South Korea Economic Structure

South Korea is the 12th largest economy in the world, with a GDP (PPP) of 1.459 trillion in 2010. South Korea is one of the fastest growing economies from the 1960s to 1990s, and was termed as one of the Asian Tigers, along with Hong Kong, Singapore and Taiwan.

South Korea is the 12th largest economy in the world, with a GDP (PPP) of 1.459 trillion in 2010. South Korea is one of the fastest growing economies from the 1960s to 1990s, and was termed as one of the Asian Tigers, along with Hong Kong, Singapore and Taiwan.

South Korea’s economic growth relied heavily on its exports, due to a lack of natural resources, and small domestic consumer market. This also makes them them the 7th largest exporter and 10th largest importer in the world. The South Korean economy has also grown from one which is labor-intensive, to one which is more capital and technology-orientated.

South Korea’s growing economy is also one of the few countries which avoided recession during the 2008 financial crisis. However, the country’s progressive economic growth could be impeded by its continued tension with North Korea. Economic ties between North and South Korea were established in 1988, and trade volume rose to $1.82 billion in 2008, making South Korea the second largest trading parter of North Korea, after China. But constant conflicts between the two nations have severed the economic ties between them.

South Korea is also a member of world organizations including the G-20, APEC, OECD and WTO. It has also signed free trade agreements with other coutries, with the most important free trade agreement signed with the US in 2007, the Korea-US Free Trade Agreement (KORUS FTA) which removed all trade and investment barriers between 2 countries. This also made US their second largest export market.

Economic Geography

South Korea has a land area of 96,920 square km, with 16.58 percent of arable land. The country’s main agricultural crops are rice and barley. Other products supplied by South Korea includes vegetables, fruits, root crops, cattle, pigs, chicken, milk, eggs and fish. South Korea also enjoys few natural resources such as coal, tungsten, graphite, molybdenum, lead and hydropower potential.

Population and Labour Force

South Korea has a population of 48.75 million people as of 2010, with a labour force of 24.62 million people. In 2010, the unemployment rate in South Korea is 3.725 percent.

South Korea has a labor force with 70 percent of its workers employed as irregulars, people who take up temporary or uncommon jobs. An imbalance of work protection and benefits between the regular and irregular workers have led to strikes and protests by the irregular workers. This irregular labour force is the driving factor behind South Korea’s economic recovery from the 2008 financial crisis and experts says that though the unemployment rate of 3.725 percent reflects on the growth of labor market, it does not reflect well on the fact that more than half of its workers are irregular workers receiving poverty wages.

Industry Sector

The industry of South Korea contributes 39.4 percent of the country’s GDP in 2010. The industry and manufacturing industries are the major growth engine for South Korea during its economic progress in the 1980s. South Korea’s largest industries are electronics, automobiles, telecommunication and shipbuilding.

Electronics boosted the South Korean economy in the 1980s, by becoming the world’s sixth largest manufacturer of electronic goods such as color televisions, microwave ovens, radio, watches and personal computers. . South Korea is also a major manufacturer of semiconductors, with Samsung Electronics and Hynix Semiconductor the global leaders in the production of memory chips.

The automotive industry also plays a major role in the South Korean economy today. It has grown into one of world’s largest automobile producers, coming in 5th after the United States and Germany, with an estimate of 4.27 million automobile produced a year. Some of South Korea’s international automobile brands include Hyundai, Kia and Renault.

From a slow start of two million subscribers to a current high of 40 million, mobile telephone is the fastest growing area in telecom, going beyond the 20 million fixed lines serving a 40 million-strong population.Today, South Korea also has the highest number of broadband users in the world. The presence of one of the fastest broadband networks in the world also permits e-commerce to grow.

South Korea is a global player in the production of ships, with a 50.6 percent share of the global shipbuilding market in 2008. Four of the world’s largest shipbuilding companies are from South Korea: Hyundai Heavy Industries, Samsung Heavy Industries, Daewoo Shipbuilding & Marine Engineering and STX Offshore & Shipbuilding. Europe’s largest shipbuilder, STX Europe, is also owned by South Korea.

Services in South Korea contributes 57.6 percent of the nation’s total GDP, and employs 68.4 percent of the workforce. The government shifts its focus from manufacturing to services in 2009, and experts predict that the services will be the driving force of South Korea’s economy for the next few years, as current productivity level is just at 58 percent of that in manufacturing.