South Korea’s Economic Transformation and Growth

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Introduction

South Korea has recorded great economic progress for years dated back to 1960, this incredible achievement has transformed Korea into a high-tech modern world economy. The once rated together with the African and Asia GDP pa capita has stepped up to a trillion-dollar nation joining the range of lesser economies in Europe. This progress can be attributed to good governance, business ties, including directed credit, import restriction great labor effort, and restriction of imports.

The Korean government has encouraged savings and investment over consumption import technology and production of raw material using advanced technology. The weaknesses of the southern Korean developing model were exposed in the 1997 and 1999 Asian financial crises. These weaknesses included foreign borrowing and high debt/equity ratios. The countries GDP has been irregular from 6.9% in 1998, 9.8% in 1999, 3.3% in 2001, growth from 2003 to 2006 has been around 4-5%.

There has been moderate inflation, low unemployment surplus in export and fairly equal distribution of income. The year 2006 GDP (purchasing power parity) was $1.196 trillion (2006 est.). The official exchange rate $897.4 billion (2006 est.), real growth rate 4.8% (2006 est.) and the per capita (PPP) $24,500 (2006 est.) The GDP is composed by agriculture 3%, industries 45%, and services 52% (2006 est).

Personal Income and Average family income

The distribution of family income was Gin Index: 35.8 in the year (2000), the economy labor force of 23.77 million (as per 31st Dec 2006) this labor force estimated distribution of 6.4% agriculture, 26.4% industry and 67.2% (2006) on services. The country has an annual (ppp) of $24500.

The unemployment rate is at around 3.3% and the population below poverty line at 15%. The household income or consumption by percentage share lowest 10.5% to 2.9% and highest 10%: 25% according to (2005) estimates. Inflation rate of consumer prices of South Korea was at 2.2% (2006 est.). The investment was 28.4% of GDP (2006 est.) the budget revenues at $ 200 billion and

expenditures at $201 billion; including capital expenditures of $NA (2006 est. The Public debt as at 2006 was 31.9% of GDP. The agricultural products of south Korea are: rice, root crops, barley, vegetables, fruit; cattle, pigs, chickens, milk, eggs; fish. Industries ranges from: electronics, telecommunications, automobile production, chemicals, shipbuilding, steel Industrial production growth rate. Distribution of Wealth

Workforce Composition

International Trade Trends

South Korea is the third largest producer of steel, posch and is the 5th largest car-producing nation, largest shipbuilder, Samsung and Hyundai heavy industries. Others are robots it is also the world’s first cloned dog. On April 2007 South Korea signed a trade agreement with the United States. It is the eleventh largest economy in the world and third in the third-largest behind Japan and China. South Korea is a member of Asia Pacific Economic Co-operation (APEC), East Asia Summit (EAC), World Trade Organization (WTO) and Organized Economic Co-operation and Development (OECD) i.e. the Four Asia Tiger.

Balance of Payments

Robust Export performance turns south Korea Deficit into $1.7 billion surplus in 1986 this expanded to $12.1 billion in 1988, since then this has then declined until 1990 when the economy realized a deficit of $274 due to declining export. The deficit grew to over 4% GDP due to shrinking currency base.

IMF in 2001 recorded $151.4 billion and imports up to $138 billion then the service credit was work

Unions and Labor Laws

The labor standard act stipulates that a minimum working standard for workers, used to be applied to workplaces with five or more workers, but with the revision of the Enforcement Decree effective on February 24, 1998, this scope was later expanded to cover all workplaces with effect from first January 1999. Some provisions which are related to contracts, restriction on dismissal, leave and working hours are not applied to work place with four or less workers given the economic conditions and administrative capacity.

Force Composition

The workforce of south Korea as at 2005 was 23.53 million from a population of 48.85 million people. 67.2% of the labor force in services. Mining and manufacturing taking 26.4%. the labor force of south Korea is one of the largest in the world. The south Korean are loyal and hardworking worth $29.6 billion and debit worth $33.1 billion. The purchasing power parity of South Korea was $159.2 billion while import totaled $146.6 billion resulting to a trade surplus of $12.6 billion.

Foreign Aid

South Korea is a member of OECD which is in development assistance committee (DAC). The GNP which was being used by the OECD was later changed to Gross Nation Income (GNI) in the year 2000.

Inflation

The July 1997 (IMF) crisis raised fears worldwide this East Asia currency crisis forced IMF to initiate a $40 billion program to stabilize the currencies of South Korea, Indonesia, and Thailand whose currency were most hit by the East Asia currency crisis. During this year of great inflation the KIA South Korea third largest motor industries borrowed an emergency loan. The Seoul stock exchange fell by 4% on 7th November and later 9% which was the largest fall in a day.

Technology

South Korea is the global leader in electronics, computer, digital displays, semiconductor devices, mobile phones and high tech-gadgets it’s the most wired nation in the globe, it has 90% of it’s house hold connected with cheap Internet. one can get a signal in all parts of South Korea. connectivity of is easier in South Korea is cheap due to dense population of South Korea government policies too promote development policies that promote development.

References

Andrew, N. (1996), Korea; a history of Korea people, Seoul: Holly M publishers.

Brown, D. (2002), The Cambridge history of Korea, London: Cambridge University Press.

Bruce, C. (1997), Korea’s place in the sun, New York: www Norton.

Hart, D. (2003), from tradition to consumption; constructing a capitalistic society of South Korea. London: Cambridge university press.

Roger, A. (2004), Measurement of the Aggregate Economy, New York: McGraw-Hill.

Rodney, E London: Cambridge University Press. (2006), Growth Accumulation, London: Cambridge University Press.

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