Download Overview - University of San Diego

Country Study:
South Korea
Overview
• Until 20th century, Korea existed as an independent
country. In 1910, it became a colony of Japan
• After WWII, Republic of Korea was set up in Southern
Peninsula
• Current President Lee Myung-bak was elected in
February 2008
Overview
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Population: 48.5 million
Working age population (15-60 years): 72%
Urban population: 81%
Rate of urbanization: 0.6%
Infant mortality rate: 4.26/1000
Literacy: 97.9%
Education expenditures as % of GDP: 4.6%
Overview
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GDP(PPP) per capita income: $26,000
Inflation: 4.7%
Population below poverty: 15%
Gini coefficient: 0.31%
Development Model
• 1960’s was marked by land reforms, literacy and import
substitution
• Government played a critical role in developing private
sector
• A deliberate policy to encourage big businesses (Chaebols)
with government direct credit, import restrictions, and
incentives
• Government sponsored semiconductor industry to make
it competitive globally
Development Model
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Another example is South Korea’s shipbuilding industry
Strong labor unions
Inflation prone economy and recent labor shortages
Only South Korea (in Asia) financed its development with
foreign debt
• South Korea combined a policy of import substitution and
export promotion by sponsoring strategic industries
• In mid-1970’s exports increased by 45% per year, exportled growth took off in 1960’s
Trade Policies
• Heavy emphasis on the imports of capital goods,
restrictions on consumer goods
• High savings and investment rates, yet borrowed heavily
(external debt - $380 billion)
• Exports of semiconductors, ships, steel computers &
motor vehicles
• Trade with U.S. accounts for 12.4% of total trade
• Protection for big businesses
Asian Financial Crisis
• GDP went down by 6%
• South Korea Won was down by 33%
• Heavy debt, unregulated financial sectors and
government policy of encouraging big businesses were
among some of the causes of the crisis
• IMF bail-out with $60 billion
• Recovered in 2000
Current Problems
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Strained relations with North Korea
Inflation
Unequal distribution of income
Global recession affecting exports
Labor shortages
Financial markets hit hard in 2008
o Stock
prices fell by 40%
o Won depreciated by 26%
• Government is taking steps to stimulate the economy
($11 trillion economy plan)
Korean Culture
• Hardest working people in the world
• Some pain and hurt from the split between North Korea
and South Korea
• Love to sing
• Emphasize education of children from early age
• Male-dominated society, strict parenting