Economic Development

of the Republic of Korea

 1 The Korean Economy Now

2 The Process of Economic Growth in Korea

Contents 3 How Korea Dealt with the Economic Crisis

4 Korean Companies

5 Future Growth Engine and Policy Direction

The Korean Economy Now
The Korean Economy Now

Korean Economy Now

• Global GDP Ranking 12th Place

• 30-50 Club * GDP per capita 31,363 USD + Population of 51,840,339 (2018)
* Those countries with per capita gross national income (GNI) surpassing USD 30,000 and a population of over 50
million

Other Economic Indicators…

• Economic Growth Rate 2.7% (Source: IMF)

• Relative Equality Gini-coefficient* 0.355 (8th highest among 38 OECD countries)

(source: http://www.gini-research.org/)
*A gauge of economic inequality measuring income distribution in a country

• Unemployment Rate 3.8% (OECD average: 5.3%)

(as of 2018 or the latest available)
The Korean Economy Now

Leading Technology
1) Semiconductor
Sales Ranking; 1st Samsung, 3rd SK Hynix (Source: IC Insights’ Strategic Reviews database)

2) 5G Network;
Samsung and LG competing with Qualcomm, Ericsson, and Huawei

3) Shipbuilding Industry
Hyundai and Daewoo

4) Smartphone Ownership and Internet Usage Rate:

95% of the adult population (Source: Pew Research Center)
The Korean Economy Now

Innovation
1) 2019 Bloomberg Innovation Index: No.1 for the sixth year in a row

2) 2018 UN Global Innovation Index*: 12th out of 126 countries

* An index measuring multidimensional facets of innovation-driven growth, providing 80+ detailed metrics such as human capitals
and infrastructure
The Korean Economy Now

A Simple Question & Quiz

Which country’s economy is the most similar with that of South Korea?
1) France 2) Italy 3) Canada 4) Australia 5) Spain

Economic GDP GDP per capita Income inequality Bloomberg Inno-

Growth Rate (billion USD) (USD) (Gini Coefficient) vation Index

South Korea 2.7% 1,619.4 31,346 0.355 89.00 (1st)

France 1.6 % 2,775.3 42,878 0.291 80.99 (11th)
Italy 0.7 % 2,072.2 34,260 0.328 65.57 (24th)
Canada 1.8 % 1,711.4 46,261 0.307 71.58 (19th)
Germany 1.5 % 4,000.4 48,264 0.294 83.92 (3rd)
Australia 2.7 % 1,418.3 56,352 0.330 73.33 (18th)
Spain 2.6 % 1,425.9 30,697 0.341 62.51 (29th)

(as of 2018 or the latest available (Source: IMF, OECD))

The Process of Economic
Growth in Korea
The Process of Economic Growth in Korea

From Ruins
to Economic Powerhouse GDP Per Capita
(USD)
2010s (23,083~33,346)

State-Led Development Plans

2000s (11,951~19,152)

Export / Large Companies-

Oriented Policies 1990s (6,514~10,404)

1980s (1,703~5,738)
Investment in Human Resources

1970s (253~1,713)
Strong Work Ethic
1960s (80~216)

1950s (66~81)
The Process of Economic Growth in Korea

Two Koreas after Korean War

• GDP and GDP per capita (source: KOSIS & Bank of Korea)

10110
2006138 13824
2015161 20872
2006575 27097
2015642
GDP (100 million USD) GDP per capita (USD)

South Korea North Korea South Korea North Korea

• Electricity Consumption (unit: kWh per capita) (source: KOSIS & World Bank)
1971 1983 1992 2014
South Korea 296 1,141 2,826 10,497
North Korea 909 1,134 1,024 600
The Process of Economic Growth in Korea

Korea’s GDP Ranking

• GDP per capita Ranking (source: World Bank)
1965 1975 1985 1995 2005 2015 2018
Ranking 105 79 48 33 34 29 28
GDP per 106 608 2,458 12,340 18,658 27,513 31,345
capita (USD)

• GDP Ranking (source: World Bank)

1980 1985 1990 1995 2000 2005 2010 2015 2018
Ranking 28 20 16 11 12 10 14 11 11

GDP 83.3 167.9 322.3 544.7 773.4 1,094.8 1,473.7 1,856.7 2,136.3
(Bil.
USD)
The Process of Economic Growth in Korea

Developing Country and

Industrial Development/Sophistication

• Successful developmental state  State-led industrial policies  Industrialized economy

Large Companies / Export-Oriented Policies Personnel Development Strong Work Ethic

• “Capitalism with Democracy” achieved in 1987

• Economic growth remained steady since the 1990s due to democratic political stability

• Industrial transformation: Following other developed countries’ path and formulas

Light Heavy Service Tech/Capital

Industry Industry Industry Intensive Industry
The Process of Economic Growth in Korea

From ODA* Recipient to Donor

(Official Development Assistance)

• Became a member of OECD/ DAC* (Development Assistance Committee) (2010)

: The only nation to transform itself from a recipient to a donor

• Korean diplomat elected Vice Chair of OECD / DAC (June 2019)

• Korea’s economic growth would have been impossible

without financial and technological assistance from developed countries

• Provided US$ 2.35 billion of ODA in 2018 (equivalent to 0.15% of GNI)

• Plans to steadily increase the ODA until the ODA/GNI ratio reaches 0.2%
(source: odakorea.go.kr)
The Process of Economic Growth in Korea

A Simple Question & Quiz

• What do you want to know about the process of the Korean economic development?

• What are the factors that contributed to the development of Korea’s Economy?

• Which of the factors do you want to learn more about?

How Korea Dealt with
the Economic Crisis
How Korea Dealt with Economic Crisis

Overcoming the Crisis

• Hard to maintain its economic growth

Due to mounting foreign debt, opaque financial market, volatile labor market, collusive
links between politics and businesses

• Asian Financial Crisis in 1997

(GDP growth rate in 1998: -5.5%)
Industrial restructuring & reform measures
by the newly-elected ruling party + efforts of
ordinary people

Gold Donation Campaign in 1997

(Source: Chosun-Ilbo)

• Subprime-Mortgage Financial Crisis in 2008

Learning from the previous experience:
preventing speculative foreign investment and increasing currency swaps
Overcoming Process of the Korean Economic Crisis

A Simple Question & Quiz

• How did Korea overcome the economic crises?

Consolidated Democratic Political System

Efforts of Business Circles

Efforts of Ordinary Citizens

Korean Companies
Korean Companies

Top Technologies
• Conventional Heavy Industry
Mechanical Automobile, Shipbuilding, High-speed Train, Infrastructure

• Electronics
Home Appliances (e.g. LG), Semi-Conductor (e.g. Samsung)

• Information Technology
Smart Phones and AI-based Appliances (e.g. Samsung’s Galaxy)
Digital Banking (e.g. K-Bank, Kakao Bank)
Mobile Communications (e.g. 5G)
Internet of Things (“IoT”)
Korean Companies

Technological Development

The 4th 5-Year Basic Plan for Science and

Technology (2018)

Bio-Health-Medical Energy-Resource ICT-Software

• Technology Transfers

Construction- Environment- Machine-

• Investment in Human Capital Transportation Climate Manufacturing

• Government’s Strong Commitment Agriculture- Space-Aero- Material-Nano

Aquarian-Food Marine

Defense Disaster Safety

Korean Companies

A Simple Question & Quiz

• What do you want to know about the technological development of Korea?

• Who’s No.1 in the memory semi-conductor industry in the world?

Future Growth Engine and Policy
Direction
Future Growth Engine and Policy Direction

Developing Next Growth Engine

• Gearing up for the new industrial era in the face of the 4th Industrial Revolution
technologies and structural changes (Source: Parametrix)

1) AI, Robots 3) Hydrogen Electric Car

LG (AI), Doosan (Collaborative Robots* Hyundai
or Cobot that physically interact with humans in a
shared workspace)

2) Electric Vehicle (EV) Battery: 4) 5G, IoT

LG, Samsung, SK KT, SKT, Samsung
Future Growth Engine and Policy Direction

“Innovative and Inclusive Economy”

• Less and less regulatory red tape

• More investment in the 4th industrial revolution and future-oriented

technologies

• Sustainable growth with more redistributive welfare systems

Overcoming the previously excessive free-market capitalist policies

• “Human-Centered” economic development

Preventing inhumane economic practices to ensure ordinary citizens’ basic
quality of life
Future Growth Engine and Policy Direction

Final Question

• In which sector does your country need to cooperate with Korea for economic
development?
Here are several examples of sectors for your countries to consider.

Conventional Conventional
Labor-intensive Factories Tech-/Capital-intensive
Factories
Information
Bio-Health Care Technology

Education Infrastructure Tourism, Cultural

and Construction Duty-Free Industry, Industry
Roads, Highways, Railways,
and Beauty Industry K-Pop/Drama/Movie
Electricity, Communication,
Smart city