Yael Dahan | 05 February 2020

Korea, like many countries around the world, received last month (January) the New Year and the New Decade. In the past decade, the Korean economy has experienced many upheavals, most of which can be attributed to the cooperation and contacts between the country and the entrepreneurial elites. But the introduction of the new civil year brought with it a particularly optimistic outlook.

In the 1960’s, South Korea was one of the poorest countries in the world and with a per capita income close to that measured in Africa’s poorest parts. The economy has experienced the slowest growth in Asia alongside the largest inflation. Massive government intervention in its early decades was one that rescued the country from further deterioration. With the help of taxation, regulations and cash flows, the government made sure to encourage exporting and “heavier” industries, such as car manufacturing and shipbuilding.

As a result of the Asian economic crisis in 1997, Korea suffered a liquidity crisis and needed a bailout from the IMF. One of the conditions for receiving the support was a renewed economic organization that would help lead the country to concentrate on information and communications technology (ICT). With the help of rewriting a new work ideology and internal industrial entrepreneurship, today, Korea is considered the spearhead in developing and manufacturing parts and components in the hardware business of the computing. Apart from that, it is among the world’s leading in the fields of machinery, vehicles (Hyundai), electronics (LG, Samsung) and shipping.
Despite the hard data and precisely because of it, South Korea’s economic growth is so impressive. In 30 years, Korea has managed to become from a third world country into one of the world’s strongest and most influential economies.

Furthermore, the future forecast for the Korean economy is conclusive – According to the World Economic League Table 2020, Forecasts to 2034 (World Economic League Table 2020), Korea is a high-income country with a GDP of 44,740 Dollar in 2019 and now ranked 12th in the world. The report, that published last December, presents the economic structure focused on growth and export-led manufacturing by family-owned freight corporations known as “Chaebols”.
South Korea, an open and dynamic economy that relies on world trade, is expected to become the world’s tenth largest economy by 2027.
The surge in growth is expected to accumulate momentum as early as the coming year (2020); and yet, Korea’s position between the hammer and anvil, in the US -China trade war and tensions with Japan, pose significant reduction risks. The ongoing crisis with Japan is still a matter of contention, leaving a wide void in commodity exports that needs to be filled as soon as possible.

The report additionally claims that had it not been for China’s economic downturn, the Korean economy would have gained more momentum. In addition, China is expected to become the world’s largest economy by 2033 and India will overtake Germany to be the fourth largest in 2026.

Korea’s “economic miracle” is widely spoken and attributed mainly to the economic powers and dependence of them to this day; when little attention was paid to the achievements and contributions of Korean industrial development work. It is implied that in the near future, the Korean economy is likely to reap its rewards and enjoy the effort invested. The road is still long and contingent on many challenges: From an external perspective, Korea still depends on the balance of the world trade scene and its rapid recovery. From an internal perspective, dealing with many structural.

References:

The World Economic League Table 2020, https://cebr.com/wp-content/uploads/2019/12/World-Economic-League-Table-Report-2020-Final.pdf

Andrew Eungi, K., & Gil-sung, P. (2007). Nationalism, confucianism, work ethic and industrialization in south korea. journal of contemporary asia, Volume 33, 37-49. https://www.tandfonline.com/doi/abs/10.1080/00472330380000041?casa_token=hL1sJc5pfNcAAAAA%3ArB3YzSZOeDkEbOLfIMGd7_62W9oO6kK2AWRclME4zpc8B64LLGQI1F0lQ2ErmZRWBzrCvcDqsmc0&