- Alexander Kamyshov
1. Globalization has impacted the South Korean economy greatly. It seems that globalization is a key factor for Republic of Korea’s prosperity. Indeed, South Korea grew rich due to the economic strategy based on export growth and participation in the global economy: “a key factor that has propelled South Korea’s growth has been its strong export emphasis since the 1960s; growth of exports rose 21% annually” (Dan Nguyen, n.d.).
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According to the data of the Korea International Trade Association (2011), value amount of exports increased by 4,3 times since 1996 year and totaled in $552.6 billion in 2012, which made Korea the 6th largest exporter on the world. Contemporary South Korea is a leader in various industries, from entertainment and music to high technologies and automobile industry.
Regarding technology, it is worth saying that South Korean conglomerate Samsung plays a huge role in the country’s process of globalization with its partnerships all over the world. According to estimates of Korean economists, Samsung Electronics’ profit is almost one third of the total net income earned in 2010 by the thirty largest corporations of the country (James Dixon, 2011). Moreover, the capitalization of the electronics industry leader in the stock market is equal to the total cost of the nine other most expensive country’s companies.
Another main area of South Korea’s growth and globalization can be observed in the automobile industry. Specifically, Hyundai Motor Co. and affiliate Kia Motors surpassed Toyota as the biggest Asian carmaker in Europe in 2011, according to the Korea Times (James Dixon, 2011). This year, the company saw record growth and market shares in the North American market.
Moreover, it is not only Korean large companies that are driving globalization. “There is a huge movement in the spreading of Korean culture abroad, also known as the Korean wave” (James Dixon, 2011). In fact, many people now believe that Korea, as a national brand itself, may appear to be the new passion for the Korean wave. Over the past years, Korean pop culture has spread contagiously throughout the world. The term, “Korean Wave”, has been used to describe the growing popularity of Korean pop culture. The Korean government fully recognized the benefits of this national phenomenon and began aiding the Korean media industries in the export of Korean pop culture. This global expansion contributed to the strengthening of the national image of South Korea and its economy, and even become a tool of public diplomacy (Sue Jin Lee, 2011).
- South Korea is an instance of both regional and global integration. The country is an important strategic player in the process of integration due to its great influence on trade and efforts to promote multilateralism. Currently, South Korea signed eight free trade agreements with 45 countries and is negotiating other eight agreements with 13 states, including China.
Korean trade relations with Western countries include economic partnership primarily with the United States and the European Union. Korea is also the member of several international organizations such as World Trade Agreement, Association of South-East Asian Nations (ASEAN), Asia-Pacific Economic Cooperation (APEC), etc.
Korea is also preparing to conclude a trilateral free trade agreement with Japan and China. If all of these documents will be signed, Korea will become “the epicenter” of free trade, as it will participate in the agreements with countries that account for over 70% of the world economy (Wook Chae, 2012).
Moreover, there is another driver gaining force to integrate the Korean economy. Led by the U.S. Trans-Pacific Partnership (TTP) has been working not only to abolish customs duties and restrictions not related to customs tariffs, but also on cross-cutting issues, including the harmonization of legal acts, regional economic integration, development of small and medium-sized businesses and increase competitiveness of economies.
Additionally, there are the ongoing negotiations on a free trade agreement between Korea and Australia. Both countries signed a free trade agreement with the United States and are actively working to strengthen economic integration with East Asia. They are members of the WTO, the Organization for Economic Cooperation and Development (OECD) and the G20 and make joint efforts to revive negotiations between the countries in APEC, East Asia Summit and the ASEAN Regional Forum.
3. Comparing South Korean and the Turkey’s one, it is worth noting that both countries have rather large economies – according to the World Bank (2012), Korea is now “the world’s 15thlargest economy” and Turkey, with a Gross Domestic Product (GDP) of $786 billion is the 18thlargest economy in the world.
Over the past decades, South Korea has shown startling growth and global integration to become a high-tech industrialized economy. As in other developed countries, the service sector has become dominant in the economy the in early 90-ies, and now it is about a half of Korean GDP. In contrast, Turkey’s largely free-market economy is increasingly driven by its industry and service sectors, although its traditional agriculture sector still accounts for about 24% of employment (TURKISH AGRICULTURE INDUSTRY REPORT, 2010).
Korea is an exceptional example of a high-income country, with GNI per capita increasing rapidly from US$ 67 in the early 1950s to US$ 22,670 in 2012, while Turkey’s gross national income per capita has nearly tripled in less than a decade and now exceeds $10,830 (the World Bank, 2012).
It is impossible not to mention a great role of Foreign Direct Investment that impact both countries considerably. Republic of Korea’s FDI totaled 26,7% of GDP in 2012, whereas Turkey’s Foreign Direct Investment has grown from just over $1 billion to an average of $13 billion in the past five years and made up 20,3% of the country’s GDP (the World Bank, 2012).
In terms of weaknesses of these two countries, the South Korean economy’s long-term challenges include a rapidly aging population, inflexible labor market, and heavy reliance on exports – which comprise half of GDP, whilst Turkey remains dependent on often volatile, short-term investment to finance its large trade deficit. Relatively high current account deficit in Turkey, the uncertainty associated with monetary policy, and political turmoil in neighboring countries Turkey, make the economy vulnerable to destabilizing shifts in investor confidence.
|Real GDP (% change)||2.0||2.8||3.7|
|Nominal GDP (US$ bil.)||1,129.1||1,205.3||1,274.5|
|Consumer Price Index (% change)||2.2||1.3||2.3|
|Policy Interest Rate (%)||2.75||2.50||2.50|
|Fiscal Balance (% of GDP)||1.4||1.0||1.8|
|Unemployment Rate (%)||3.2||3.2||3.2|
|BOP Exports of Goods US$bn||555.0||574.2||628.2|
|BOP Imports of Goods US$bn||515.3||514.2||580.6|
Source: IMF, World Economic outlook October 2013
*Indicators shown in green mean the forecast value
It may be inferred that overall South Korean economy seems to be thriving according to the comparison of macro-economic indicators shown above.
South Korea Major Trading Partners, 2012
|Country||Billions of USD||Percent Share||Country||Billions of USD||Percent Share|
|Hong Kong||32.6||5.9||Saudi Arabia||39.7||7.6|
Source: IMF, Direction of Trade
According to the study by the Global Insight, major Korean export-import partners are China, the United States, Japan, Hong Kong, Singapore, Saudi Arabia and Qatar.
Dixon, J. (2011, April 24). Korea’s embrace of globalization. Retrieved March 1, 2014, from http://www.koreatimes.co.kr/www/news/biz/2013/05/348_91475.html
Kar-yiu Wong (n.d.). ECONOMIC INTEGRATION IN NORTHEAST ASIA: CHALLENGES AND STRATEGIES FOR SOUTH KOREA. Retrieved from http://www.keia.org/sites/default/files/publications/03Wong.pdf
Nguyen, D. (n.d.). Globalization Case Study: South Korea. Retrieved from http://www.kewpid.net/notes/globalisation_sk.pdf
REPUBLIC OF TURKEY PRIME MINISTRY (2010). TURKISH AGRICULTURE INDUSTRY REPORT. Retrieved from Deloitte website: http://www.invest.gov.tr/en-us/infocenter/publications/Documents/AGRICULTURE.INDUSTRY.PDF
Sue Jin Lee (2011). The Korean Wave: The Seoul of Asia. Retrieved from The Elon Journal of Undergraduate Research in Communications website: http://www.elon.edu/docs/e-web/academics/communications/research/vol2no1/09suejin.pdf
Wook Chae (2012, June 4). South Korea’s regionalism policies | East Asia Forum. RetrievedFebruary28, 2014, from http://www.eastasiaforum.org/2012/06/04/south-korea-s-regionalism-policies-in-the-asian-century/
Korea International Trade Association Retrieved February27, 2014, from www.global.kita.net/
The World Bank Group (n.d.). World Bank Group. Retrieved from http://www.worldbank.org/
Country Intelligence: Report: South Korea. (2014).South Korea Country Monitor, 1-18.