South Korea Market - Assignment Example

South Korea Market Introduction Until recently, South Korea operated a mixed economic system. On one hand, the country adhered to the basic tenets of private enterprise and a market economy. On the other hand, it followed a highly visible policy of government intervention. Through planning, direct or indirect ownership and control of enterprises and financial institutions, regulation of foreign exchange, and implementation of appropriate monetary and fiscal policies, the Government played a crucial role in making market adjustments and maximizing incentives. This was aimed at pursuing the fulfillment of its desired economic, social, political, and cultural objectives. However, economic success, the increase in complexity of the economy, the emergence of a more democratic and pluralistic society, and increasing international competitiveness were crucial factors in bringing about a decline in governments’ role in the South Korean economy. The reformist thrust of government economic policy, realized in the 1980s, was underlined by renowned emphasis on the need for greater efficiency in the economy. In addition, it improved labor productivity and enhanced competitiveness in order to meet the demands of globalization. The admission of South Korea, in December 1996, to membership of the Organization for Economic Co-operation and Development (OECD) was another watershed, which heightened the importance of economic reform, which is a step away from negativity – the Asian financial crisis, which highlighted long-standing structural weaknesses in the South Korean economy (Paik 69). Demographic Information of South Korea South Korea is, in fact, regarded as one of the world’s most densely populated countries, with 440 people per square kilometer. However, most people are concentrated in the major cities (Lie 16). The principal cities in South Korea include Seoul, Busan, Daegu, Ulsan and Incheon. In these four cities, the population density is about two-thirds of the whole population in South Korea (Caselli 129). The country’s capital city is Seoul. It covers about 12% of the total country’s area. Like the other cities, it is home to approximately 45% of the country’s population; as such, the 3rd largest and populated urban center in the world. Current statistics shows that more than 50% of the immigrants are moving to the capital city. Indeed, it has been speculated that about 55% of the national population will be living in the capital city. South Korea is officially recognized as the Republic of Korea with an area of 99,268 km2. According to information published by the World Bank, the total population is 48.747 million by 2009. Figure I. Republic of South Korea (Source: U.S. Department par. 1) The official language in the region is Korean, and it is closely related to Mongolian and Japanese. Although there is a clear difference in grammar with Chinese language, a large number of the Chinese cognates still exist in the Korean language. Modern Korean articulates to hangul—a phonetic writing system—in their writings. The country borders North Korea on its Northern part. The country is also surrounded by a mass of water encompassing Sea of Japan and Yellow Sea. It is separated from Japan by Sea of Japan (Paik 77). Korea’s ethnical group has been regarded as the most linguistically homogenous in the whole world. The region is occupied by Koreans, however, about 20,000 people of Chinese descendants occupy some parts of the country. Indeed, all Koreans have a common linguistic and cultural heritage. South Korean political system is based on the Republican form of governance. The President is the Head of State, and the Prime Minister acts as the Head of Government. The power is shared between the legislature, executive and judiciary. Currently, the South Korean president is Lee Myung-bak, while the Prime Minister is Han Seung-soo. The comparison of the literacy rates between the United States and South Korea are as follows: Nation Total Literacy Rate Male Literacy Rate Female Literacy Rate South Korea 98% 99% 97% (CIA, South Korea 3). United States 99% 99% 99% (CIA, United States 3). Economic Information of South Korea South Korea was a predominant agricultural country. Industrialization that followed in South Korea enhanced economic development which necessitated improved transportation of commodities in the region. Currently, the government is striving to achieve the economic tranquility that most of the developed countries enjoy. In doing so, they have renovated domestic airports that are located in Pyongyang, Busan and Seoul. The government has also completed superhighways that connect Seoul—capital city—with other principal cities in the region. The country is ranked 7th in the world as the largest exporter, and 10th as the largest importer. In 2010, its export amounted to US$466.3 billion, while its imports totaled US$417.9 billion (Kim 198). The main exports in South Korea include wireless telecommunications equipment, semiconductors, computers, motor vehicles, steel chips, and petrochemicals. These commodities are shipped to China, US, Japan and Hong Kong. On the other hand, the main imports include electronics and electronic equipment, machinery, steel, oil, plastics, organic equipment and transport equipment. These imports are from China, Japan, US, Saudi Arabia and Australia. Since 2000, the economy of South Korea has grown rapidly, and it is perceived to attain the high-tech industrialized economy. The South Korean economy has recorded an immense growth of 6.1% (2010). The GDP per capita of its economy is $29,997 in 2010 (CIA, United States 4) as against the United States with $47,184 (CIA, United States 4). Indeed, the US economy has approximately twice the GDP of South Korea. This is attributed to the US vast resources and high employment rate. With regard to inflation, the country’s inflation rate has increased from 2.8% in 2009 to 3% in 2010. The situation in the US economy has been drastic over the past twelve months. The economic report showed an inflation rate of 3.9% in 2010, which is higher than that of South Korea (Yi 202). The country’s stock market index, KOSPI, was able to rally 59 points—3.11%—in the last 12 months. From 1980 to 2011, the KOSPI stock market has averaged 742.82 points attaining a historical high of approximately 2229 points in June of 2011. The South Korean stock market index is given as: Figure 2 South Korea Stock Market (Source: South Korea Stock par. 1) The South Korea stock market uses KOSPI in analyzing the volatility of its stock in the market over the US stock market. The indexes provided are weighted against the values in the US economy. South Korea is an emerging industrialized economy that will be competitive to Developed Countries like Japan. As such, the economists have predicted that, in 2020, South Korea will have a high-tech and industrialized economy like other developed countries. Works Cited Caselli, Graziella. Demography: Analysis and Synthesis, Four Volume Set: A Treatise in Population. New York: Academic Press, 2005. Central Intelligence Agency. South Korea. The World Factbook. People and Society. n.d. 24 October 2011. . Central Intelligence Agency. United States. The World Factbook. People and Society. n.d. 24 October 2011. . Kim, Myung Oak. The New Korea: An Inside Look at South Korea’s Economic Rise. New York: AMACOM Div American Mgmt Assn, 2010. Lie, John. Han Unbound: The Political Economy of South Korea. New York: Stanford University Press, 2005. Paik, Myungho. Gender Differences in Demography and Labor Markets. London: ProQuest, 2008. South Korea Stock Market at 1898.32. Trading Economics. 2011. 24 October 2011. . U.S. Department of State. Background Note: South Korea. 7 July 2011. 24 October 2011. . Yi, Hyŏng-gu. The Korean Economy: Perspectives for the Twenty-First Century. New York: SUNY Press, 2003. Read More