction projects for the development of local infrastructure.

When General Park Chung-hee took over in the 1960s, Chung continued to obtain contracts to entrench Hyundai’s market dominance, such as the development of the Gyeongbu Expressway. Externally, the HECC helped to develop infrastructure in Vietnam and the Middle East, which proved to be a fortuitous time for diversification.

The success of HECC in the construction industry, aided by support from the Park military government, enabled Hyundai to diversify into the automobile and shipbuilding industries and establish the Hyundai Motor Company and Hyundai Heavy Industries in 1967 and 1974.

… This aggressive entry into the Middle East market had important implications for the growth of both HECC and the Hyundai Business Group. It enabled HECC to become an international construction company no longer dependent on its domestic market. Moreover, the rapid expansion of its heavy industrial construction projects created a large internal demand for materials, enabling Hyundai to strengthen its monopoly position in the domestic construction market during the 1970s.

An excerpt from “The Chaebol and Labour in Korea: The Development of Management Strategy in Hyundai” by Seung-Ho Kwon and Michael O’Donnell.

Enter Hyundai Motor
Initially, the Hyundai Motor Company (HMC) forged a joint agreement with the US-based Ford Motor Company. Yet, the lack of consensus over managerial and marketing issues led to the termination of the partnership in the early 1970s. In 1976, HMC developed its first car, the Hyundai Pony, in 1976.

The Hyundai Pony as described by George Turnbull [Video by ThamesTV]

The Hyundai pony was developed with the support of the Mitsubishi Motor Company that sought to expand its market access beyond the shores of Japan. Hyundai was granted a technical licensing agreement, which enabled it to develop its very own nameplate cars.

Additionally, Chung roped in George Turnbull, who was formerly the president of the British Leland – an automotive company. Turnbull assumed the role as vice president of the HMC. In two years, Turnbull oversaw the development of the car production facilities in Ulsan.

By 1976, the new plant was completed and the first cars began rolling off the assembly line. Chung named the new model the Pony, a familiar name to many Koreans who were brought up on American Western movies. The Pony was a 1.2 liter rear-wheel-drive subcompact of modest quality. No market research had been done. Chung and his company had simply designed and built the car they thought the Korean people should have. President Park guaranteed the financing; Hyundai built it. It was Korea’s first national car.

An excerpt from “Made in Korea: Chung Ju Yung and the Rise of Hyundai” by Richard M. Steers.

From mid-1970s onwards, the HMC moved beyond the limited domestic market to the export markets. Alongside other similar automakers like Daewoo and Kia, the HMC increased export production in the 1980s. Hyundai Motors set up a production facility in 1985, which had an annual capacity of 300,000 units. By the mid-1980s, more than half of the total car production was exported, enabling the South Korean economy to benefit from continued current account surpluses by 1989.

What can we learn from this article?
Consider the following question:
– Assess the reasons for the rise of Hyundai from the 1970s to 1980s.

Join our JC History Tuition to learn more about chaebols and other factors relating to the Asian Tigers. The H2 and H1 History Tuition programmes feature online learning activities to consolidate your content awareness and improve answering skills. Attend our free writing practices to improve your time management and application techniques.

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JC History Tuition Online - What is the Saemaul Undong movement - Asian Tigers Notes

What is the Saemaul Undong Movement?

Topic of Study [For H2 History Students]: 
Paper 1: Understanding the Global Economy (1945-2000)
Section B: Essay Writing
Theme II Chapter 3: Rise of Asian Tigers from 1970s to 1990s [South Korea and Taiwan]

Examine the impacts of the Saemaul Undong Movement on the rapid modernisation of South Korea in the 1970s and 1980s [Video by Arirang News]

Historical context: Origins of the New Village Movement
The South Korean President Park Chung Hee launched the Saemaul Undong (New Village Movement) in April 1970. It was targeted at the rural parts of nation to advance economic development by combatting endemic rural poverty in the Republic. Although South Korea was already experiencing economic growth in the 1960s, the rural population did not gain much from this trend.

“Our industry,” [Park] solemnly declared, “can develop only when our farmers become well-to-do and the rural communities develop rapidly. Well-to-do farmers generate a great deal of purchasing power, providing one of the basic conditions for industrial development. When industries develop rapidly, the resources thus generated are made available… for reinvestment in the agricultural sector. Viewed in this way, agriculture and industry are inseparable.

An excerpt from “The Park Chung Hee Era: The Transformation of South Korea” by Byung-Kook Kim and Ezra F. Vogel.

How does it work?
The Saemaul Undong is defined as a community development movement that promotes three main concepts: self-help, diligence and co-operation. The Park administration mobilised governments to equip farmers with the knowledge to modernise their homes and farms. Improvements in infrastructure was aimed to raise living standards. Also, farmers were encouraged to use high-yielding varieties to boost their rice production, thus ending food shortage.

To symbolize this change, all rural households had to replace their thatched roof with tiles, which were more fireproof and considered more modern, although the poor often had to settle for corrugated metal roofs painted blue or orange to look like tiles.

Most important was the price support given to farm crops, especially rice. It meant higher food prices for urban workers, who often struggled on low wages, but it produced higher incomes for farmers and eventually reduced rural poverty.

An excerpt from “A Concise History of Korea: From Antiquity to the Present” by Michael J. Seth.

The movement was a resounding success in the mechanisation of farming techniques. With the increased use of motor vehicles, farm output increased significantly. Furthermore, the development of collective farm estates in the 1970s contributed to the production of specific agricultural items like citrus and oysters.

Some of the specialty agricultural items produced by these estates, including citrus, oyster, and mushrooms, were exported, with remarkable growth rates in exports of citrus (1,800%) and mushrooms (1,000%) during 1972–1976. Such impressive rates of growth boosted the total value of exports of agricultural products to $328 million in 1971, a 255% increase over 1967.

An excerpt from the “The Saemaul Undong Movement in the Republic of Korea” by the Asian Development Bank, 2012.

What can we learn from this article?
Consider the following question:
– Assess the view that industrialisation was the most important factor in explaining the ‘Miracle on the Han River’.

Join our JC History Tuition to learn more about the Asian Tigers. Our H2 and H1 History Tuition to get a good grasp of the A Level History content. We provide online and physical lessons to organise your study and improve your answering techniques for essay and source based case study questions.

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JC History Tuition Bishan Singapore - What caused the Taiwan economic miracle - JC History Essay Notes

What caused the Taiwan economic miracle?

What is the Taiwanese economic miracle?
Taiwan’s phenomenal economic transformation has been examined thoroughly by academics. Some argue that the economic miracle was attributed to internal factors, particularly the role of the government in spearheading heavy industrialization. In contrast, others believe that Taiwan’s meteoric rise in international markets was due to international developments, such the role of the USA in providing loans and access to foreign technology. Generally, both perspectives are valid and indeed contributed to the economic development of Taiwan.

Topic of Study [For H2 History Students]: 
Paper 1: Understanding the Global Economy (1945-2000)
Section B: Essay Writing
Theme II Chapter 3: Rise of Asian Tigers from 1970s to 1990s [South Korea and Taiwan]

In the next section, we will examine the key contributing factors that led to the economic miracle of Taiwan, especially the government and private enterprises.

1. [Government] Import-substitution Industrialization
From the 1950s, the Taiwanese government engaged in import-substitution industrialization (ISI) to develop the manufacturing sector. Apart from the focus on restoring pre-war levels of production in the agricultural sector, the government insulated domestic firms from foreign competition, thereby enabling the production of textiles, plastics and plywood.

For example, in the textile industry, the government imposed tariffs and quotas on the imports of yarn. Additionally, the government improved access to credit, thus allowing firms to purchase capital. A limit of new entrants was imposed to prevent excessive competition from undermining the growth of local textile firms.

As a result, their efforts provided successful as Taiwan became a major textile exporter in the 1950s. The export of textiles increased twofold in the same time period. In fact, Taiwan was so successful that USA engaged in protectionism in 1961.

2. [Government] Export-oriented Industrialization
Over time, the government recognized the economic potential of export-led growth and pursued an outward strategy. This was known as export-oriented industrialization (EOI), which aligned with the trend of economic liberalization.

One of the many areas of focus was the provision of incentives to encourage export promotion. For example, a concessional export credit scheme was introduced. Also, the government devalued the exchange rate to raise export competitiveness.

Besides, the government pursued an indirect approach by nurturing the growth of small and medium enterprises (SMEs) in Taiwan. By having a sizable pool of SMEs, the government can benefit from an additional dimension of trade-led growth. For instance, the SME Development Fund was set up to grant financial assistance to the private enterprises. Firms were also granted access to foreign technology and manpower training.

As a result, SMEs dominated the domestic markets. In contrast to South Korea, in which the chaebols (large family-dominated conglomerates) occupied major shares of the economy, Taiwan was backed by numerous SMEs. By 1994, nearly 98% of Taiwan’s manufacturers were SMEs. Furthermore, SMEs were key producers that provided nearly half of the total production in the late 1970s and early 1980s.

3. [Private Enterprises] Greater emphasis on export promotion
Eventually, as SMEs grew and expanded in size, the government continued to play a vital role in supporting these private enterprises that became internationally competitive. Although many industrialized countries like Taiwan and South Korea were hit by the Crisis Decades, the SMES were able to endure these external shocks through continual state support.

For instance, the oil shocks in the 1970s eroded export competitiveness for Taiwanese manufacturers. In response, the government formulated a new plan in the mid-1970s to engage in economic restructuring. As such, Taiwan ventured into quality-driven exports, such as petrochemicals and electronics.

The government oversaw the transition from a labour-intensive to capital-intensive production by establishing the Industrial Technology Research Institute (ITRI) in 1973. The ITRI specialised in R&D. In 1987, the Taiwan Semiconductor Manufacturing Company (TSMC) was formed as a result of ITRI.

4. [USA] External support to enhance capital-intensive production
The private enterprises were also supported by the USA, which capitalized on the low-cost base and pro-liberalization policies of the government to set up firms in Taiwan. The entry of American MNCs (e.g. Taiwan) proved beneficial for Taiwan as it led to the influx of foreign direct investment (major source of growth) and foreign technology (raised quality of production).

What can we learn from this case study?
Consider the following question to understand this issue:
– How far do you agree that the economic transformation of Taiwan was the result of government intervention? [to be discussed in class]

After you have examined this case study to understand the importance of the above-mentioned factors in contributing to the growth of the Taiwanese economy from the 1970s to the 1990s, you should apply your knowledge to the essay questions. It is important that you review your learning through an application-oriented approach. You can consider joining our JC History Tuition and learn how to condense your content revision in a more productive way, such that you can answer both essay and source-based case study questions effectively.

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JC History Tuition Bishan Bedok Tampines Singapore - How did Taiwan become a successful export economy - JC History Essay Skills

How did Taiwan become a successful export economy?

How did Taiwan become an economic power in Asia? 
In continuation of the previous article pertaining to the contributing factors that led to the economic transformation of South Korea, we will now examine how Taiwan, also known as the ‘accidental nation’, achieved its economic success from the 1960s to the 1990s. Taiwan also undergone a process of rapid industrialisation, shifting its focus from domestic production to export-driven production that propelled the nation to its developed status.

Topic of Study [For H2 History Students]: 
Paper 1: Understanding the Global Economy (1945-2000)
Section B: Essay Writing
Theme II Chapter 3: Rise of Asian Tigers from 1970s to 1990s [South Korea and Taiwan] 

In the following section, we will focus on four major roles that led to the economic miracle in Taiwan. Take note that these points are to be evaluated based on role and factor comparison, so as to improve your comprehension of these contributing roles to the economic development of Taiwan. For example, you should analyse the varying degrees of importance for government and private businesses in affecting the economic transformation of Taiwan.

1. Role of the Government
a. Target Setting and Planning
Taiwan began its planning phase with the establishment of the Council for United States Aid (CUSA) in 1948, which was later reformed as the Council for Economic Planning and Development (CEPD). The CEPD played the role as a government agency to draft plans and set targets for the economic development of Taiwan. As a planning body, the CEPD decided on the allocation of state resources for the growth of industries, such as the distribution of development funds.

b. Policy Implementation
From the 1950s to 1960s, Taiwan’s economic policies were centred on the the implementation of the ‘import-substitution industrialisation’ (ISI) strategy, which focused on the protection of infant industries. For instance, the government introduced import restrictions on consumer goods to protect local firms from external competition. As a result, the agricultural sector flourished, contributing to the growth of the Taiwanese economy.

However, the economic contribution of the agricultural sector was low in value. As such, the Taiwanese government shifted its focus to ‘export-oriented industrialisation’ (EOI), which emphasised on the production of exports in capital-intensive industries. The government oversaw this development by passing laws that reinforced export-based production, such as the Provisions for Export Zone in 1965. Consequently, the EOI strategy was met with great success, as evidenced by the domination of numerous exporting goods in the international markets by the 1980s. For example, Taiwan was known for its exports of motherboards and computer terminals as it occupied more than three-quarters of the global exports.

2. Role of the Private Businesses [i.e. SMEs]
On the other hand, not only the public sector contributed to the economic transformation of Taiwan, but also the private counterpart, particularly the small and medium enterprises (SMEs). In contrast to South Korea, which is known for its few and massive chaebols that dominated the entire economy, Taiwan’s economic growth was driven by the existence of many SMEs. These SMEs played a crucial role in pursuing the goals set by the government, as observed by the large-scale production of exports. In the 1960s and 1970s, SMEs accompanied the government’s focus on EOI by producing standardised light-industry products. These goods were produced and sold at the international markets.

Over time, SMEs dominated the Taiwanese export production, accounting for nearly two-thirds of the entire country’s exports. Given that Taiwan’s economic developed hinged on export gains, this implied that SMEs became the key driver of the economy.

3. Role of Culture
Although Taiwan had a stark difference in the role of private businesses as compared to South Korea, the cultural factor remained similar, in the sense that favourable cultural influences could explain the remarkable economic performance of Taiwan from the 1960s to 1990s. Taiwan was also shaped by Confucianism, which is a philosophy that encouraged diligence, frugality and respect for authority.

One of the notable consequences of such cultural traits is the emergence of SMEs. In this case, the Taiwanese people were entrepreneurial. Their willingness to innovate and battle against the odds was critical in supporting this significant development. As a result, many business owners possessed the business acumen to deal with economic uncertainties.

Furthermore, the relevance of frugality to economic development can be explained by the high savings rate, which means that many firms have sources of financing to conduct investment activities that propel economic growth even more. Therefore, cultural values were important in helping us to understand the vigour that drives these firms.

4. International Developments [i.e. Role of USA]
The economic development of Taiwan was also supported by the role of USA, which increased its presence in Asia as a response to the perceived ideological threat of Communism. This response was carried out in the form of advancing economic progress by providing financial aid and other forms of support. For example, Taiwan was given exclusive access to American market and the privilege to impose trade protection temporarily. As such, USA occupied nearly two-fifths of Taiwan’s exports. From 1960s to 1970s, USA became Taiwan’s major export market, accounting for a large proportion of its economic growth.

Points to Ponder
Now that you have looked into the four major roles that affected the economic transformation of Taiwan, do consider the following ideas to reinforce your study of this topic for essay writing:
– How did the role of SMEs contribute to the economic miracle of Taiwan? 
– In comparison between South Korea’s chaebols with Taiwan’s SMEs, analyse their approaches in supporting the economic development of these two Asian Tigers. [to be discussed in class]

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JC History Tuition Bishan Bedok Tampines Singapore - How did South Korea become a developed nation - JC History Essay Skills

How did South Korea become a developed nation?

What are the Four Asian Tigers? 
To understand how South Korea become a developed nation, we must start off the discussion with the understanding of the ‘Four Asian Tigers‘. The ‘Four Asian Tigers’ refer to the fast-developing nations of South Korea, Taiwan, Hong Kong and Singapore. These four Asian economies were identified as remarkable case studies, given their high levels of sustained economic growth from 1960s to 1990s. Due to their extensive focus on export-oriented industrialisation, these countries have caught up with developed countries and competed at the international markets

Topic of Study [For H2 History Students]: 
Paper 1: Understanding the Global Economy (1945-2000)
Section B: Essay Writing
Theme II Chapter 3: Rise of Asian Tigers from 1970s to 1990s [South Korea and Taiwan] 

In the following section, we will examine the contributing factors that can explain the economic transformation of South Korea.

1. Role of the Government
a. Target Setting and Planning
At the stage of economic development, the South Korean government undergone a process of central planning that involved target setting and resource management. Central planning was essential in the prioritisation of promising industries to nurture and expand, especially the family-owned chaebols. Institutionalisation of planning procedures took the form of the Economic Planning Board (EPB was established in 1961), which took the lead in formulating Five-Year Plans (FYP), which were important in charting the direction on a progressive basis. The EPB was accredited for the successful policy shift from import-substitution industrialisation (ISI) to export-oriented industrialisation, which propelled the South Korean economy significantly.

b. Policy Implementation
The strategies employed by the South Korean government have evolved over time. At the initial stage, the South Korean economy was built upon the foundations of domestic production. This strategy is known as ‘import-substitution industrialisation‘, which refers to the use of artificial trade barriers to insulate the domestic economy from foreign competition. The main purpose of ISI was to nurture local firms, such that they will develop and expand to become the key driver of the South Korean economy. In this case study, the government imposed trade protection to develop labour-intensive sectors that produce textile, agriculture and light consumer goods.

However, the South Korean government realised the economic gains of ISI were not sustainable as the above-mentioned goods yielded low-value economic growth. Hence, they turned their gaze towards foreign markets. This approach involved ‘export-oriented industrialisation‘. In contrast to ISI, EOI involved the production of exports (i.e. domestically-produced goods to be sold in the international markets) to promote economic development. In order for exports to be competitive, the South Korean government provided financial support to exporting firms, such as tariff exemptions on the import of raw materials for export production. Given that the foreign markets were much larger than the domestic market of South Korea, it was evident that the country enjoyed tremendous success, which was indicated by the increase in per capita income from $100 from 1963 to $6614 in 1990.

2. Role of the Private Businesses [i.e. Chaebols]
In addition to the notable contributions by the South Korean government, the economic transformation was made possible through the efforts of the private enterprises. In this case, the chaebols played a crucial role in the economic development of this Asian Tiger. Chaebols are family-dominated conglomerates that serve as the key pillars of support for the development of the South Korean economy. These major business corporations (e.g. Samsung and Hyundai) were formed in the 1960s under the auspices of the government, which provided extensive financial support and exclusion from stiff foreign competition. As such, these companies expanded and dominated the economy.

It was an economic success as the chaebols could compete in international markets against multinational corporations (MNCs) as they possessed large capital to innovate and improve the quality of exports. By 1980s, these major companies were self-sustaining and no longer needed government support to function. In return, these companies acted as the lifeline of the South Korean economy. For instance, Samsung occupied nearly one-fifth of South Korea’s Gross Domestic Product (GDP), implying that a single chaebol could support nearly 20% of the entire nation’s economy.

However, the remarkable achievements of these chaebols were blemished by structural flaws that began to appear over time. The over-bearing influence of these major companies was observed in the monopolisation of markets, which crowded out small and medium enterprises (SMEs). The nearly-absent competition cultivated a culture of complacency, which resulted in the deterioration of product quality. Furthermore, the family-oriented structure of chaebols encouraged the top management to appoint family members, which translated to the growing inefficiencies of these corporations. As such, it was imperative for the government to intervene and address the dominance of chaebols.

3. Role of Culture
The ‘Miracle on the Han River’ can also be explained by the inherent characteristics of the South Koreans, particularly the cultural traits shaped by Confucianism. Similar to the Japanese, many look up to the South Koreans for their work ethics, as they are described as industrious and reliable. In economic terms, many firms benefited in terms of higher labour productivity levels, which contributed to increase in economic growth rates.

Additionally, the frugal mindsets of South Koreans were beneficially for economic developments as savings rate was high. This meant that many firms could take loans from banks to finance their investment activities, thus promoting economic growth.

4. International Developments
South Korea’s economic development can also be explained by the tremendous economic support provided by USA during the Cold War period. During and after the Korean War (1950 to 1953), USA supported Korea’s industrialisation policy as part of its strategy to stem the tide of Communism in Asia. For example, USA provided post-war financial aid to South Korea, in which the financial resources were important for public infrastructure projects, like road-building and airport construction. From 1950 to 1980, the estimates of American aid to South Korea amounted to nearly US$6 billion. Due to the efforts of the USAID (United States Agency for International Development), South Korea’s exports increased from US$4 million to over $150 billion in 1980. Therefore, it can be observed that USA played a significant role in the development of the Korean economy.

Points to Ponder
Now that you have covered the four major factors that could explain the economic transformation of South Korea, consider the following pointers to integrate your knowledge for essay writing application:
– Which role was more important in the economic transformation of South Korea: Government or Private Enterprises [explain why]
– “The role of USA was most crucial in achieving the economic miracle of South Korea.” Assess the validity of this statement. [to be discussed in class]

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