South Korea Affected by Globalization - Case Study Example

South Korea Affected by Globalization Introduction of Globalization Globalization is basically a process that integrates the economic, political and cultural systems around the globe. Since past many years the topic of globalization is considered to be the hottest issue concerning the international economy. It is believed that globalization has reduced the rate of poverty in many countries and this is a positive point of globalization and may be the basic reason why globalization is being given so much importance. It also supports new and basic ideas of how to create wealth and markets. Although it has gained much recognition in many countries, it has also been opposed by many international countries. The major concerns of this opposition are caused by the increasing of inequality and environmental degradation. Apart from these concerns there are also concerns over causing of widespread suffering, disorder and unrest. Globalization can be remarked as a medium which becomes the main source for global movements of social justice and also a source of repression. By governing these materials we can take a glance at the features of globalization, as to how the process drives, how politics can be changed and how it changes or affects institutions like the UN. Globalization has helped improve the poverty in a large number of developing countries but still it needs to bind to help the society’s poor community. Mainly we can say that as globalization covers all the cons and pros of the human society, and virtually every aspect we need to analyze and think, about the questions such as normative political theory. (Globalization, 1, n.d) Overview of the Economy of South Korea Recently it can be said that the economy of South Korea is one of the strongest economies of the world. It can be ranked as the thirteenth largest economy of the world because it is highly developed trillion dollar economy. Among the economies of Asia the economy of South Korea can be termed as the fourth largest economy. The growth of economy in South Korea is faster than all the major economies of the world in the 20th century. Till many decades the growth was continued in the double digit. South Korea turned in to a highly developed country just in 50 years and it is not less than a miracle. World Bank has termed the economy of South Korea as the High income economy and IMF has termed it as advanced economy. The economy of South Korea is known as the Asian Tiger in the economy of Asian countries because of its rapidly growing status. The capital of South Korea is Seoul and it is considered to be a big global city and also the major international financial center in Asia. Because of high income and good financial and economical status the living standard and life style of South Koreans is quite high and they enjoy the freedom of financial usages. The South Korea has developed so much rapidly because of the rapidly increasing process of industrialization in the South Korea which has placed the country among the top exporters and most of the export process is performed with China. The main industries of South Korea include chemicals, steel, textile, footwear, food processing, electronics and automobiles. The unemployment rate has also been recorded as low as 3.2% in the year 2007. The level of education of the country is also very much improved and competitive. The scientific literacy of South Korea is on the top and the mathematical literacy is ranked as second highest. According to the economists the information technology industry of the South Korea has also among the three top IT industries. Hence all this above analysis shows that the economy of South Korea has geared itself from the year 1960s till 2007. The GDP rate that was recorded in the year 2007 was GDP (Nominal) $981.9 Billion and GDP (PPP) $1.312trillion. Although the economy has faced a really tremendous rise but the financial crisis that has been taken place in the year 2008 which has affected G7 and the over all European economy has also shaken the economy of South Korea and now the value of the Korean currency has decreased 31% if it is compared with the value of US dollar in the single year. The economy of South Korea has also seen the bad patch like other economies of the world. (CIA- the world fact book, 1, 2009) South Korea has developed itself in the field of technology and industry to the large extent and now in today’s world it is among the competitive countries of the world because it has high level of technology introduced. The economy of South Korea had faced a financial crisis in the year 1997 and has tried hard to improve its economy and this was done just by improving the industrial sector. Now again in the year 2008 when global financial crisis has been observed it is being thought that the economy of South Korea is again having a night mare and the economy value and the stock markets have fallen down almost 30 percent if it is compared with the stock markets and the currency value of the year 2007. It has just recalled the picture of the financial crisis 10 years back and the people are scared of those situations. The financial crisis has begun and the Asian Tiger of economy has facing the problems. It is believed by some people that the economy of South Korea is facing this effect and is open to this destabilization of economy because it is more vulnerable to the foreign capital and Western market if it is compared with other Asian countries having strong economy like China and Japan. All the strong economies of the world are facing the financial challenges and crisis today and South Korea has also hit by this issue. The credit crisis is also arising issue in South Korea and it can affect the banks of South Korea. Now the value of dollars has risen in comparison of the South Korean currency which has made the banks of South Korea unable to borrow dollars. The trade and export of South Korea has also been affected to some extent. The South Koreans do not want to seek for the help of other countries like they had to take before. Some of the economists believe that the country’s economy is strong enough and can face the challenges itself but the current financial scenario is unpredictable and nothing can be said. (Fackler, 1, 2008) Fig:1 Economy of South Korea Relationship of Economy and Globalization The relationship between Economy and Globalization is a deep study; globalization affects this world and the people living in it in many ways. Globalization as a whole affects the economic state of a country and exposes the developing countries. It has led to different competitions, such as perfect competition, and weakens the position of the poor countries as well as poor people. As of the new globalization affects, technology advancement has taken place and many developed countries in order to take advantage of this advancement spurred investments in this sector to open up to foreign trade and investments. Because of globalization, poor countries disintegrate and their trade and investments worsen which leads to their downfall. Even if all the countries of the world stay united and co-operate with one another, the developed countries has the power to control, and whatever they say happens. Developed countries such as United States, as one of the richest in the world, has been influencing globalization and has used it to their advantage which direct to economic and cultural issues worldwide. Nowadays, poverty is on the increase which proves that globalization has affected Poverty and is a major factor in the increasing number of poor people. This effect is majorly due to the competition from all over the world and the countries which are less developed are suffering from it, which is due to the competition between the workers and foreign investments. For instance, when there is competition among the workers from different countries, workers with more facilities provided to them by their government will overcome the workers with fewer facilities and so the outcome will be, rich taking over the poor. All these effects on globalization have led to the downfall of the economy. (Globalization of the Economy, 1, n.d) Effects of Globalization on South Korean Economy South Korean economy was affected by globalization in different ways. The South Korean Economy tasted globalization in the late 1980’s when they opened their economy to free trade. They stopped supporting their farmers or supported them in a few matters. They were supported by the Uruguay round (which later on became WTO). By reducing the support to their farmers they thought that they had put its country on a fast track to development which will open up new developments and country’s economy will be boosted. This led to the downfall of their farmers and the other countries such as United States kept supporting their farmers and thus the South Korean farmers could not compete with other countries and suffered a severe setback. Rice is a major culture of South Korea and by the decrease of farmers in South Korea, which was dropped from 6.6 million to 3.6 million in twelve years, was a setback to their economy and decreased their development process. They suffered a financial meltdown in the year 1997-98, when Asia was suffering from currency crises. But they recovered soon by support from the International Monetary Fund. There were some benefits for the South Korean Economy by the globalization effect. They effectively managed the chaebol system into their economy which leads them to superior results, but afterwards the chaebol system caused the downfall. This system included large corporation with many unrelated subsidiaries. They supported all the companies by financial assistance. Also they created export orientated industries. Chaebols were a major factor to their economy, even big enough to utilize limited resources effectively. This system also protected their domestic market so that the currency crisis can be avoided. Through this system they emerged as on of the leading exporters in the world. South Korea imported raw materials to manufacture exports. They faced problems as well due to this system such as the labor cost increased, which was due to the high standard of living. This system contributed to the economic crisis which South Korea faced in the year 1997. The banking sector gave too many loans and suffered from debts. Due to this they became less competitive in the long run. This caused a bad effect to their economy, rather good effect of globalization. (Gongol, 1, n.d) Conclusion It can be concluded that the process of globalization has brought the political, cultural, social as well as economical aspects together at one place and this step has affected the international economy to the large extent. All the nations of the world are striving hard for getting globalizes because it is a thought that the countries are flourishing if they are getting globalize. Globalization basically can be referred as the use of technology to the great extent such that all the countries come at single place and communicate and interchange with each other. The main aim of establishing the thought of globalization is because the countries want to establish their economic conditions and it is believed that globalization has reduced the problem of poverty and also has provided the new concepts of wealth and market. In this paper our research question is that what are the possible effects that has been made over the economic conditions of South Korea due to the trend of globalization. In this paper the detailed overview of the economy of South Korea has been provided which shows the financial crisis of the year 1997 and then the rise in the economy of the country. The country has struggled a lot in maintaining this economic level and has developed the industry to the large extent which has given rise to the economy of the country. But now again the world is facing a new financial crisis and it has also hit the economy of South Korea and now the economy of the country is not stabilized. The globalization is observed to have positive impacts over the economy of the country and the other word that can be used for globalization is identity so it can be said that globalization gives identity to the country among all the countries of the globe. Still different people have different thoughts and some believe that the globalization is having a negative impact over the economy of the world while others believe that globalization is showing new ways and advancements to the economy of the world. Surely the economy of South Korea has taken great advantage from the globalization and this can be proved by observing the improvements in the economy of the country after the financial crisis of the year 1997. Obviously globalization made them to survive and to work hard by observing other countries and by also taking help from other countries which made them able to stabilize their economy. References Brian Gongol, South Korea’s Chaebol (no date) http://www.gongol.com/research/economics/chaebol/ Accessed March 11, 2009 Cate Malek, Globalization (2005) http://www.beyondintractability.org/case_studies/Globalization.jsp?nid=5102 Accessed March 11, 2009 CIA- the world fact book Korea, South (2009) https://www.cia.gov/library/publications/the-world-factbook/geos/ks.html Accessed March 10, 2009 Globalization of the Economy (no date) http://www.globalpolicy.org/globaliz/econ/index.htm Accessed March 11, 2009 Martin Fackler, South Koreans reliving nightmare of last financial crisis (2008) http://www.iht.com/articles/2008/10/24/business/24won.php Accessed March 10, 2009 Figure 1 http://www.economywatch.com/world_economy/south-korea/ Accessed March 13, 2009 Read More