Economy of South Korea
South Korea's economy has grown in the last 35 years. Per capita
GNP, only $100 in
1963, exceeded $20,000 USD in
2005. South Korea is now one of the world's largest economies (as of 2006, it is 14th in the world according to GDP).
The core of the South Korean economy has changed substantially over the country's six-decade existence. In the 1940s, the country was predominantly agricultural, with little industry.
[Yang (1999), p. 593.] The emphasis shifted to light industry and consumer products in the following decades, and then to heavy industry in the 1970s and 1980s. As in other developed countries, the service sector has become increasingly dominant since the 1990s; it now comprises about two-thirds of the GDP.
In the early
1960s, the
Park government instituted sweeping economic reforms emphasizing exports and labor-intensive light industries. The government carried out a currency reform, strengthened financial institutions, introduced flexible economic planning, and arrested competing leaders of industries it was trying to control. In the
1970s South Korea began directing fiscal and financial policies toward promoting heavy and chemical industries, as well as consumer electronics and automobiles. Manufacturing continued to grow rapidly in the
1980s and early
1990s. During the late 1990s and the 21st century, Korean high-tech industries became very competitive in global market, especially in comparison with that of Japan and Taiwan, and dominated in various international semiconductor chip production.
In recent years South 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 crisis with
IMF assistance, and carried out extensive financial reforms that restored stability to markets. These economic reforms pushed by President
Kim Dae-jung, helped Korea maintain one of
Asia's few expanding economies, with growth rates of 10% in
1999 and 9% in
2000. The slowing global economy and falling exports account for the drop in growth rates in
2001 to 3.3%, but in
2002 Korea pulled out a very respectable 6.0% growth rate. Restructuring of Korean conglomerates (
chaebols), bank privatization, and creating a more liberalized economy with a mechanism for bankrupt firms to exit the market remain Korea's most important unfinished reform tasks. As of
2004 the economic situation looks less promising than in the years before. Increasing trade with the
People's Republic of China, however, is expected to boost Korea to a leading position among Asia's developed economies. It is also expected to lead the world in penetrating Japan's trade barriers.
South Korea relies largely upon exports to fuel the impressive growth of its economy, with finished products such as electronics, textiles, ships, automobiles, and steel being some of its most important exports. Although the import market has liberalized in recent years, the agricultural market has remained largely
protectionist due to serious disparities in the price of domestic agricultural products such as rice with the international market. As of 2005, the price of rice in South Korea is about four times that of the average price of rice on the international market, and it was generally feared that opening the agricultural market would have disastrous effects upon the South Korean agricultural sector. In late
2004, however, an agreement was reached through the
WTO by which South Korean rice imports will gradually increase from 4% of consumption to 8% of consumption by 2014. In addition, up to 30% of imported rice will be made available directly to consumers by 2010, where previously imported rice was only used for processed foods. Following 2014, the South Korean rice market will be fully opened.
Since
1988, two-way trade between the two Korean countries has increased from $18.8 million in
1989 to $647.1 million in 2002. In 2002, South Korea imported $271.57 million worth of goods from
North Korea, mostly agro-fisheries and metal products, while shipping $371.55 million worth of goods, mostly
humanitarian aid commodities including fertilizer and textiles as inputs for North Korean garment manufacturers. South Korea is now North Korea's third-largest trading partner, after China and Japan. Numerous ventures by the
Hyundai Group have contributed to North Korea's economy, including the
Kŭmgang-san (Diamond Mountain) tourist site. Last year alone, 84,347 visitors travelled by Hyundai-operated passenger ships, and most recently via land routes, as part of this tourism initiative, raising the total number of South Korean visitors to over half a million (see
Kŭmgang-san Tourist Region). A mere 1,141 North Koreans travelled to South Korea, mainly for joint sporting events.
Hyundai Asan is also lined up to be the South Korean party that will help develop an 800 acre (3.2 km²) industrial complex in
Kaesŏng, located near the
Demilitarized Zone (DMZ), subject to final agreements, including between
Seoul and
P'yŏngyang. The year
2002 witnessed significant progress on the Seoul-
Shinŭiju railroad, on both reconstructing road and rail links across the DMZ (as of early
2004 this process was stalled). However, the constructiveness of these efforts is still on question, as North Korea still declines to abandon its Stalinist style of government and is hardly showing any reliable economic growth.
This is a chart of trend of gross domestic product of South Korea at market prices
estimated by the International Monetary Fund with figures in millions of South Korean Won.
| US Dollar Exchange |
|---|
| 1980 | 38,774,900 | 605.85 Won |
| 1985 | 84,061,000 | 869.51 Won |
| 1990 | 186,690,900 | 707.59 Won |
| 1995 | 398,837,700 | 771.27 Won |
| 2000 | 578,664,500 | 1,130.95 Won |
| 2005 | 812,196,561 | 1,024.11 Won |
For purchasing power parity comparisons, the US Dollar is exchanged at 841.39 Won only.
Industrial production growth rate:10.1% (2004 est.)
Electricity:*
production: 322.5
TWh (2003)
*
consumption: 293.6 TWh (2003)
*
exports: 0 kWh (2003)
*
imports: 0 kWh (2003)
Electricity - production by source:*
fossil fuel: 62.4%
*
hydro: 0.8%
*
other: 0.2% (2001)
*
nuclear: 36.6%
Oil:*
production: 0 barrel/day (2004 est.)
*
consumption: 2.07 million barrel/day (2004 est.)
*
exports: 0.63 million barrel/day (2003)
* imports: 2.263 million barrel/day (2003)
Natural gas:*
production: 0 cu m (2003 est.)
*
consumption: 20.92 billion cu m (2003 est.)
*
exports: 0 cu m (2003 est.)
*
imports: 21.11 billion cu m (2003 est.)
Agriculture - products:rice, root crops, barley, vegetables, fruit; cattle, pigs, chickens, milk, eggs; fish
Exports - commodities:electronics (5000 of Export - 2004 estatitics) - semiconductors, lcd panel, mobile phone, computers related, television, and others], motor vehicle, steel, ships, petrochemicals,
Imports - commodities:machinery, electronics and electronic equipment, oil, steel, transport equipment, organic chemicals, plastics
Exchange rates:South Korean Won (W) per US$1 - 945.3 (May 2006), 1,143.7 (2004), 1,191.61 (2003), 1,251.09 (2002), 1,290.99 (2001), 1,130.32 (January 2000), 1,188.82 (1999), 1,401.44 (1998), 951.29 (1997), 804.45 (1996), 771.27 (1995)
Growth plunged by 6.6% in 1998, then strongly recovered to 10.8% in 1999 and 9.2% in 2000. Growth fell back to 3.3% in 2001 because of the slowing global economy, falling exports, and the perception that much-needed corporate and financial reforms have stalled. Led by industry and construction, growth in 2002 was 5.8%, despite anemic global growth. South Korea's economy is the 4th largest in Asia on a currency basis.
*
OECD's Korea country Web site and
OECD Economic Survey of Korea*
Economy of Asia*
East Asian Tigers*
Economy of North Korea*
List of Korea-related topics*
List of North Korean companies*
List of South Korean companies*http://www.bok.or.kr/
Bank of Korea, the
central bank of
South Korea*http://www.kse.or.kr/
Korea Stock Exchange
