University of International Business

Economy in South Korea

Almaty, 2011

 

South Korea, officially the Republic of Korea (ROK). Currency South Korean Won (W)

 

Geography

Area: 98,480 sq. km. (38,023 sq. mi.); slightly larger than Indiana.

Cities (2010): Capital-Seoul (10.5 million). Other major cities-Busan (3.6 million), Daegu (2.5 million), Incheon (2.7 million), Gwangju (1.4 million), Daejeon (1.4 million), Ulsan (1.1 million).

 

People

Nationality: Korean(s).

Population (2010): 48,636,068.

Annual population growth rate (2010): 0.258%.

Ethnic groups: Korean; small Chinese minority (about 20,000).

Religions: Christianity, Buddhism, Shamanism, Confucianism, Chondogyo.

Language: Korean; English widely taught in junior high and high school.

Education: Years compulsory-9. Enrollment-11.5 million. Attendance-middle school 99%, high school 95%. Literacy-98%.

Health (2010): Infant mortality rate-4.24/1,000. Life expectancy-78.81 yrs. (men 75.56 yrs.; women 82.28 yrs).

Total labor force (2010): 24.37 million.

Labor force by occupation (2007): Services-67.7%; industry-25.1%; agriculture-7.2%.

Government

Type: Republic with powers shared between the president, the legislature, and the courts.

Liberation: August 15, 1945.

Constitution: July 17, 1948; last revised 1987.

Branches: Executive-President (chief of state); Prime Minister (head of government).Legislative-unicameral National Assembly. Judicial-Supreme Court and appellate courts; Constitutional Court.

Subdivisions: Nine provinces, seven administratively separate cities (Seoul, Busan, Incheon, Daegu, Gwangju, Daejeon, Ulsan).

Political parties: Grand National Party (GNP); Democratic Party (DP), formerly known as United Democratic Party (UDP); Liberty Forward Party (LFP); New Progressive Party (NPP); Pro-Park Alliance (PPA); Renewal Korea Party (RKP).

Suffrage: Universal at 19.

Government budget (2010): Expenditures-$227.2 billion.

Defense (2009): 2.5% of GDP.

Economy

GDP (purchasing power parity in 2010): $1.364 trillion.

Real GDP growth rate: 2008, 5.1%; 2009, 2.3%; 2010, 0.2%.

GDP per capita (2010, current U.S. $): $17,074.

Unemployment rate (2010): 3.6%.

Inflation rate (consumer prices): 2009, 4.7%; 2010, 2.8%.

Natural resources: Coal, tungsten, graphite, molybdenum, lead, hydropower potential.

Agriculture: Products-rice, root crops, barley, vegetables, fruit, cattle, pigs, chickens, milk, eggs, fish. Arable land-16.58% of land area.

Industry: Electronics, telecommunications, automobile production, chemicals, shipbuilding, steel.

Trade (2009): Exports-$363.5 billion: semiconductors, wireless telecommunications equipment, motor vehicles, computers, steel, ships, petrochemicals. Imports- $323.1 billion: crude oil, food, electronics and electronic equipment, machinery, transportation equipment, steel, organic chemicals, plastics, base metals and articles. Major export markets (2010)-China (23.2%), U.S. (10.1%), Japan (5.8%), Hong Kong (5.3%), Singapore (3.6%). Major importers to South Korea (2009)-China (16.8%), Japan (15.3%), U.S. (9.0%), Saudi Arabia (6.1%), Australia (4.6%).

Over the past several decades, the Republic of Korea has achieved a remarkably high level of economic growth, which has allowed the country to rise from the rubble of the Korean War into the ranks of the Organization for Cooperation and Development (OECD). Today, South Korea is the United States' seventh-largest trading partner and is the 15th-largest economy in the world.

In recent years, Korea's economy moved away from the centrally planned, government-directed investment model toward a more market-oriented one. South Korea bounced back from the 1997-98 Asian financial crisis with assistance from the International Monetary Fund (IMF), but its recovery was based largely on extensive financial reforms that restored stability to markets. These economic reforms, pushed by President Kim Dae-jung, helped Korea return to growth, with growth rates of 10% in 1999 and 9% in 2000. The slowing global economy and falling exports slowed growth to 3.3% in 2001, prompting consumer stimulus measures that led to 7.0% growth in 2002. Consumer over-shopping and rising household debt, along with external factors, slowed growth to near 3% again in 2003. Economic performance in 2004 improved to 4.6% due to an increase in exports, and remained at or above 4% in 2005, 2006, and 2007. With the onset of the global financial and economic crisis in the third quarter of 2008, annual GDP growth slowed to 2.3% in 2009 and just 0.2% in 2010.

Economists are concerned that South Korea's economic growth potential has fallen because of a rapidly aging population and structural problems that are becoming increasingly apparent. Foremost among these structural concerns are the rigidity of South Korea's labor regulations, the need for more constructive relations between management and workers, the country's underdeveloped financial markets, and a general lack of regulatory transparency. Korean policy makers are increasingly worried about diversion of corporate investment to China and other lower wage countries, and by Korea's falling foreign direct investment (FDI). President Lee Myung-bak was elected in December 2007 on a platform that promised to boost Korea's economic growth rate through deregulation, tax reform, increased FDI, labor reform, and free trade agreements (FTAs) with major markets. President Lee’s economic agenda necessarily shifted in the final months of 2008 to dealing with the global economic crisis. ............