f the 1980s than they were in the two earlier decades.
Although the Korean government cooperates with industry in efforts to keep labor unions as ineffective as is possible, wage levels and employee benefits increased significantly in the first half of the 1980s. This development caused some Korean manufacturers to consider a shift of production from Korea to lower labor cost countries. More often, however, the result was a drive for higher productivity through a move away from labor intensive manufacturing practices. This route was the one taken by Gold Star. Increased prosperity for workers has led to a greater demand for domestic consumption, which has, in turn, caused some manufacturers to devote increased emphasis to the domestic Korean market. Among these firms was Gold Star.
External debt is a major problem facing Korea's economic planners and managers. An external deficit develops for a country when the claims of foreign entities on the country's economy exceed the claims of entities in that country on the
economies of other countries. A country's external debt is comprised of loans to both government and private sector organizations in the country. Loans to government entities involve sovereign risk, while loans to all other entities involve enterprise risk.
Loans involved in a country's external debt are extended by other governments, by international organizations (primarily the International Monetary Fund and The World Bank), and by private sector lenders in other countries (primarily banks, but also by investors who buy bonds and other debt obligations). The International Monetary Fund (IMF), however, plays a special role in this loan activity, because it, for the most part, establishes the rules of the game for all parties, as well as extending loans on its own.
Most of the world's developing countries had a net external debt in the first half of the 1980s. Some of these countries, however, had a ...