South Korea Country Analysis

South Korea is known for having one of the greatest economic transformations of the past 60 years, by pursuing an industrialization-led development commitment since 1961, becoming then the 11th largest economy in the world with an annual GDP growth of nearly 9%. The success of South Korea’s economic growth is due to policies aimed at being open to foreign markets, in other words, export-oriented reforms. Adding as well the improvement in the business environment and policies stimulating investment innovation.

Strengths

South Korea is known for having a very successful education system that is divided into three parts: six years of primary school, followed by three years of middle school and then three years of high school.

The curriculum in primary school consists of nine principal subjects: moral education, Korean language, social studies, mathematics, science, physical education, music, fine arts, and practical arts. They begin to learn the English language in third grade. In middle school or grades seven through nine their curriculum consists of 12 required subjects, electives, and extracurricular. Similar to the United States, South Korean teachers in elementary school teach all of the subjects. While in middle school and high school the subject matter is divided among different teachers that are specialized in their subjects. Once students reach high school they have the option of going into an academic school or a vocational school. The majority (62%) of students decide to go to an academic school and the other 38% go to vocational schools and specialized in their desired career fields.

Economic Indicators

The unemployment rate, which is 3.68%, by the rate being this low it can be inferred that the country of South Korea is full of economic opportunities, because it counts with the society being actively employed. Then the Gini coefficient describes the inequality in the distribution of income, which lays on 0.3 and the closer to 0 the better, that means that despite there being inequality of income it is indeed really low. Additionally, the gender inequality index, which is crucial and a major barrier to human development. Luckily, South Korea’s inequality lays closely to 0 at 0.063, which means that despite of gender people count with freedom of choice and opportunity. Equally important is the literacy rate which measures how many people can read and write with understanding, in this case, it being 97.9% shows how Korean people are well educated, being crucial to the economic development. Moreover, secondary school completion rate, which is a rate of 95.6%, meaning that this percentage of people have an education that counts with at least the completion of high school. Then we have the human development index, which indicates how people and their capabilities are the ultimate criteria for the development of a country. The number for South Korea is 0.0903 which indicates a high level of economic development. Next with infant mortality rate, with a rate of 2.9, that is the number of deaths per 1,000 live births of children under one year of age. It being really low along with child malnutrition, which is 2.5, shows how there’s advanced technology and medicine, and people are getting the nutrients they need. Due to having enough food means that the life expectancy is actually high, being 86.3% for female and 79.2% for male, because of available health care resources. With a skilled labor force of 84.6%, Korea will keep showing a great economic growth. However, despite being an advanced country, it just recently started contributing to organizations that protect the environment, being placed number 9 on the list of carbon dioxide emissions with an environmental sustainability of 11.6. Even though is not on the top five of countries contaminating the environment, it is on the top ten, so this is when the government needs to start to take action. Finally. the economic indicators of South Korea are being affected by how rapidly the economy is growing, because everything is connected. A honorable education means more professionals on the fields of marketing, medicine, manufacturing, finance, business and more, being crucial and beneficial to the country and its economy.

Imports and Exports

The South Korean Economy is largely based upon its’ Imports and Exports, this exchange makes up a majority of the Gross Domestic Product and Profit they make day to day. According to many recent news outlets, South Korea has the 5th largest export economy in the world. The amount earned selling exports per year has increased when comparing 2012’s earnings, $591B dollars, to 2017 earnings of $596B an overall increase rate of 1.2%. Major Exports involved with the South Korean market are Integrated Circuits, Cars, Refined Petroleum, Passenger and Cargo Ships, and Vehicle parts. Integrated Circuits represent 17.5% of the total, followed by Cars, which account for 6.71%. As a result of looking through this, it can be reasonable to say that they focus more on the automobile and electronic productions to sell them later on. In addition, due to trading these materials they have had good trade relations with China, U.S, Vietnam, Hong Kong, and Japan as they exchange frequently with one another to satisfy each others needs. Among South Korea’s natural resources metalloids like Graphite, Iron ore, Gold, Zinc, Lead, and Tungsten are used to make the outer exterior for cars. In particular, Graphite and Tungsten are so abundant in South Korea as they have the world’s largest deposits of these metals making them more common in the automobile and phone industry. Imports are also a factor in their export success as they can be materials produced to create their finished product to later ship to somewhere else. In the 1960s, under President Park Chung-Hee, the government promoted the import of materials and technology which reinforced the idea to produce a good using these imports.

Due to their over-reliance on imported supplies, it led to companies such as Daewoo, Hyundai, and Samsung to experience a global success as they specialized in technological advancements. This is also the reason why South Korea still uses the same imports, since they are so used to having major profits with current imports they continue to use it even today. Major Imports involve materials like Crude Petroleum, Integrated Circuits, Petroleum Gas, Photo Lab Equipment, and Coal Briquettes. Crude Petroleum represents 11.9% of the total imports of South Korea, followed by Integrated Circuits that total to about 8.18%. The need for these products has created good import relations with China, Japan, U.S, Germany, and Asia. The land in South Korea is known for being deforested by past generations in place of factories and other buildings, meaning that their weaknesses lies on agricultural practices. To accommodate this, they import wood from other countries so that they do not have to cut down anymore trees, this resulted in the plywood industry to develop largely. In conclusion, the Imports and Exports have a big role in the South Korean economy as they yield more beneficial results monetary-wise. As a result of being so successful, South Korea has a big hand in the market and is experiencing a huge growth of their companies globally as they continue to produce more profit.

Environment

After World War two South Korea shifted from agrarian to industrial, which was later accelerated by the Korean war. In South Korea’s current economy about 82% of the population live in urban areas. During the 1970s under the rule of dictator Park Chunhee, the industry and manufacturing in South Korea skyrocketed. This rapid industrialization led to the immense deterioration of air quality and pollution, especially in major cities such as Seoul.

Currently, South Korea is one of the world’s most polluted countries. Apart from their own carbon emissions, China, their neighboring country is in part to blame for the thick haze that blankets over the major cities. Unfortunately, this has severe effects in the citizen’s health since the air has high concentrations of PM 2.5 which is a “fine particle matter that can get deep in your lungs” and cause wheezing and coughing that will not go away. Seoul’s pollution levels often times is the same as those of major Chinese cities, Beijing and Shanghai. In 2016, Seoul’s air quality index was considered unhealthy for sensitive populations such as children and elderly with respiratory problems for 78 days out of the year.

In 2017, South Korea teamed up with NASA to do a detailed examination of the air quality. NASA was able to answer South Korea’s most irking question, whether the air pollution was mostly homegrown or trans-boundary. NASA concluded that more than half of the air pollution was local. On the bright side this means that South Korea can take action to better their carbon emissions and greenhouse gases. The government has already begun to take action and President Moon Jae-in is overseeing a fine dust task force and is eliminating ten of the oldest and most polluting coal plants in the country. The country also began to use nuclear fuel in an attempt to reduce the use of coal but unfortunately this has backfired because they are now faced with a nuclear waste storage problem and campaigning in order to open more nuclear storage sites. By 2030, South Korea plans to replace 20 percent of their total electricity consumption with renewable energy.Additionally, they plan to reduce their coal use to 36.1 percent by 2030 and nuclear to 23.9 percent. But they will still make up more than half of the country’s power production by the end of the next decade.

Another environmental issue that South Korea is facing is the pollution level in South Korea’s rivers. As a solution to this ongoing problem they have launched the Four Major Rivers Restoration project, the $18 billion project focuses on South Korea’s four major rivers – the Han, Nakdong, Geum and Yeongsan, as well as hundreds of miles of tributary streams. This project has several aims including the improvement of water quality, restoring the ecosystems in the rivers, improve the control of flooding, and securing abundant water resources to protect against water scarcity. The Four Rivers Restoration is part of South Korea’s Green New Deal policy to stimulate the economy after the 2008 financial crisis. Currently South Korea is facing droughts and flooding yearly and this was not something included in $18 billion budget.
the country’s extreme flood/drought cycle, left many rivers without sufficient water for much of the year in order to support an ecosystem.

With Korea having one of the highest population densities in the world, a single dam is providing drinking water for the 25 million people living in the Seoul and Gyeonggi province, and the Baekje Weir’s hydropower generating electricity for 58,000 households. Through the river restoration project South Korea could get about 5 percent extra water. South Korea’s continuous embrace for both clean technology and environmental policies brings promise of a clean future for the country.

Innovation and Companies

According to Bloomberg’s Innovation Index, 2018, South Korea is the most innovative country in the world. Bloomberg also says that this top ranking is due to Samsung a major conglomerate. South Korea began its industrialization in the 1960s, it was a developing country, with poor resources, a small market and a large population dependent on foreign country’s for national security. Since then they have exponentially grown and become the world’s number one producer of mobile phones, displays, semiconductors and shipbuilding mostly exporting machinery, automotive, semiconductors and petroleum products. The country has become the world’s top innovator because they have invested a lot of money into research and development as a share of GDP, in fact they have spent more than any other country in the world.

The emergence of ‘chaebols’ (wealth clique in Korean) or a large family-owned business conglomerate, that South Korea was really able to transform their economy. Companies such as Samsung, Hyundai, LG, and many more have allowed Korean manufacturing to grow into a phase of “technological leadership and innovation, with a reputation for high-quality and leading-edge products.” (Dominguez and Mazumdaru, 2016).

Unfortunately, South Korea has become too heavily dependent on chaebols, a system that is poorly suited for the twenty-first century, as many politicians and investors argue. More than 27% of the Korean Stock Index is own by the top 10 chaebols. If for any reason any of the leading chaebols takes a hit or go out of business the South Korean economy will the a major hit because they are too dependent on them. This was especially evident when Samsung and the Korean government were faced with a major scandal due to business collusion between the country’s president and Samsung’s top executive. The scandal caused both of them their jobs and left Jay Y. Lee, the head of the Samsung group with a sentence of five years.

Tourism

There is a very important trend referred to as “Hallyu,” meaning Korean Wave. And is about the spreading of Korean culture across the world: serving as an optimal opportunity to showcase and promote South Korea’s rich heritage and culture by music, movies, online games, cuisine, fashion, and design. What is fascinating about this is that Hallyu is invested in by the government, the nation’s top investors, and business people. This is acting as a way to build South Korea’s power and cultural relevance.

South Korea is also known to be one of the world leaders in infrastructure and high-speed technology, and Korean people love to spend money and buy luxurious goods thus stimulating the economy. Another factor, already mentioned before, is market agreements with other countries. These trading policies supply South Korean consumers with even more options. The government carefully imports and exports goods that will eventually have a positive effect in the financial system.

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