The South Korean Economy
Contemporary Korean Economy | South Korean Soft Power
Korean Economy
According to some estimates, South Korea has the world's eleventh
largest economy.
It has a population of over 48 million, 35% of whom live in Seoul & its environs. The standard of living is close to that of Hong Kong,
Taiwan and Singapore. South Korea is close to Japan geographically and in economic style. Indeed
the Japanese colonial period 1910-45 shaped the economic and industrial
direction of the country. Any discussion of the economy cannot fail to
mention the 'chaebol', the Korean equivalent of the big Japanese
corporations.
The big names are Hyundai, Samsung, Lucky-Goldstar, Daewoo,
Sunkyong, Hanjin, Ssangyong, Kia, Hanhaw and Lotte. The chaebol and the
government have had a close relationship for a long time, much in the
same way as that of the big corporations and government in Japan. In South
Korea, this has taken the form of cheap credit from government-controlled
banks and tax breaks for the companies willing to pay bribes.
Most of the chaebol are concentrated in Seoul, Daegu
and Busan (Pusan). Wealth is concentrated
in South Korea in the hands of the chaebol. To give some idea of their
size, in the early 1980s, the country's three biggest conglomerates accounted
for more than a third of South Korea's entire Gross National Product.
In addition, a 1970s study of top chaebol executives found that about
12 percent were closely related to the founders' families.
Another similarity with the Japanese model is that imports from
abroad have been restrained by strict regulations and tariffs, while exporting
has been aggressively promoted. These policies led Korea to become an
Asian 'Tiger' economy, at least until the economic crisis
in Asian economies in 1997/1998, from which it made a remarkable
recovery.
Of course, this economic dip was not the first in Korea's recent history;
the recovery from the Korean War (1950-52) was sluggish and a corrupt
regime was ousted by the military. General (later, President) Park Chung-hee
maintained control by means of rigging elections and human rights abuse.
It was under his tutelage that the Korean economy took off. Priority was
given, initially, to the exportation of low-cost goods, rather
than the creation of homegrown industries making products designed to
replace imports from overseas.
The downturn in the NASDAQ in the U.S. (falling during 2000 from a high
of 5,000 to about half of that) has been reflected in the fortunes of
the even worse performing KOSDAQ in Korea. In addition, by the end of
the twentieth century the local currency (the won) had slipped
in value to its 1988 level.
Nobel prize-winner President Kim Dae-jung of Korea and Japanese PM Mori
set up a joint electronic commerce committee to help promote this area
of business in Asia in the autumn of 2000. There are social and political
hopes that the rapprochement between South and North Korea
will unify the nation, but there are attendant economic fears concerning
the cost of unification, given the German experience.
Contemporary Korean Economy Nowadays, exports are of high technology products such as mobile phones, semiconductors, computer equipment and flat-screen TVs, as well as automobile manufacture and shipbuilding. It is in the first of these, the so-called New Economy, where Korea appears to be outrunning Japan in some areas.
As of August 2000, over a third of the South Korean population were Internet users, compared with under a fifth of the Japanese; with many more ADSL subscribers in Korea. By 2011 over 40 million South Korean's had internet access (out of a population of 48 million) leading to a booming e-commerce sector. In 2010 South Korea experienced 6% growth far ahead of its neighbor Japan. Korean companies such as Samsung, Hyundai and LG seem to have won their battles with such Japanese competitors as Sony and Matsushita, helped by the relative weakness of the Korean Won against the soaring value of the Japanese Yen. China is now South Korea's major import and export partner.
Possible economic problems on the horizon are Korea's rapidly ageing society and an over-dependence on exports to fuel growth.
South Korea Soft Power
South Korea's exports are not just limited to mobile phones and cars. Korean popular music (K-pop) and Korean TV dramas have become popular in many other Asian countries and even among the young in Europe and America. Korean food is also growing in popularity helped by Korean diasporas in the USA and UK. Tourism in South Korea is also on the increase with neighboring Japan and China supplying the bulk of incoming tourists often in the form of short 3-5 day package tours.
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