Economy of South Korea

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Economy of South Korea

Rank	15th (nominal) / 12th (PPP)
Currency	South Korean Won (KRW)
Trade organisations	APEC, WTO, OECD, G-20
Statistics
GDP	PPP: $1.423 trillion (2010 est.) Nominal: $1.007 trillion (2010 est.)
GDP growth	6.1% (2010 est.)
GDP per capita	PPP: $30,200 (2010 est.) Nominal: $20,265 (2010 est.)
GDP by sector	agriculture (3.0%), industry (39.4%), services (57.6%) (2008 est.)
Inflation (CPI)	3% (2010 est.)
Population below poverty line	2% (2004 est.)
Gini index	31.4 (2009)
Labour force	24.62 million (2010 est.)
Labour force by occupation	agriculture: 7.3%; industry: 24.3%; services: 68.4% (2010 est.)
Unemployment	3.3% (2010 est.)
Main industries	electronics, telecommunications, automobile production, chemicals, shipbuilding, steel
Ease of Doing Business Rank	8th^[1]
External
Exports	$466.3 billion (6th; 2010 est.)
Export goods	semiconductors, wireless telecommunications equipment, motor vehicles, computers, steel, ships, petrochemicals
Main export partners	China 23.2%, United States 10.1%, Japan 5.8%, Hong Kong 5.3% (2009 est.)
Imports	$417.9 billion (8th; 2010 est.)
Import goods	machinery, electronics and electronic equipment, oil, steel, transport equipment, organic chemicals, plastics
Main import partners	China 16.8%, Japan 15.3%, United States 9%, Saudi Arabia 6.1%, Australia 4.6% (2009 est.)
FDI stock	abroad: $115.6 billion (31 December 2009)
Gross external debt	$380.6 billion (31 December 2010 est.)
Public finances
Public debt	23.7% of GDP (2010 est.)
Revenues	$248.3 billion (2010 est.)
Expenses	$267.3 billion (2010 est.)
Economic aid	ODA, $900 million (donor) (2009)^[2] aid to North Korea excluded
Credit rating	Standard & Poor's:^[3] A+ (Domestic) A (Foreign) AA- (T&C Assessment) Outlook: Stable^[4] Moody's:^[4] A1 Outlook: Stable Fitch:^[4] A+ Outlook: Stable
Foreign reserves	US$298.806 billion (March 2011)^[5]
Main data source: CIA World Fact Book All values, unless otherwise stated, are in US dollars

South Korea has a market economy which ranks 15th in the world by nominal GDP and 12th by purchasing power parity (PPP), identifying it as one of the G-20 major economies. It is a high-income developed country, with a developed market, and is a member of OECD. South Korea is one of the Asian Tigers, and is the only developed country so far to have been included in the group of Next Eleven countries. South Korea had one of the world's fastest growing economies from the early 1960s to the late 1990s, and South Korea is still one of the fastest growing developed countries in the 2000s, along with Hong Kong, Singapore, and Taiwan, the other three members of Asian Tigers.^[6] South Koreans refer to this growth as the Miracle on the Han River.^[7] Having almost no natural resources and always suffering from overpopulation in its small territory, which deterred continued population growth and the formation of a large internal consumer market, South Korea adapted an export-oriented economic strategy to fuel its economy, and in 2010, South Korea was the seventh largest exporter and tenth largest importer in the world.
Despite the South Korean economy's high growth potential and apparent structural stability, South Korea suffers perpetual damage to its credit rating in the stock market due to the belligerence of North Korea in times of deep military crises, which has an adverse effect on the financial markets of the South Korean economy.^[8]^[9] However, renowned financial organizations, such as the International Monetary Fund, also compliment the resilience of the South Korean economy against various economic crises, citing low state debt, and high fiscal reserves that can quickly be mobilized to address any expected financial emergencies.^[10] South Korea was one of the few developed countries that was able to avoid a recession during the global financial crisis,^[11] and its economic growth rate will reach 6.1% in 2010,^[12] a sharp recovery from economic growth rates of 2.3% in 2008 and 0.2% in 2009 when the global financial crisis hit.
South Korea was a historical recipient of official development assistance (ODA) from OECD. Throughout the 1980s until the mid 1990s, South Korea's economic prosperity as measured in GDP by PPP per capita was still only a fraction of industrialized nations.^[13] In 1980, the South Korean GDP per capita was $2,300, about one-third of nearby developed Asian economies such as Singapore, Hong Kong, and Japan. Since then, South Korea has advanced into a developed economy to eventually attain a GDP per capita of $30,000 in 2010, almost thirteen times the figure thirty years ago. The whole country's GDP increased from $88 billion to $1,460 billion in the same time frame.^[14] In 2009, South Korea officially became the first major recipient of ODA to have ascended to the status of a major donor of ODA.^[2] Between 2008 and 2009, South Korea donated economic aid of $1.7 billion to countries other than North Korea. South Korea's separate annual economic aid to North Korea has historically been more than twice its ODA.^[15]

History

Shipbuilding is a flagship industry of South Korea that boomed since the 1960s.

The growth of the industrial sector was the principal stimulus to economic development. In 1986, manufacturing industries accounted for approximately 30 percent of the gross domestic product (GDP) and 25 percent of the work force. Benefiting from strong domestic encouragement and foreign aid, Seoul's industrialists introduced modern technologies into outmoded or newly built facilities at a rapid pace, increased the production of commodities—especially those for sale in foreign markets—and plowed the proceeds back into further industrial expansion. As a result, industry altered the country's landscape, drawing millions of laborers to urban manufacturing centers.
A downturn in the South Korean economy in 1989 spurred by a sharp decrease in exports and foreign orders caused deep concern in the industrial sector. Ministry of Trade and Industry analysts stated that poor export performance resulted from structural problems embedded in the nation's economy, including an overly strong won, increased wages and high labor costs, frequent strikes, and high interest rates. The result was an increase in inventories and severe cutbacks in production at a number of electronics, automobile, and textile manufacturers, as well as at the smaller firms that supplied the parts. Factory automation systems were introduced to reduce dependence on labor, to boost productivity with a much smaller work force, and to improve competitiveness. It was estimated that over two-thirds of South Korea's manufacturers spent over half of the funds available for facility investments on automation.