An Economic Overview Of South Korea Economics Essay Essay Example

An Economic Overview Of South Korea Economics Essay Essay Example An Economic Overview Of South Korea Economics Essay Essay An Economic Overview Of South Korea Economics Essay Essay The Korean peninsula is located in the northeasterly portion of Asia. The southern half of the peninsula boundary lines on the east sea and the Yellow Sea. To the North, Korea portions its boundary line with China and Russia. Besides the mainland peninsula, Korea besides has approximately 3,000 islands. Japan ruled Korea from 1910 boulder clay 1945. Subsequently the peninsula was divided into two parts and this led to a cold war. After the Korean War ( 1950-1953 ) , Korea remained split into two parts- the Republic of Korea ( ROK ) and the Democratic People s Republic of Korea ( DPRK ) . A demilitarized zone was established with the US set uping a base with soldiers near to this zone in South Korea ( issd.org 2004 ) . The Republic of Korea ( ROK ) is ideally situated geographically in Asia. It is close to China, the new taking economic system in the universe. Japan is besides close-by and a good trading spouse. Furthermore, Singapore, a stable economic state is a close trade spouse and India, which is fast going the 2nd economic system in the universe is back uping the South Korean economic system. The Republic of Korea ( ROK ) authorities was officially established on August 15, 1948. The caput of province is the President. He is the state s representative in international personal businesss. When the President is absent, so the Prime Minister stands in for him and Acts of the Apostless as president. The premier Minister s function is that of executive helper to the President. An executive subdivision, of which the President is caput, consists of the premier Minister, the Cabinet, 15 executive ministries and 16 independent bureaus. This includes the Jeju Special Autonomous state ( issd.org 2004 ) . Society South Korea has a strong political system led by a president with a batch of power. Presidential elections are held every 5 old ages and the whole state ballot for him. The President elects his Prime Minister. The Legislature is elected every 4 old ages and consists of the National assembly.243 of the 299 seats of the national assembly is by voting. The remainder is appointed by political parties. The ROK has 9 states and 7 provincial- degree metropoliss. Koreans are of one cultural group and background. As at the terminal of 2002, the state s population stood at about 47,640,000. Now it stands at about 48,636,068 ( July 2010 est. ) Life anticipation as at 2001 was estimated at 76.5 old ages, and now in 2010 it is 79.8 old ages. The state is ranked at 12th in the Human Development Index, 2010.Gross National Income ( GNI ) per capita ( 2010 ) is $ 29,518 ( UNHDI 2010 ) . Literacy Rate: It is estimated that all over the age of 15 and over can read and compose. The literacy rate for the entire population stands at 97.9 % . For males it is 99.2 % and for females it is 96.6 % ( 2002 ) ( CIA Factbook 2010 ) . Environment The state has a entire surface country of 99,720 sq kilometer of which the land country is 96,920 sq kilometer. H2O country is about 2,800 sq kilometer and the seashore line is 2,413 kilometres ( CIA Factbook 2010 ) . The state s land mass is largely made up of mountains, turn overing hills and highlands. There are broad coastal fields to the West and the South. A negative consequence of the fast growth industrialisation and developing economic system every bit good as urbanisation has caused a batch of pollution to the environment. ( OECD/IEA 2003 ) .Fortunately the authorities has acknowledge this as a job and has introduced programs to clean the environment and protect it. Pollution of air and H2O every bit good as the environment are chief issues to turn to. Most of them are connected to wellness jobs. By the terminal of the 1980s the authorities launched an environmental policy to look at get the better ofing the jobs. The Korean Environmental bureau became a Ministry in 1990. The state started turn toing its jobs and started following and paying attending to international pacts in footings of pollution, such as the Kyoto-Protocol ( iisd.org 2004 ) . Climate: Korea is portion of the monsoon country in Asia. It has a temperate clime. There are four distinguishable seasons. Traveling air from Asia influences the conditions more than air from the Pacific ocean. Winters are long and cold with snow. In contrast, the summers are short, hot and humid. The Spring and Autumn seasons are nice but short. Average temperatures in Seoul in January is approximately -5C to 2.5C. IN July it is pleasant at about 22 25C. There is adequate rainfall in Korea to assist agribusiness. Rainfall is about neer less than 75cm and sometimes it goes every bit high as 100cm. Rainfall nevertheless can change and dry seasons or drouth can happen. Most rain falls between June and September. The state does non acquire typhoons like Japan. About 1 to 3 typhoons can go on yearly. These can convey heavy rain with deluging which can do tonss of harm and deceases. In 1984 such a typhoon and inundations caused deceases of about 190 people and left 200,000 people stateless ( Cou ntry Studies ) . Local Culture: South Koreans have traditions and cultural activities that span 1000s of old ages. However, there have been recent lifestyle alterations. These are as in other states mostly due to modernisation and a fast turning economic system. Tied to this are the higher incomes from occupations and this leads to consumerism. Lifestyle alterations and a higher younger population addition critical positions of old-style civilization and traditions. So there is a clang between younger people and older people in footings of civilization and traditions. Clothing is but one such factor. Manner, coming from Western states, has a singular influence on people. This leads to fashion-consciousness and Westernization. More money leads to more purchasing and shopping. Electronicss besides has a major influence on immature peoples lives. South Korea manufactures hi-tech merchandises and these are used widely, such as nomadic phones, computing machines and the cyberspace. Many people are taking occupations h armonizing to their aptitudes and abilities and non merely for the income. Higher incomes have made it possible for people to pass more clip and money on leisure activities. Leisure activity disbursement has increased from 10 % to 25 % of entire family disposable income. Despite this variegation of life style, many people still maintain a traditional life style whereby the household ideals are treasured. Besides, that the organisation is more of import than the person ( PWC 2005 ) . Buyer behaviour: As the economic system in South Korea developed and people became more employed, so demand for assorted merchandises increased. Consumer behaviour in the field of touristry is noteworthy. In 2009 Korean Air celebrated 40 old ages of being in service and the demand for abroad travel increased. Besides, the domestic market welcomed many tourers to Korea. Samsung developed hotels and Hyundai supplied autos to the auto rental market. Millions of Koreans travelled out of Korea and this figure was set to turn by approximately 8.6 % ( Au A ; Jung 2009 ) . The Korean people and consumers shortly became trade name and monetary value medium as in other booming economic systems. Peoples would shop as their incomes allow. The higher income groups would shop in up-market stores and countries, purchasing expensive branded merchandises. Lower income groups will still shop in lower-end section shops and markets. Even during the Korean economic slack in 1997- 1999. Buying merely slowed down, but did non halt. Even the recent universe economic crisis did non halt purchasing wholly, it merely slowed down. Consumer disbursement besides affects the South Korean furniture market which amounted to over US $ 5 billion in the twelvemonth 2009. It is a big market, when compared with the other 60 states monitored by CSIL. This market was executing good during the twelvemonth before the fiscal crisis. As for future tendencies, CSIL prognosiss are for a stable state of affairs for the twelvemonth 2010 and a moderate recovery for the twelvemonth 2011 and2012 ( CSIL Milano 2010 ) . ROK Economy: South Korea did non go a to the full developed state overnight ; it is still developing. It can be said that South Korea, though technically Less Economically developed, it is classified as a freshly industrialized state ( NIC ) . The sudden and rapid economic development and growing started at a rate and gait non seen since World War II. NIC states are those that have non reached the position of a developed state. However, it has outpaced other developing states. After WW II, South Korea was dependent on assistance from the US. In 1961 South Korea underwent an internal revolution. The states swayers embarked on a series of 5 twelvemonth programs to go self-supporting. The 5-year programs were devised to convey economic prosperity, wealth and political stableness. One end was to cut down importing of goods and instead bring forth locally. Another end was to export manufactured goods and so stimulate industrialisation. Development: The five-year programs 1962 -1966 a focal point on fabrics ; do South Korea self-sufficient 1967- 1971 move the province into production of heavy industry 1971 1976 Continue to switch the province in to heavy industry ( including Fe and steel ) 1977 1981 the development of industries ; the purpose is to vie on universe markets ( do electronics and autos ) 1982 -1986 -Goal to make high-technology merchandises 1987 -91 go oning on the ends of old 5-year programs 1992 1996 investigate and get down developing aerospace A ; micro technology. It was through the 5-year programs that South Korea changed from an developing state after WW II to an economic giant and a thriving economic system in the universe. At present it is home to a hi-tech and industrialised fabrication economic system. Its finished merchandises of high-end electronics and autos are exported all over the universe. The quality of its merchandises is high and sought after. Electronicss by LG and Samsung every bit good as autos by Hyundai and Kia are sold worldwide. It was merely possible to make so by holding a skilled work force. To achieve this state invested a batch of its GDP in instruction. The planetary economic downswing and recession affected Korea merely like other states. Despite this, Korea is in the favorable place that recovery is possible. This is the anticipation by the International Monetary Fund ( IMF ) . The anticipation is based on the state s economic footing. The anchor of Korea is its sound and developed industries which make merchandises that are renowned for its quality and technological promotions. Shipbuilding has made Korea the universe s leader in this field. Semiconductors and shows are besides extremely ranked. Today Korea has one of the fastest turning economic systems in the universe and the taking economic system in Asia ( korea.net 2010 ) . Korea which has a topographic point on the G20 states is expected to turn the 5th fastest of all the member states. It is predicted that if growing is sustained that it will travel up into 4th place in 2011. At a meeting in September 2010 held by the G20 Finance and Central Bank Deputies, the growing for Korea is estimated at 6.1 % for 2010. It is predicted that growing for 2011 will be about 4.5 % . China, its neighbor, is presently turning at 10.5 % , and India is following at 9.4 % . The strong fiscal militias of Korea and its fight in exports is assisting the state to come out of the economic downswing. The IMF and G20 states are impressed with Korea s ability to get the better of the economic recession whereas other states are fighting to make so ( C. Ji-Eon 2010 ) . The organisation for Economic Co-operation and Development ( OECD ) ranks Korea foremost in footings of its member states. Datas by the OECD shows Korea s GDP rate growing to hold increased by 7.1 % compared with that of last twelvemonth. Korea shows the highest rate of the 17 OECD states who submitted informations. A strong point of Korea s economic system is its competitory power in footings of fabrication industries. This helped the economic system to retrieve. Besides, domestic ingestion every bit good as investing helped the economic system to retrieve. Korea is besides the lone state that has grown four consecutive quarters since the 3rd one-fourth last twelvemonth. Korea s economic growing in the 2nd one-fourth last twelvemonth was at minus 2.1 % , but increased by 1.1 % following one-fourth. In the 4th one-fourth last twelvemonth, growing was 6.1 % , while growing in the first one-fourth of this twelvemonth was 8.1 % and 7.1 % growing in the 2nd one-fourth. Meanwhile, German y reported the highest first one-fourth growing at 2.2 % in the first one-fourth compared with the first one-fourth of 2010, followed by Korea ( 1.5 % ) , Slovakia and Sweden ( 1.2 % ) , and The UK ( 1.1 % ) ( J. Seoyoung Choi ) . Korea is ranked eleventh among OECD states, demoing a excess of 1.28 billion dollars in its international balance of payments in 2010. This is harmonizing to OECD Quarterly National Accounts information released August 25, 2010.In this study 12 of the 32 OECD member states showed a excess in the first one-fourth of 2010. Japan showed the largest excess, with 50.2 billion dollars, followed by Germany with 39.7 billion, Switzerland with 20.6 billion, Norway with 14.7 billion, and the Netherlands with 12.5 billion dollars. Korea placed 11th, following Austria ( 1.48 billion dollars ) and Chile ( 1.3 billion dollars ) .A In contrast with this, the US showed a shortage of $ 109 billion followed by Spain with $ 23.4 billion and Italy with $ 19.4 billion in the first Quarter. Korea showed a shortage of $ 7.5 billion in the 3rd One-fourth of 2008, nevertheless, the state rebounded and showed excesss for 6 consecutive Living quarterss since so ( J. Seoyoung Choi 2010 ) . Korea and the G20 in 2010: Korea played host in November 2010 to the leaders of the G20 states in Seoul. They met to discourse the universe economic indexs as states come out of the fiscal crisis. The chief purpose was to see how to stabilise economic systems, travel frontward and seek and excite growing. For Korea, an emerging economic system and state, this was something to be proud of. At last it has earned a topographic point among former taking economic systems. Other organic structures present were the International Monetary Fund ( IMF ) , the World Bank every bit good as the Financial Stability Board. This meeting of the G20 represented more than 85 % of the universe economic system. Past G20 determinations were once more revisted and the meeting pledged to co-operate to and to reform international fiscal organisations to side-step a repetition of the present planetary fiscal convulsion. State Evaluation: ROK has proven that it has a strong, turning economic system. It has a high literacy rate and tonss of skilled workers. It has proven to fabricate many merchandises, such as electronics and autos of high quality. South Korea is a prima state of all new emerging economic systems and is extremely rated by the OECD, IMF, G20, G8 and other international organic structures and organisations. The state has developed quickly despite the fiscal crisis in Asia in the late 1980s -1990s. Now it has tremendous hard currency militias and is turning quickly in the economic field. While other economic systems are seeking to acquire out of the planetary recession, Korea is traveling in front at a speedy gait. SWOT Analysis: South Korea Strengths Great industries Strong, turning economic system Strong trading spouses Member of G20 High literacy rate Skilled workers Biggest shipwright in universe Failings Weather: inundations ; drouth Cutback of purchasing by states Environmental harm: industries Far from merchandising spouses: Europe Opportunities New trading spouses: exports Local consumers Leader in engineering Menaces Political differences with North Korea Other fabricating states: China Loss of trading spouses FOREIGN DIRECT INVESTMENTS: SOUTH KOREA The Korean Government announced in October 2010 that Foreign Direct Investment ( FDI ) in the state has slowed down and the Numberss have dropped by 13.1 % in the 3rd One-fourth compared to a twelvemonth ago. The chief grounds given are a stronger currency ( Kwon ) and a slow recovery of the planetary investing market. The sum as FDI is US $ 2.93 billion in July-September. Last twelvemonth at the same clip the figure stood at $ 3.37 billion. The cumulative DI for the first 9 months came to $ 7.26 billion which was down by 9.4 % of the sum in 2009.The currency ( WON ) stood at 1,164.4 to $ 1 US from January- September 2010, compared to 1,314.9 WON in 2009. Although this is a negative for Korea, other states are every bit affected due to the planetary economic recession. China is one of Korea s best FDI counries. The FDI from the US, Japan and European Union, former strong FDI s dropped by about 41.1 % due to the economic crisis in the mentioned states. However, Japan remains one of th e largest FDI states, holding invested more than $ 1 billion in 2010, although this is down by 42.7 % compared to the Nipponese FDI of 2009. IN contrast, the Chinese FDI stood at 127.2 % up for 2010, with $ 330 million investings. In-between eastern Countries FDI went up to 390 % at $ 167 million ( YonHapNews 2010 ) . A A A A A A Following are facts and figures up to 2006 of FDI by Korea to India ; it is interesting to compare this with the above influx of FDI into Korea. FDI SYNOPSIS ON SOUTH KOREA ( as on 30.06.2006 ) hypertext transfer protocol: //www.dipp.nic.in/korea/fdi_synopsis_korea.pdf FDI inflows A ; blessings: oˆ‚?iˆ Accumulative FDI influxs ( cyberspace of ADRs/GDRs ) during 1991-2006 ( up to June ) is US $ 40.63 billion, including sum of acquisition of bing portions ( upto 1999 ) , RBIs-NRI Schemes, stock swapped A ; progress pending for issue of portions. oˆ‚?iˆ South Korea ranks 9th A ; Cumulative FDI inflows ( cyberspace of ADRs/GDRs ) from South Korea is US $ 0.76 billion ( 2.07 % ) , excepting FDI influxs received for acquisition of bing portions ( upto 1999 ) , RBIs-NRI Schemes, stock swapped A ; progress pending for issue of portions. oˆ‚?iˆ Total FDI blessings ( cyberspace of ADRs/GDRs ) during the last 15 old ages are over US $ 70.33 billion. oˆ‚?iˆ South Korea ranks 5th A ; histories for approximately 3.78 % with FDI blessings ( cyberspace of ADRs/GDRs ) of US $ 2.67 billion of the entire investing blessings. Top Sectors attracted FDI Inflows A ; blessings: oˆ‚?iˆ Top sectors pulling FDI blessings ( from August 1991 to June 2006 ) from South Korea are Transportation Industry ( 38.17 % ) , Fuels ( power A ; oil refinery ) ( 32.46 % ) , Electrical Equipments ( including computing machine package A ; electronics ) ( 10.62 % ) , Chemicals ( other than fertiliser ) ( 6.07 % ) and Commercial, Office A ; House-hold Equipments ( 3.94 % ) . oˆ‚?iˆ Top sectors pulling FDI influxs ( from January 2000 to June 2006 ) from South Korea are Electrical Equipments ( including computing machine package A ; electronics ) ( 41.49 % ) , Metallurgical Industries ( 26.13 % ) , Food Processing Industries ( 9.81 % ) , Transportation Industry ( 6.69 % ) A ; Industrial Machinery ( 1.69 % ) . Technical coactions: oˆ‚?iˆ Total ( overall ) proficient coactions during the last 15 old ages ( Nos. ) 7,792. oˆ‚?iˆ South Korea has been granted 228 proficient coactions ( 2.93 % of the sum ) since, 1991. oˆ‚?iˆ Top five sectors pulling engineering transportation from South Korea are Transportation Industry ( 55 nos. ) , Electrical Equipments ( including computing machine package A ; electronics ) ( 48 nos. ) , Chemicals ( other than fertiliser ) ( 19 nos. ) , Misc. Mechanical Engg. Industries ( 14 nos. ) A ; Metallurgical Industries ( 13 nos. ) . hypertext transfer protocol: //www.fdi.net/country/images/korea.jpg ROK A ; the UAE The UAE is traveling in front to construct atomic reactor workss to bring forth electricity. South Korea has won the contract to construct the atomic workss here in the UAE. The Korean engineering every bit good as their expertness secured the contracts and the building will shortly get down.