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Korea: General Information, Economic and Trade Report

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Updated: Oct 13th, 2021

Brief History

Before the 1945 division of the peninsula people of North and South Korea identified themselves as people of Choson. The Republic of Korea is approximately 98,477 km2. Seoul is the capital city and other major towns include Busan, Daegu and Uslan. Korea’s terrain is partially mountain forest, which is separated by valleys. Koreans cultivate along the coasts especially in the western and the southern regions. The population in the Republic of Korea was 48 846 823 as of 2006. In the same year, it was established that the annual population growth rate was at 0.42%. There are a few Chinese minorities in Korea but most people are Koreans. The major language used is Korean and a religion ranges from Christianity, Buddhism, Shamanism, and Confucianism well as Chondogyo. Education is valued in Korea and it has a high literacy level of 98%. The infant mortality rate in 2006 was 6.16/1000 while the life expectancy was at 77 years with males having a lower rate at 73.6 while females had 80.8 years. The country’s demographic structure has been changing over the years and it was estimated that the children below 15 years comprised 20% of the total population while those above 65 years comprised more than 20%. The fertility rates in 2006 stood at 1.6 per woman while the birth rate was 12.3 births per 1000.

Most people or rather a high percentage of the labour force works in the service sector about 67.2%. Those working in the agricultural, mining and manufacturing sectors account to a tune of 32.8% of the total labour force. Korea’s population can be said to be the most homogenous both ethnically and linguistically. Almost all Koreans share a common culture and linguistic heritage thus Korea is much unified. Korea is among the most or rather has the highest population density in the world. The northwest, southeast and Seoul-Inchon area are most populated. There are very high rates of emigration in Korea and this could be dangerous for the country as the human capital transfer is high. Resourceful and skilful people could be moving from Korea to develop other countries abroad.

The Korean language has some relationship with Japanese and Mongolian. It is characterized by ideograms, which dates back to the BC era. Christianity and Buddhism form approximately 80% while other religions form the remaining 20%. Koreans are known to value self-efficiency since time immemorial. It was able to fight its invaders despite it being in domestic strives. It was awarded the title ‘Hermit Kingdom’ in the 19th century due to its foreign influences. Japan took over Korea when Chinese power dwindled around the 1900s. Japan tried to overshadow the Korean language as well as its culture and this led to increased hatred and resentment among the Koreans. The feeling led to the ban of Japanese movies, music and fashion although this was lifted as years passed by. Today, most Koreans especially the young follow Japanese pop culture. Similarly, Korean culture is spreading in Japan through movies and shows.

Political Organization

The Republic of Korea was established on August 15 1948 with Syngman Ree as the first president. In September 1948 the Democratic People’s Republic of Korea (DROK) was established and it was under Kim II Sung. (Dan K, 1988, 2). This is also known as North Korea. ROK was adamant in signing a peace treaty in the 1950s with the UN Command (UNC). War emerged killing and wounding millions while leaving scores of others homeless. Autocratic leadership became a source of political strife in Korea forcing President Syngman Ree to resign in the 1960s. (Kleiner J, 2001, 5). He was succeeded by Chang Myon who only ruled for one year before being overthrown through a military coup by major general Park Chung –Lee. Park’s rule experienced tremendous economic growth and development while ensuring minimal political freedom. As a result of this, he was assassinated in 1979. A group of strong and influential military officers took over the leadership and Gen Chun Hwan declared martial law and took overpower.

Labour union activists and students were keen on opposing the authoritative power at hand. They held a protest and through them, deaths were recorded. Through increased or rather intensified pro-democracy activities changes were evident and this saw the restoration of direct presidential elections. (Kleiner J, 2001, 5). In 1987 Roh Tae-Woo, a former general was elected president. The fight for democracy continued and in 1992. Kim Young-Sam was the first civilian elected president in Korea. In 1997 Kim Dae-Jung was elected president in Korea and he was from a major opposition party. This was a clear indication that democracy had truly been accepted. Again, in 2002 a human rights activist Roh-Moo Hyn became the president. He supported a participatory form of government. The current president is Lee Myung-Bak and he took over in February 2008.

The government of the Republic of Korea comprises the president, legislature, and judiciary. The president should serve a 5-year term and he is the head or chief of the state. The executive is headed by the president, has a prime minister and 17 executive ministers and independent agencies. The unicameral national assembly consists of 299 members who are elected after 4 years. 243 members are elected from single-seat districts and 56 members are chosen through proportional representation. The judicial system is comprised of the supreme courts, appellate courts and a constitutional court and it is independent. The Republic of Korea has 9 provinces and 7 administratively separate cities. Political parties include the Grand National Party, United Democratic Party, Liberal Forward Party and Democratic Labor Party.

The Economy

Initially, Korea was a traditional agrarian subsistence economy but as years passed by it became an industrialized economy. Rice, tobacco, silkworms, tea and livestock rearing were major agricultural activities. The economy of the Republic of Korea has grown from a GNP of $100 in 1963 to $20,000 today. Trade is a very important economic activity in Korea with the U.S being one of their greatest trade partners. (Feffer J, 2003, 87). During Park’s rule, the government brought about great economic changes that advocated for export intensive policies as well as labour-intensive light industries. This move by the government led to a rapid debt-financed industrial expansion. It ensured that there was a stable currency, strengthened the financial institutions and enhanced flexible economic planning turned to be a success. Around the 1970’s fiscal and monetary policies were put in place to enhance heavy and chemical industries, consumer electronics and automobiles.

Today, the economy of Korea is no longer government-controlled but the forces of demand and supply also called the market forces have been left to operate. A more market-oriented approach is healthy for the growth of any economy. The extensive economic reforms in the face of a financial crisis originating from a mishap with IMF is the reason behind Korea being one of the few Asian countries that registers a positive gradual change economically. The growth rate in 1999-2001 was 10% or 9%. The growth was however interrupted in 2001 to 3.3% while the global economy started to decline and it was characterized by a reduction in exports and in foreign currency earned. The growth further declined due to over shopping or impulse buying and increased household debts. In 2004, the economy improved as trade intensified and exports increased. It, however, remained at a stable level from 2005 through 2007.

The stagnant economic growth can be attributed to the fact that there are higher numbers of the ageing population who are in most cases not productive. Structural problems have also been accused of shunning economic growth. Structural rigidity like in the strict labour regulations hinders effective economic growth. There is therefore much need to improve the relationship between the management and the workers. A well-regulated body should be put in place so that transparency is ensured at all times. There is also a need to improve the conglomerates to create a more liberalized economy where bankrupt firms can exist. The increased diversion of corporate investment to China, the world greatest growing country in trade is not good for Korea.

North and South Korea are major trading partners. They both carry out many transactions like those based on processing on commission arrangements. With improved transportation and communication systems like on roads and rail, there will be increased trade. South Korea is very handy in developing North Korea. Workers from North Korea can be effectively employed in S. Korea and the reverse is true. The Republic of Korea has good international or foreign relationships and it has hosted important and international forums. It co-hosted major games or sporting activities like the Summer Olympics and World Cup Soccer. Much care is taken when selecting the best solution to handle foreign policies. This is done to make sure that economic consideration is observed. South Korea has risen to have the highest Internet access and is a leader in semiconductor production as well as a global innovator in consumer electronics. Improving the fishing industry would also be very critical to the country’s economy especially because it will ensure the creation of employment as well as act as a generator of national income. The country’s trade prospects are also enhanced by its membership in World Trade Organization (WTO), which ensures a wider market for its products.

Social Organization and Culture

Korea has a rich and very distinct culture. Its history dates back to over 5000 years ago. Most historical sites have been preserved over the years. Major buildings were made from stone pagodas, lanterns and other pieces of sculpture. They include Bulguksa tembu, seokguram grotto, Itaeirisa temples, Changgyongp’ango, Jongmyo shrine, Changdeokkung Palace complex, Hwaseong fortress, Kochang, Hwasun and Kwanghwas Dolmen sites, Gyeongju historic site. (Clark D, 2000, 75).

Koreans are friendly and loving and although Korean has been the national language, Koreans are trying to learn English and this would be better for international business. This will be a plus to Korea’ economy as it will be a factor when considering that ‘language’ or rather effective communication will boost tourism. Many buildings or flats look alike as they have the same heights. They can only be differentiated by the way they are painted at the end. Traditional Korean’s style rooms act as bedrooms and living rooms during the day. Rice, vegetables, and fruits are eaten almost at all meals. The seat on the floor when eating and they also eat a lot of pork. (www.everyculture.com).

Although Koreans share a common culture there is clear evidence that a distinction exists between those from North Korea and those from the south. They have distinct customs and perceived personalities. There is also a distinction between those from South Korea in the southwestern region and those in the southeastern region. The Korean flag is a unique symbol of unity in Korea as it symbolizes the basic ideas of East Asian cosmology that was shared by people in the Chinese culture area.

National days in Korea include Liberation Day, National Foundation Day, and the Day of Recovering the Light that commemorates the liberation of Korea from Japanese rule in 1945. Heaven Opening Day is about the commemoration of the founding of the first Korean kingdom.

Most Koreans perceive themselves as being from the middle class and classes were highly correlated with one’s level of education. However, there is an evident income gap between the working class and the industrialist class. Other factors contributing to unequal distribution in wealth include family background, education, occupation and acceptance of monocracy. (Clark D, 2000, 75). Symbols of social status include one’s house, location, automobile possessed honoraries in speech and style and quality of dressing.

Ancestors in South Korean societies are held with much regard especially at the family level. Ancestral worship is a practice that is taught to children whereby they are raised to believe that they can never repay their debts to their parents. Ancestral ceremonies are held several times per year especially on New Years Day.

Economic and trade indicators, why this market is attractive, potential and pitfalls in international management, and contemporary issues that may support or impede Korea.

There have been significant changes in the Korean labour market, especially after the 1997 financial crisis. The Asian economic crisis had affected South Korea too but it started rebounding in 99. The main aim has been to ensure that the laws are not very rigid by ensuring that fundamental labour-related laws and principles were changed. Employment conditions have changed making employment more flexible. Industrial relations have also changed from being full of confrontation to being harmonious. Major businesses are positive about labour and management relations. (English.Seoul. go.KR). The increased confidence in the labour and management acts as an incentive to invest, which is good for the economy. Trade unions have also become strong and more effective which is not only a plus to the economy as a whole but to the employees too.

The government is also committed to enhancing a culture of autonomics negotiation, which means there will be, better and improved industrial relations. (www.kwrintl.com). Improved industrial relations work to encourage foreign investment where it becomes more economically viable to establish firms in Korea for foreign companies than in their homes. This is attributed to the high productivity rates in the country. To enhance its competitiveness in trade Korea developed three free economic trade zones that would offer advantages on tax, labour, regulatory and other incentives to increase trade and investment. (English.Seoul. go.KR). Korea is also strategically located in terms of geographical position and it’s an entry point or an ideal hub. It has also accepted and welcomed the idea of incorporating foreign investors and companies to channel their efforts in its development process.

Korea has enhanced economic, social and regulatory changes and reforms to promote economic growth and development. It favours easy access to its attractive markets. (www.kwrintl.com). It has also adopted new technologies and applications to a better stand in the global market. It has a lead in online games, displays, automobiles, mobile phones and wireless broadband applications.

Korea has approximately 3000 islands and the province of Cheju is the largest. It is strategically positioned in the sense that it is surrounded by Russia, China, and Japan as well as by the sea. The three countries consider it as of importance in their own security and even the U.S has had major interests especially of security with Korea. Most of the Korean land is mountainous leaving only about 20% for farming.

Korea should be cautious to avoid the harmful effects of dumping which could result due to free trade. It can also fail to attain optimal results as other countries for instance the U.S have highly competitive agriculture, manufacturing and service industries than it does. Domestic industries could be at stake, as they would face competition would also be felt especially when important sectors like legal, education and auditory sectors would become liberalized. Industries involved in both countries would become complementary and there would be a long-term opportunity for dynamic economic growth between them. This move would also encourage efficiency as it decreases the potential for dependency especially on the Chinese economy security would also be enhanced as the two countries work together.

Environmental problems remain an issue that needs to be effectively addressed in South Korea. It has been classified as the second country that contributes to the emission of greenhouse gases. Air pollution is a major concern especially in the densely populated urban centres where approximately 80% of the total population is settled. Water pollution is also a problem especially from sewers, industries as well as from acid rain. This causes health-related problems and should therefore be effectively addressed. The joint efforts in fighting pollution will bring about significant changes in the country. South Korea can exploit its high population of almost 50000000 people for its labour as well as potential demand. South Koreans are well-informed consumers who would create a great impact on the country’s economy. This is clearly seen in the improved or higher standards of living that her population experiences.

References

Seoul metropolitan government. 2007. Labor environment and employment systems. Changes in the labor market. Web.

Keith Rabin. 2004. Web.

John Feffer. 2003. North Korea, South Korea: U.S. Policy at a Time of Crisis. Seven Stories Press. P 87.

Advameg Inc. 2007. Republic of Korea. Web.

Donald Clark. 2000. Culture and Customs of Korea. Greenwood Publishing Group. P 75.

Jurgen Kleiner. 2001. Korea, a Century of Change. World Scientific publishers. P 5.

Tsuneo Akaha 2002. The Future of North Korea. Routledge publishers. P 128.

Eun Choi, Yesook Merrill, Ung-han Kim, E Kim. 2003. P 29 North Korea in the world economy. Routledge publishers. P 29.

Duck-Koo Chung, Barry J. Eichengreen. 2004. The Korean economy beyond the crisis. Edward Elgar Publishing. P 130.

Kong Dan Oh. 1988. Leadership Change in North Korean Politics: The Succession to Kim II Sung. Rand Corporation Publishers. P 2.

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