South Korea: an economic superpower in the making

The rise of India has long been attracting economists’ attentions, but very few people realize that in one or two years of time South Korean economy will exceed the size of India.

Despite South Korea’s astonishing achievement in raising its per capita income, in the perception of  many people S. Korea is just another  rich but small country like Singapore, and only draw our  attentions because the troubles of her Northern neighbor.

We haven’t’ realize that she is actually a very populated country, and an economic superpower in the making.

If you are Luxemburg, no one care whether you are rich or not. But we are talking about a country of similar population size as France! And with similar income level as Portugal! And unlike Portugal, it is a very innovative country by the way! By the way, Korea still invests 30% of its GDP, a ratio that is close to China's (40%); and all countries with higher investment ratio than Korea's are poor countries.

Unlike Taiwan that make profit by exploiting cheap labor in China  , South Korea has been manufacturing products under their own global brand names such as Samsung.

Professor Hasung Jang , Dean of Korea University's Business School, who was named Star of Asia by BusinessWeek for his contributions in reforming Korean corporate sector, is very proud of his country’s great industrial competiveness and potential:

“Korea is the only country that boasts of competitiveness in many manufacturing sectors, including automobiles, electronics, steel, shipbuilding, petrochemicals, and IT. It is hard to find a country that has competitiveness comparable to Korea’s. Therefore, we have to make good use of these excellent advantages and draw up growth strategy in this knowledge-based economic era.”

Please imagine a France rising up in East Asia, it is difficult, but try.

Japan has less than three times that of South Korea’s population, and every international  investment bank has a region called Asia (excl. Japan),  I wonder whether in 20 years time we will have a region called Asia (excl. Japan and South Korea)

I would like to refresh you with some basic facts that many of us usually haven’t realized:

(1) South Korea’s population is nearly 50 million. To put this number into perspective, France has a little more than 60 million, and Japan has less than 130 million.
(2) South Korea is the 12th largest economy in the world. By the end of 2005,  at market exchange rate, Korea’s GDP is 726 billion USD, while India’s is 735 billion, and Russia 740 billion. I would say the gap can well be due to estimation errors.
(3) They’ve been through economic crisis and political transitions. Unlike India and China that are still addressing easy problems, Koreans have gone through the tough times, endured the short-term pains, became a democratic country, and further increase of income is just a matter of time.

To Professor Hasung Jang, the big problem is whether the political leadership of the country can make best use of his country’s advantage:

“It seems that the confrontation between conservatives and liberals is getting worse. But what’s more worrisome is that rightists, who are accustomed to the government-led economy and chaebol dominance, and leftists, who are insensitive to global trends, are managing the economy in a manner that runs counter to the global trend,” he said.

Well, at least in Korea political parties try to differentiate themselves in economic policy, whereas in Taiwan no one can win on the platform of better economic policy. Taiwan has one advantage though: they don’t have militant leftists.

For more information on Korea, check CIA factbook

Comments

[Victor Foo]

First of all, I would like to know who writes this article. Yes, I agree with the viewer's point of view towawrds Korea. Korea is in the process of transforming itself into an super economic power. It already has the 10th biggest economy worldwide in 2006. Its' income per capita is close to $20,000.
Now, Korea faces several economic challenges such as unstable labor management relations, regulation and incompetitive service sectors. Fortunately though, the government has been very committed to address these challenges. In 2 or 3 years time, the economic conditions will improve noticeably where its ordinary citizens start to feel the effect of the improvement. If everything goes well, Korea might have the 8th biggest economy in the world in terms of GDP. By then, Korea would enter rank of G7 nations. By the way, China is the only developing country with a higher GDP than Korea.