Economy of South Korea

In the early 1960s the economy of South Korea transformed from a poor, agricultural society to one most highly industrialized countries worldwide. This rapid economic growth was made possible by the cooperation of government and business leaders who worked together to target specific industries for development. However the Asian financial crisis of 1997-99 revealed structural deficiencies in the development model of South Korea. The deficiencies include huge foreign borrowing, high debt/equity ratios, and a disorderly financial sector. Subsequent to the crisis, the government made several attempts to liberalize the financial and economic sectors. Nevertheless the economy of South Korea continues to be dominated by large conglomerates.

Between 2000 and 2002 there had been fluctuations in the economic growth of South Korea. However, between 2003 and 2006, the economic growth was a moderate 4-5%. A decline in consumer spending was counterbalanced by rapid export growth. Today the economy of South Korea is characterized by low unemployment, moderate inflation, export surplus, and reasonably equal distribution of income. South Korea became a member of the trillion dollar club of world economies in the year 2004. The country is aiming towards becoming the center of a powerful Asian economic bloc in the 21st century.

Major Economic Sectors

According to the 2006 census, the agricultural sector accounts for 6.4% of the total GDP, while the industries sector contributes 26.4% to the country's GDP. The services sector accounted for the highest percentage of GDP which is 67.2%.

Agricultural Sector

In comparison to the industrial and service sectors, agriculture remains the most slow-moving economic sectors in South Korea. In the beginning of the economic boom in 1963, the majority of South Koreans were farmers. However in the following years the country grew from a predominantly rural, agricultural nation into a highly urbanized and industrialized nation. The workforce of the agricultural sector declined to a meager 8.8%.

By the late 1980s, due to the rapid development, about half of South Korea's requirements of wheat and animal feed corn were imported. The chief agriculture products in South Korea are rice, barley, fruit, vegetables, cattle, pigs, chicken, fish and milk.

Industrial Sector

The industrial sector growth was the key stimulus to economic development in South Korea. The country's main industries include automobiles, electronics, steel products, semi-conductors, shipbuilding, and textiles. The industrial sector accounts for 19.1% of country's work force.

A recession in the economy of South Korea in the year 1989 prompted by a decrease in exports and foreign orders, became a cause of great concern in the industrial sector.

Services Sector

The services sector accounts for 67.2% of the country's GDP according to the 2006 census. The service industries include restaurants, hotels, laundries, insurance, public bath houses, health-related services, and entertainment businesses. In the mid-1980s, the retail trade was the country's largest employer in service sector.

Between the years 1997 and 2001 the percentage of the share in employment in services industries increased from 66% to 70% of the total workforce of the country.

 

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