Economic Development of Korea


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Korean Economy Evolution

  • Korea Foundation
  • Special Lectures on Korea 2015
  • Jung Soo SEO
  • KAC, Keimyung University
  • Daegu Korea
  • October 22, 2015
  • Nazarbayev University

On the 70th Anniversary of Korea’s independence from Japanese Annexation, NSO released some interesting statistics for Korea

  • On the 70th Anniversary of Korea’s independence from Japanese Annexation, NSO released some interesting statistics for Korea
  • Source: statistics.kr

These figures place Korea in 2014 as

  • These figures place Korea in 2014 as
    • 7th largest trading countries by exports & imports (IMF WEO DB)
    • 13th largest economy by GDP (IMF WEO DB)
    • 13th highest internet penetration ratio (World Bank WDI DB)
    • 27th largest country by population size (World Bank WDI DB)
    • 31th richest economy by GDP per capita (IMF WEO DB)
  • Rank
  • Country
  • GDP(US$M)
  • Rank
  • Country
  • GDP(US$M)
  • 1
  • United States
  • 17,418.93
  • 11
  • Canada
  • 1,788.72
  • 2
  • China
  • 10,380.38
  • 12
  • Australia
  • 1,444.19
  • 3
  • Japan
  • 4,616.34
  • 13
  • Korea
  • 1,416.95
  • 4
  • Germany
  • 3,859.55
  • 14
  • Spain
  • 1,406.86
  • 5
  • United Kingdom
  • 2,945.15
  • 15
  • Mexico
  • 1,282.73
  • 6
  • France
  • 2,846.89
  • 16
  • Indonesia
  • 888.648
  • 7
  • Brazil
  • 2,353.03
  • 17
  • Netherlands
  • 866.354
  • 8
  • Italy
  • 2,147.95
  • 18
  • Turkey
  • 806.108
  • 9
  • India
  • 2,049.50
  • 19
  • Saudi Arabia
  • 752.459
  • 10
  • Russia
  • 1,857.46
  • 20
  • Switzerland
  • 712.05
  • Source: IMF World Economic Outlook Database
  • 1
  • Luxembourg
  • 111,716.27
  • 21
  • New Zealand
  • 43,837.29
  • 2
  • Norway
  • 97,013.26
  • 22
  • 43,179.78
  • 3
  • Qatar
  • 93,965.18
  • 23
  • Kuwait
  • 43,103.34
  • 4
  • Switzerland
  • 87,475.46
  • 24
  • Hong Kong SAR
  • 39,871.10
  • 5
  • Australia
  • 61,219.16
  • 25
  • Israel
  • 36,990.98
  • 6
  • Denmark
  • 60,563.62
  • 26
  • Brunei Darussalam
  • 36,606.83
  • 7
  • Sweden
  • 58,491.47
  • 27
  • Japan
  • 36,331.74
  • 8
  • San Marino
  • 56,820.02
  • 28
  • Italy
  • 35,823.22
  • 9
  • Singapore
  • 56,319.34
  • 29
  • Spain
  • 30,278.35
  • 10
  • United States
  • 54,596.65
  • 30
  • Bahrain
  • 28,271.75
  • 11
  • Ireland
  • 53,461.97
  • 31
  • Korea
  • 28,100.72
  • 12
  • Netherlands
  • 51,372.96
  • 32
  • Cyprus
  • 26,115.46
  • 13
  • Austria
  • 51,306.67
  • 33
  • Malta
  • 24,876.20
  • 14
  • Iceland
  • 51,261.88
  • 34
  • Saudi Arabia
  • 24,454.02
  • 15
  • Canada
  • 50,397.86
  • 35
  • The Bahamas
  • 24,034.19
  • 16
  • Finland
  • 49,496.72
  • 36
  • Slovenia
  • 24,019.25
  • 17
  • Belgium
  • 47,721.59
  • 37
  • Taiwan Province of China
  • 22,597.73
  • 18
  • Germany
  • 47,589.97
  • 38
  • Portugal
  • 22,130.49
  • 19
  • United Kingdom
  • 45,653.41
  • 39
  • Greece
  • 21,653.08
  • 20
  • France
  • 44,538.15
  • 40
  • Trinidad and Tobago
  • 21,310.83
  • Source: IMF World Economic Outlook Database

Fortune Global 500 (2014),

  • Fortune Global 500 (2014),
    • Ranked Korea on the 7th in terms of the number of companies with 14 companies from Korea was listed
  • Source: Fortune (http://fortune.com/global500/)
  • Rank
  • Country
  • No. of Companies
  • 1
  • United States
  • 128
  • 2
  • China
  • 95
  • 3
  • Japan
  • 57
  • 4
  • France
  • 31
  • 5
  • Germany
  • 28
  • 6
  • United Kingdom
  • 28
  • 7
  • South Korea
  • 17
  • 8
  • Switzerland
  • 13
  • 9
  • Netherlands†
  • 13
  • 10
  • Canada
  • 10
  • Source: Fortune (http://fortune.com/global500/)

It is also indicated that

  • It is also indicated that
    • Korea’s GDP in 2014 is 31,108 folds bigger than that in 1953
    • GDP per capita 424 times larger than that in 1953
    • Korea’s exports (merchandise) in 2014 was 22,907 times larger than that in 1956
    • Korea’s imports (merchandise) in 2014 was 1361 folds bigger than that in 1956
    • Thus making Korea’s external merchandise trade 2672 times larger that in 1956

But Korea is small in size of area

  • But Korea is small in size of area
    • with a slightly over 100,000km2 of land area, ranked 109th in size
    • Smaller than Victoria but 1.5 times bigger than Tasmania
    • Arable land is roughly 17% of the area
  • Not well endowed with natural resources
    • With a very high imported energy dependence ratio of 95.6%
  • Country Size by Area ('14)
  • (km2)
  • 100,284
  • Import Energy Dependence ('15.04)(%)
  • 95.6
  • Population Density ('13)
  • (persons/㎢)
  • 515.9
  • Arable Land('14)(ha)
  • 1,691,113
  • Source: Statistics Korea

Still confronting with hostile North Korea

  • Still confronting with hostile North Korea
    • The devastated economy during the Korean War (1950-1953)
      • Short Lived but extremely bloody
        • Life loss(incl. deceased, casualties & missing): 2.81 million lives
          • S. Korea: 650,000 & UN: 150,000
          • N. Korea: 800,000 & Chinese: 1230,000
        • Refuges: more than ½ total population
      • Highly Destructive to industrial production capacity
        • 42% of S. Korea’s manufacturing
        • 60% of N. Korea’s industries
    • And surrounded with super powers: US, China, Japan and Russia
  • Russia
  • China
  • Japan
  • USA
  • RoK
  • DPRK
  • Geopolitics of Korea
  • Kazakhstan
  • Source: googlemap

Korean Economy is

  • Korean Economy is
    • The Miracle on the Han River (World Bank, 1993)
    • Asia’s Latest Miracle(Times, 2011.11.15)
  • How did Korea achieve such a miraculous economic growth?

Average Growth Rate,1953-1960

  • Average Growth Rate,1953-1960
    • 5.3%p.a.
      • Resulting Market Saturation
  • National Priority Goal: Reunification of Korean Peninsula
  • Source of Economic Growth?
    • Foreign Assistance from US
  • Growth Strategy?
    • Industrialization & Inward Looking
    • Import Substitution

Political Leadership Committed to Economic Development

  • Political Leadership Committed to Economic Development
    • Came into power: 1961 Military Coup
    • Government-Led Economic Development
      • 1st Five-Year Economic Development Plan(FYEDP) (1962-1966) & 2nd FYEDP
    • Average Economic Growth Rate (1962-1971): 9.9% p.a.
  • Growth Strategy
    • Outward Looking & Export Promotion
    • Manufacturing; Labor Intensive manufacturing

Policies and Incentives

  • Policies and Incentives
    • How to make export competitive?
    • “Getting Prices Right”
      • Unified Exchange Rate System (1961)
      • Devaluation of Korean Currency by 50% (1964)
    • Tax Concessions
      • Import Liberalization
        • Free import of materials and equipment used for export activities
        • Negative Import List System (1967)
      • Generous waste allowance for export business

Policies and Incentives

  • Policies and Incentives
    • How to make export competitive?
    • “Getting Prices Right”
      • Unified Exchange Rate System (1961)
      • Devaluation of Korean Currency by 50% (1964)
    • Tax Concessions
      • Free import of materials and equipment used for export activities
      • Generous waste allowance for export business

Policies and Incentives

  • Policies and Incentives
    • Non-Pecuniary
    • Normalization of Diplomatic Relationship with Japan (1965)
      • Foreign Capital
      • Export Market
      • Source of Advanced Technology

1972-1981 Average Growth Rate: 9.0% p.a.

  • 1972-1981 Average Growth Rate: 9.0% p.a.
    • 3rd (1972-1976) and 4th (1977-1981) Five Economic Development
    • Creating Comparative Advantage
      • Heavy Government Intervention
      • By promoting Heavy and Chemical Industries
      • Iron & Steel, Non-Ferrous Metal, Shipbuilding, Petrochemical, Machinery and Electrical
        • Capital-Intensive & Energy-Intensive

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