1. Economic Growth and Development in South Korea
Key Macro Data (2015)
Latest annual GDP Growth (%)
3.7%
GDP or GNI per capita
(US $, PPP)
$33K
Inflation (%) 2
Unemployment rate
(% of labour force)
3.6%
Fiscal balance
(% of GDP)
0.5
Govt debt (% of GDP)
53%
Yield on 10-Yr Govt Bonds (Per Cent)
Investment
31%
Gross national savings (% of GDP)
35%
Background Information
Currency unit
Won
Exchange rate system
Float
Policy interest rate
1.5%
Member of a Regional Trade Agreement
Many FTAs
Current account balance (% of GDP)
+6%
Main corporate tax rate (Per Cent)
24%
Competitiveness rank
26/144
Corruption Perception Ranking
43/175
Ease of Doing Business Ranking
5/189
External Debt
(% of GDP)
27%
Aspects of Development
Latest HDI ranking
15/187
Income inequality HDI ranking
19/187
Gender inequality HDI ranking
17/187
% of population living in extreme poverty
< 2%
Life Expectancy at birth (years) 81
Gini coefficient (Latest published estimate)
0.32
Inward FDI (% of GDP)
0.9%
Remittances (% of GDP)
0.5%
Aid (% of GDP)
Donor

2. Contextual Background on South Korean Economy
Economic Structure
Share of GDP by value added (% of GDP)
Primary: 2%
Industrial: 39% (strong manufacturing sector)
Services: 59%
Main export industries (+ major firms)
1/ Machinery / transport equipment
2/ Electronic / computing manufactures
3/ Chemicals and related products
Key risks to sustainable growth
1/ Chinese slowdown & falling Japanese Yen
2/ High household debt & youth jobless rate
3/ Low labour market participation (just 55%)
Development and Growth Issues / Policies
3 factors limiting development progress
1/ Subjective well-being low – many suicides
2/ Ageing population + many are poor
3/ Workforce = 18m of pop of > 50 million
3 policies used to improve the supply-side
1/ Attempts to stimulate SMEs/start-ups
2/ FTAs with EU + USA + China + Vietnam
3/ Reforms to improve lab market flexibility
Long term challenges facing this country
Challenge 1: Shift to a new style of growth
Challenge 2: Costs of possible reunification
Challenge 3: Reform of corporate oligopolies

3. Main Strengths and Weaknesses for South Korea
Competitive Strengths
1/ High income and diversified economy
2/ Structural trade (external) surplus
3/ Low unemployment + low stable inflation
4/ High ranking for ease of doing business
5/ 6th largest export economy in the world
Other Notes
It is 7th most complex economy in the world
Heavily urbanized (80% plus and rising)
Successfully navigated “middle income trap”
Strong & scaled manufacturing industries
Has avoided a full-blown recession since 1997 – one of few countries to do so since 2007
Rich enough now to be an overseas aid donor
Tremendously high rankings on Science and Maths scores in educational tests (PISA)
Main Weaknesses in their Economy
1/ Corporate oligopolies – too powerful?
2/ Relative weaknesses in creative services
3/ Exposed to events in China and Japan
4/ SMEs not as dynamic as western nations
5/ Polarized lab market + long working hours
Other Useful Contextual Knowledge
Labour market is widely regarded as too inflexible – firms find it hard to get rid of older workers, growing dissatisfaction among the young – rising social tensions
Service sector productivity is only half that of manufacturing industry
South Korea has agreed a number of free trade agreements including China, Vietnam and New Zealand, the EU and the USA