South Korean Exports and Economy

South Korea’s economic growth over the past thirty years has been quite substantial. Per capita gross national product, which was only $100 in 1963, has come to exceed $16,000 in the year 2005. South Korea is currently one of the world’s largest economic nations.

The economic profile of South Korea includes sweeping economic reforms of the early 1960s, that were instituted by the Park government. These reforms emphasized labor-intensive light industries and exports.

The government of South Korea carried out a currency reform, introduced flexible economic planning, strengthened financial institutions and stopped competing leaders of industries that it was attempting to control.

In the 1970s, South Korea started to direct fiscal and financial policies toward promoting chemical and heavy factories, as well as consumer electronics and the manufacturing of automobiles. These manufacturing booms continued to grow quickly during the 1980s and early 1990s. Then in the late 1990s and early 2000s, Korean high-tech industries became extremely competitive in the global market. This is especially in relation to Taiwan and Japan, particularly in the field of semiconductor chip production.

In more recent years, Korea’s economy has moved away from the government-directed and centrally planned investment model toward more of a market-oriented model. South Korea came back from the financial crisis of 1997-1998 involving IMF assistance, and proceeded to implement extensive financial reforms that ended up restoring market stability.

The restructuring of Korean conglomerates, creating a more liberalized economy with functions for bankrupt firms to leave the market, as well as bank privatization are some of the most important factors of the financial reformation of Korea.

Korea has relied heavily upon the exportation of goods, in order to fuel this rapid growth of its economy over the last several years. Finished products that are exported by Korea include such items as ships, textiles, and electronics. As far as raw materials go, steel is one of Korea’s most important exports.

Because of protectionist approaches to importation of goods, the domestic agricultural business has remained largely separate from the international market. For example, as of 2006, the price of rice in South Korea was nearly five times that of the average price of rice on the international market.

Between North and South Korea, two-way trade has increased from only $18 million in 1989 to more than $647 million in the year 2002. South Korea imported $271.57 million worth of services and goods from North Korea in 2002. Much of these goods were metal products and fishery related items.

South Korea shipped nearly $371.55 million worth of mostly humanitarian aid commodities types of goods, including textiles and fertilizers, to North Korea in 2002. South Korea is currently North Korea’s third greatest trading partner, after China and Japan.

In the latter part of 2003, an agreement was reached through the mediation of the WTO by which South Korean rice importation will eventually and gradually raise from four percent of consumption up to eight percent of consumption by 2014. It is hoped that this shift will aid people that depend on this staple food, by decreasing the cost of rice to the people of South Korea.

After the 2014, the South Korean rice market will again be fully opened, probably causing great distress to Korean farmers who have been making up to seven times as much off their rice crops as is paid for international market rice.

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