Last updated on May 8th, 2023 at 08:12 am
Would you like to get enlightened about the comparison of South Korea’s economy with the global economy? In this blog post, you will get to know a lot about the financial markets in South Korea and how that is different from the global market.
South Korea’s Economy
South Korea was a poor country. The South Korean government had faced a lot of economic crises in the past. They faced starvation and other economic problems just like other poor countries. The South Korean economy was very low but their economy started progressing with time and now South Korea is considered one of the highest economic countries.
If we talk about the current conditions, South Korea is a developed country not only on a cultural level but also on an economic level. They are much more advanced in their economy with rapid growth. South Korea’s economy is getting more advanced and it is progressing more day by day.
Economy Of The Korean Peninsula
Let’s get a brief insight into the South Korean economy. Shall we? In 1953, the Korean peninsula was divided into two parts after a war in which over two million people died. At that moment, we could say that South Korea was in more trouble economically because North Korea had all the industries and companies while South Korea was an agricultural and underdeveloped region.
Schools in South Korea had no desks and most of the children got nutrition through powdered milk that was being imported from the U.S and Europe. Then the first south Korean dictatorship started after many protests by Park Chun Hee. For almost 27 years, the country had three dictators in consecutive years and they had a lot of political instability at that time in South Korea.
You might be wondering why a country with such economic conditions might have no future. But the economic model in South Korea proved to be miraculous. South Korean economic models were created to get rid of the economic crisis. There is a free market that is organized in a bottom-up fashion.
It means that private businesses decide how, when and what they want to sell, then the state comes in and regulates all that activity through various laws. But the policy reforms of Park Chun Hee (a South Korean leader who also belongs to the armed forces) were different.
This was a top-down system. His policy was to meet the most important families in the country, who control and run most of South Korea’s industries, which included the former founders of Samsung and L.G mobile phones.
In the 1960s, the government of South Korea gave all the facilities to the industries to help them in progressing so that the economy of the country will rise automatically. He asked the owners of different industries that if they need a loan, the government will give them. Moreover, the government will forgive them if they are unable to pay taxes and public debts. Park Chun Lee didn’t put up any barriers to international trade like other countries.
He had decided to put up low taxes on all types of businesses. He had given all the rights to people to have property rights, buy property, invest and save money. Furthermore, with the help of the government, it has allowed motor companies like Hyundai and Lotte of South Korea to compete in an open market with other vehicle companies from Japan and the U.S.
In the 1990s manufacturers decided to make a plan for the future production and high technology industries. Moreover, South Korea has developed high technology machinery and invented new types of media and apps using the 4G and 5G infrastructure in South Korea.
Following are some of the main industries that played an important role in the economic growth of South Korea:
Electronics play an important role in South Korea’s industries. Where LG, SK, and Samsung grew in this sector from the 1980s up to the 2000s. These are also the major producers of electronic devices such as television, mobile phones, and computers.
Most of the tourists visited South Korea in the past. Nearly 11.1 million foreigners visited South Korea in the year 2012 making it one of the most visited countries in the world. Almost 3 million people were recorded to visit South Korea in the year 2020.
Many tourists visit South Korea due to the rise in popularity of their culture, food, and music. Furthermore, South Korea is famous for its ancient temples as well.
In the past, South Korea was dependent on other countries like the U.S to supply its armed forces. After that, South Korea manufactured its military equipment. They got successful in it and stopped getting military help from America.
They started their international trade and hence started exporting their military equipment to other countries like Turkey, Indonesia, Arab emirates, etc. their most popular export is the K9 thunder. These have been exported to India, Finland, Poland, and Norway.
In the 1980s, Automobiles were considered one of the keys and major growth of South Korea and export industries. In 1985, almost 268,000 passenger cars were produced and investment in this sector makes a lot of profit to the economy of South Korea.
At this stage, South Korea is considered one of the biggest automobile manufacturers. The Hyundai Kia automotive group is the largest automaker in terms of production units and revenue in South Korea.
Mining and Construction
In terms of mining, South Korea is considered the 3rd largest producer of bismuth, 10th largest producer of sulfur, and 4th largest producer of rhenium. While construction is also the most important sector of industry in South Korea.
South Korea made a lot of contracts for overseas construction. Many foreign highest countries signed contracts with the companies of South Korea which also plays an important role in increasing the overall economy of South Korea. Korea’s largest construction companies include Samsung C and T corporation, and some of the highest buildings like Burj Khalifa, Petronas towers, and Taipei 101.
So the combining rapid economic growth of different industries in South Korea and foreign investment has made a remarkable change in the economy of South Korea and the South Korean economy continued with the flow.
Population In Terms Of Growth
The population of South Korea is massive as compared to North Korea. Moreover, they don’t have natural resources so they focus on the industries and manufacturing of the products. They manufacture their raw materials and then make products through them.
They hire a lot of people for the manufacturing of their products, so the people of South Korea work hard and spend quality time with their friends on weekends only.
South Korea gets popularity because of KPOP, cinemas, cosmetic surgery, fashion trends, Samsung and Hyundai, and foods like kimchi, Korean black bean noodles, and soju. Moreover, cosmetics are the most selling product in South Korea worldwide.
Economy And South Korean Education
South Korean people have become financial geniuses to the extent that even their education is designed in a way that also boots the overall country’s GDP.
People in South Korea are extremely intelligent. The children in South Korea have always got the best marks on the international PISA tests. Educational institutes guarantee for providing the best education for boys and girls.
So they designed the educational system in a way that these students worked in line with the nation’s companies and worked for the benefit of their country. Mostly, the students of South Korea are good at math and have high excellent memorization abilities.
However, the people of South Korea are multitalented. They have high creative skills as well. Most of them are more interested in music and dancing as well. This opens the South Korean market for foreign investment thus bestowing them with a remarkable success that we all can see.
There is a huge difference in the government of South Korea compared to North Korea. The South Korean government is a free paradise as compared to its neighbors in North Korea. It is because people of South Korea have all sorts of freedom whether it’s financial freedom, freedom of speech, investment freedom, and business freedom as well.
On the other hand, North Korea has extremely tough rules and regulations that the public of North Korea has to follow. The country has its own policies, whether its economic policy or monetary policy.
South Korea Economic Growth
South Korea has made remarkable economic growth due to advancements in multiple things. One of them is Kpop. K-pop and K-drama, in South Korea, are not only getting popular worldwide but the economic condition of South Korea is also increasing because of Kpop. Kpop generates almost ten billion dollars each year for the country which is almost equal to the 26 medium-sized companies, according to a report by Hyundai research institute in 2018.
South Korea is a part of an international monetary fund that facilitates the management of its financial system.
South Korea’s Exports
South Korea generates most of its economy through export. South Korea exports their material and products to other countries and grows its economy through it. Some of the top exports of South Koreans are electronics, textile, ships, automobiles, and steel.
Increase in exports
The overall value of South Korea’s exports increases every year. The export value of Korean foods in 2020 was almost 7.98 billion dollars. It was 7.67 dollars in the previous year. Korean beauty products have gained global popularity and both the production and exports of South Korean cosmetics have grown.
South Korea’s exports of skin-care products will increase to almost 7.6 billion U.S dollars in 2020. So the annual evaluation of the economic growth of South Korea through exports is much higher and increases from time to time.
new markets in South Korea
South Korea has started opening its markets in different sectors including agriculture. They also started their rice market in 2015. They are trying to complete their opening of markets through a free trade agreement (FTA).
South Korea signed an FTA with 52 countries including China, Australia, Vietnam, etc. The aim of South Korea is to expand its economic power with numerous countries by signing FTA with them.
South Korea’s economy is highly developed. It remains one of the fastest-growing developed countries in the world. It is ranked among the fourth largest in Asia and the tenth-largest economy in the world. The gross domestic product of South Korea according to the government of Korea’s policy averaged 5.45% annually between 1988 and 2019. It was recorded to be 1.80 trillion in 2020.
Impact of COVID on The Economy
The crisis management of South Korea has managed the economic condition during COVID 19 very well and their performance was exceptional but COVID 19 has had an impact on the economic condition of South Korea. The people faced a lot of economic crises during the pandemic. Covid 19 has affected the agriculture sector and financial sector of South Korea. It has both positive and negative impacts on the economy of South Korea.
The results showed that since the crisis hit, the value of industrial machinery stocks has doubled in eight months. Moreover, other sectors that benefit the economy of South Korea include computer and software services, electronic entertainment, consumer digital services, and other leisure goods.
On the other hand, sectors that decrease and affect the economy of South Korea include travel and leisure, gambling and casinos, convenience stores, etc. so the crisis has benefited the high-skilled workers and sectors that are producing goods and affected sectors that provided services and low skilled workers.
Moreover, when the countries get impacted by covid 19, the world bank group Korea office and the Korean government have launched a partnership to share a country’s expertise and experience which includes the innovative technology to respond to the covid 19. The Korean government has also started selling Korean culture to generate more revenue.
Future Of South Korea Economy
The future economy of South Korea is bright. The GDP of South Korea is estimated to increase up to 3% in 2022. The economy of South Korea is expected to grow rapidly.
Recently, President Moon Jae-in was elected as the former president of South Korea. He is a South Korean politician. He is making agreements with different countries and signing contracts with them to boost and strengthen the economy of South Korea. Furthermore, he rejected the administration’s request to Trump and agreed to a funding increase of less than 10 percent.
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