South Korea Economic Conditions

By | June 6, 2022

According to Homosociety, the regions that today make up the Southern Korea had a traditional specific agricultural vocation: the climatic and pedological conditions, the relative lack of mineral raw materials and, before the division of Korea, the concentration of industries in the northern regions confirmed this specialization. After the war, the country found itself in the need to equip itself with an industrial system, without being able to neglect the primary productions necessary for a rapidly growing population. It was especially in the 1970s that South Korea went from a fundamentally rural economy to an industrial one. Foreign investments, first American, then mainly Japanese, after the normalization of relations between the two countries (1965), they played an essential role in triggering the industrialization process and in inserting the South Korean economic system into the network of international exchanges, indispensable both for the supply of raw materials and for the placement of finished products. As in other cases of substantially exogenous industrialization, a first phase of total financial and technological dependence on foreign investors (when South Korea was counted among the NICs,New Industrialized Countries, and specialized in consumer goods for export) followed an even tumultuous development of production initiatives, often highly innovative, supported by entirely South Korean capital and projects; on the other hand, the internationalization of South Korean companies has also proceeded at great speed, and today there are many conglomerates (chaebol) South Korean financial-industrial companies that have taken on transnational connotations. An essential component of the country’s industrial development has been the large availability of labor, whose working conditions have until recent years been kept at such low levels as to be competitive even with those of much less developed countries. The rapidity of structural change in the economic field (as in the geographical distribution of the population, as mentioned above) has also fueled strong social and political tensions, not yet fully resolved, as well as a very sensitive imbalance in the distribution of incomes, which, however, in the more recent decades it has shrunk. Only in recent years, both to contain social protests and to expand the domestic consumer market, a policy more favorable to employees led to a general increase in incomes and spending power, while penalizing labor-intensive production, which had supported the great South Korean growth. The average income per resident, however, remains rather far from the top of the world rankings; international agencies place South Korea among the most advanced or ‘rich’ countries and the OECD has admitted it among its members, but it may still be more correct to consider its per capita income as medium-high.

Agriculture, which in 1970 employed half of South Korean workers, is practiced by 4% of the active population. The main crop remains the traditional one of rice (6.5 million t in 2005), widespread above all in the western part of the country, with a very high productivity; the other agricultural productions, including some cereals, are also destined for local consumption (potatoes, fruit, vegetables); overall, the country has not achieved food self-sufficiency nor is it pursuing it anymore: on the contrary, it is one of the main importers of food. Considerably extended, also following reforestation programs and a rather strict control over the cutting of timber, are the forests (63% of the surface), from which more than 4 million m are obtained.of timber per year (2005). Relevant are sericulture and especially fishing, as well as breeding, especially of poultry and pigs.

Among the mineral resources, coal (2.8 million tons in 2005), used for the production of electricity, iron and silver, deserve to be mentioned. The availability of coal and iron has supported the development of an important steel industry, which in turn has allowed the growth of shipbuilding (the country is the world’s leading manufacturer of ships) and mechanics, starting with means of transport. field in which South Korea stands out worldwide. Even the more traditional sectors (textiles, agri-food, construction) have achieved considerable development; but it is above all chemistry (fertilizers and fine chemicals) and even more electronics that have promoted, with mechanics, the flowering of South Korean industry, dictating the composition of the country’s exports. The production of electricity, in line with development rates, is very high (345,000 million kWh in 2004) and over a third is guaranteed by thermonuclear plants. The competitiveness of South Korean industry today is based on a vast use of very advanced technologies and on a constant search for product and process innovations, particularly evident in sectors such as electronics, aeronautics, nuclear power and transport.

The tertiary sector absorbs about 2/3 of the active population, in line with the more developed countries. Considering that South Korea has a relatively small public economic sector, and that liberal policies have dominated for decades, most of the workers in the tertiary sector are employed in service activities to businesses and households, among which a considerable weight have hired banking and financial services, despite the severe shocks suffered during the 1998 currency crisis. The relative ‘lightness’ of the public sector does not imply that the state is not interested in the productive economy; on the contrary, one of the ingredients of the success of the South Korean economic system is precisely in the convergence of state policies (mainly through financial and fiscal instruments) and corporate policies. As far as international trade is concerned, exports from Southern Italy have experienced a very strong increase (up to increases between 10 and 15% per year during the last fifteen years of the 20th century); approximately one third are made up of goods with a high technological content and have allowed for a considerable trade surplus for many years.

The communications system is good; the railway network is now outclassed by the road network (approximately 80,000 km asphalted). Maritime transport is also of great importance, both for internal transport and for connections with foreign countries; main ports are P’ohang, Inchŏn, Pusan, Pukp’yŏng (recently entered into operation). Similarly, a major development has been recorded in air transport, with main airports in Seoul (actually on two islands off the coast of Inchŏn), Pusan ​​and Cheju, on the island of the same name. The international tourist movement is in continuous, significant increase, and by now the admissions are almost 6 million per year (2004); but Koreans who go abroad for tourism are even more numerous, as evidence of the progressive improvement in socio-economic conditions.

South Korea Economic Conditions