Economic Development in South Korea - Case Study Example

South Korea s South Korea Introduction Countries dominate and affect the world economy, as well as influence both the cultural and political environment in which we all live. It is crucial that we comprehend the impact of each nation; what role and responsibility each member country has to the entire society. Therefore, drawing on a variety of sources the paper will provide a discussion on South Korea. Specifically, the paper will evaluate South Korea’s geographic location, demographics, predominant religion, political systems, legal and how business conflicts are resolved, current economic environment, major source of wealth, current immigration policy, and lessons learned from evaluating the country Discussion The official name is Republic of Korea, although commonly known as South Korea. It is headquartered in Seoul and Korean(s) are its citizens. The official language is Korean. The country gained independence on August 5, 1945. The major cities include Seoul with a population of 24 million, Busan 3.8 million, Daegu 2.7 million, Incheon 2.6 million, Gwangju 1.5 million, Taejon 1.4 million, and Ulsan 1.1 million (Raum, 2014). The Seoul capital area is the second largest globally. According to the 2014 estimates, the population of South Korea was 51,305,048, unemployment rate was 3%. Its flag comprises of a white rectangle with a red top and a blue symbol at the centre. The white background shows light and the traditional affinity for peace. The circle is divided into equal portions of blue and red. It symbolizes global harmony. The four black trigrams sourrounding the circle represents unity and harmony (Hong, 2014). As cited by Bowden (2011), geographically South Korea occupies the southern end of the Korean peninsula. The Sea of Japan separates South Korea from Japan to the east, whereas the Yellow Sea separates the nation from China to west. The country has a total area of 100,210 square kilometers making it the 109th largest nation in the world. In the same way, South Korea occupies about 46% of the land area of the Korean Peninsula as well as 310 kilometers of water area. There is an artificial boundary known as the Demilitarized Zone stretching for 4 kilometers wide and extending 238 kilometers over land in addition to 3.5 kilometers over sea. The zone separates South Korea from its immediate neighbor, North Korea (Park, 2008). The various mountains, coastal plains, river valleys, and numerous tiny islands create a diverse landscape. In relation to the climate, it ranges from the subtropical in the south to temperate in the north, and is influenced by the adjacent sea (Bowden, 2011). The Korean citizens live in very high standards and the nation has the uppermost median-per capita income of $20,000 in Asia. Worldwide, South Korea has invested heavily in the education together with healthcare sectors. In South Korea, education is considered as a vital socio-economic success. Every primary and secondary school in South Korea is connected to a high-speed fiber-optic Internet access. The rigorous education system has played a major role in the county’s economic development with over 67% of persons aged between 25 and 34 years holding bachelor’s degree. The literacy rate is 99% (Savada & Shaw, 2012). In 2009, the birthrate of South Korea was the lowest in the world. The yearly birthrate is 9 births per 1000 persons. As of 2014, the average life expectancy was 80.97 years, which is 19th on a worldwide scale. It is the most ethnically homogenous society in the world. The nations GDP (Gross Domestic Product) at purchasing power parity (PPP) is $ 1.666 trillion as of 2013. Each household earns about $33,200. However, the nation is faced with environmental pollution due to urbanization. In 2013, the central government’s expenditure to the health care sector was $125.5 billion (Raum, 2014). More than 70% of South Koreans confess to a religion, including Buddhism, Christianity, Confucianism, shamanism, and Islam. However, South Korea is so distinctively Christian, with more than half the population adhering to it (Jenkins, 2011). With the majority of the population being Christians, in the past three decades the country has witnessed tremendous economic development and they believe that prosperity and achievement are signs of God’s blessings. The faith is evident in the high number of people attending Churches in South Korea. This has made the populace to continue working hard for economic development. However, the recent trend of some churches building megachurches has left them in financial debt impacting negatively on the economy. The political systems have transformed South Korea from a dictatorial state in the 1960s and 1970s into a democratic state, to the current liberal-democratic state. The Korean political system has significantly influenced its economic development (Kwon, 2010). The authoritarian regime accumulated investments. However, it was surrounded by corrupt political elites. For example, Synghman Rhee was forced to step down due to widespread corruption and dictatorship. Korea was one of the poorest nations in the world with a GDP of $1.5 billion and per capita GDP was $70. From 1960 to the 1980s, South Korea was under the leadership of military presidents. The military leaders assumed power and any demonstrations to oppose the regime were dealt with violently (Lew, 2013). However, the nation managed to rise economically due to the five year economic strategic plan that was initiated in the 1990s when the nation made democratic advances. Roh Woos as well as Kim Young Sam administrations ushered in a new era of pluralistic democracy. The new political system consisted of more political stakeholders as compared to the previous regimes (Amsden, 1992). The Roh Tae Woo administration came up with an over the five-year period economic plan with a focus on globalization, and also pursued political democratization that ended the totalitarianism of over forty years. The political transition imposed significant economic adjustments including resolving of labor disputes, increase in minimum wage, and exacerbation of economic injustices among others (Kwon, 2010). These composition ensured Korea scaled the economic ladder at a very rapid rate. Like other democratic states, the government is divided into three branches, namely the judicial, executive, and legislative. The constitution of South Korea has been revised various times since its promulgation on July 17, 1948. The nation has a unitary presidential constitutional republic. Under the executive branch, the president is the head of state as well as commander in chief of the armed forces. The president also appoints the prime minister, although he or she has to be approved by the National Assembly. The current president is Park Geun-hyne while the prime minister is Lee Wan-koo (Raum, 2014). Secondly, the National Assembly is the legislative body of the South Korean government. It has 273 members voted for 4-year terms and meet in the National Assembly in a 100-day sessions from September to December. Apart from making laws, the National Assembly also declares war and approves budgets. Finally, the judicial branch comprises of the Supreme Court, Court of Appeal, local courts, and Constitutional Court. The key administrative divisions are provinces, metropolitan cities, and one special autonomous city, in addition to one special city. Besides, there are also local governments that deal with issues pertaining to the welfare of the local residents (Bowden, 2011). Today, South Korea is a multiparty country. The establishment of the democratic rule was more conducive to a sustained and equitable growth in the long run. Further development was attained through innovation, invention, and business entrepreneurship. Lesser distributional conflicts have arisen as a result of democracy. As a consequence, about 62% of the world is currently part of the South Korean ‘economic territory’ based on the GDP. The GDP has grown from $ 1.5 billion in 1962 to $ 1.34 trillion in 2013. As of 2014, its percentage of GDP PPP was $1.790 trillion and the per capita GDP PPP was $35,490. This shows how positively the political system has impacted on the South Korean economy. In the same year, the total nominal GDP PPP was $1.450 trillion and the per capita nominal GDP was $28,740 (Raum, 2014). Currently, the country is ranked 15th globally by nominal GDP and 12th by PPP. It is a developed country with a very high income economy. The U.S is the largest foreign investor, accounting for about 50% of the total foreign investments. It is ranked 5th with an economic complex index of 1.73625 (U.S Energy Information Administration, 2014). The country has diplomatic relations with over 180 nations, and it is also a member of numerous international organizations. The South Korean economy has changed drastically since 2010. Five years ago, the South Korean economy had a per capita GDP of $22,151, while the gross national income was $1.505 PPP and the population was 49 million (Byung-Nak, 2012). In 2013, the per capita GDP was 32,708. The unemployment rate was 3%. By 2014, the rate of unemployment had reduced to 3% and the per capita GDP was $35,490, while the gross national income increased to $1.450 trillion. As reported by the World Bank Group, the GDP is South Korea has increased progressively over the years being at 901.93 in 2010 to 1304.55 in 2014 (Trading Economics, 2015). The GDP is expected to continue increasing due to the rapid economic development of South Korea in the next two to three decades. South Korean economic environment from 2006 to 2014 (Trading Economics, 2015) The major source of wealth for South Korea is the export of technological products. The nation is the 7th largest importer together with 8th largest exporter in the world. The country is the leading exported electronic goods and automobiles, especially Hyundai (Johnson & Bade, 2010). On the other hand, the country mainly imports oil, which amount to 23% of all the imports. The main exporting partners are China (24.5%), United States (10.3%), and Japan (7.5%). On the contrary, the South Korea’s key import partners include Australia (6%), Japan (15%), China (18%), Saudi Arabia (8.2%), and the United States (9.4%) (Raum, 2014). As of 2014, the products exported from South Korea amounted to $562 billion, while the imported products amounted to 516.6 billion. The top five exported products from South Korea include refined petroleum (9.3%), integrated circuits (8.6%), automobiles (7.7%), passenger and cargo ships (5.3%), and LCDs (4.2%). On the other hand, the top five imported products consist of crude petroleum (23%), natural gas (6.2%), semiconductors (5.1%), refined petroleum (3.6%), and coal briquettes (2.3%) (U.S Energy Information Administration, 2014). To that effect, the nation depends on imports in order to meet about 97% of its energy demand (Youn-Ja Shim, 2010). In spite of the lack of domestic energy resources, it has the most advanced and largest refineries worldwide. With regard to the legal system, the South Korean justice system has certain elements of continental European civil law, Anglo-American law, and Chinese classical thought. The chief justice along with judges is appointed by the president. The justices have the responsibility to preside over local courts and issue rulings since there are trial judges. The prosecutors and defendants may petition first to the district appellate court then to the Supreme Court (Savada & Shaw, 2012). In case of business disputes, negotiation is the most suitable means of resolving a dispute under most situations. In South Korea, most of the commercial contracts have a standard clause that stipulates pursuing negotiations before other dispute settlements techniques can be implemented (Bowden, 2011). The other way of resolving business disputes is arbitration. It is the most utilized mechanism in South Korea. Commercial arbitration is founded on the 1973 Arbitration Law. It is also the most preferred method for resolving both domestic and international commercial disputes due to benefits of speed, cost, and confidentiality (Practical Law, 2012). The other common conflict resolution mechanisms include mediation and litigation. The contractual efficiency has seen South Korea realize rapid economic development. The better contract enforcement is as a result of a sound legal framework. In the same way, a well-functioning justice system ensures strong protection of private property rights. Also, South Korea has done administrative innovation on a variety of fronts associated with property rights in an attempt to become an intellectual property motivating force on a global scale. Non-adherence to the South Korean immigration rules may result in a penalty. Immigration is low in South Korea due to stringent immigration policies. The country lacks inclusive and rational immigration policies (Kibria, Bowman, & OLeary, 2012). The immigration policy in South Korea is handled by the immigration services of the Health and Welfare, Foreign Affairs and Trade, Labor, and Justice Ministries. The immigration policy is made up of the Immigration Control Act, National Act, Framework Act on Treatment of Foreigners, and Multicultural Families Support Act (Bowden, 2011). As for the migrant workers who work in South Korea, most of them reside in the industrial suburbs of Gyeongi Province, where the foreigners make up about 7.7% of the total population (Bowden, 2011). Majority of the foreigners are from China. Studies have evidenced that the majority of the immigrants do not qualify for Korean citizenship or permanent residency, except if they are either married to a South Korean or invested in excess of $5 million in the local economy (Mundy, 2013). The requirement to invest in the Korean economy fosters economic development. Besides that, the strict immigration policy has resulted in economic improvement since most of the employees are locally based, and very few foreigners are allowed. As a result, their GDP increases since there will be repatriation of funds. Kwaak (2014) argues that the resident-by-marriage visa applicants need to prove income of over $13,750 in the past. This has impacted positively on the economy. The single most important thing that learned when I was researching about South Korea is that it is the most innovative nation in the entire world. As a result, it is the most research and development intensive nation, which is driven by high-tech firms, such as LG and Hyundai-Kia, together with Samsung. Innovation is a catalyst for growth. The rapid growth of South Korea is attributed to its technological inventions. The highly motivated and educated population is responsible for the nation’s high technological innovations and rapid economic development. It is currently the globe’s leading information society ranking first in e-government and second in smartphone usage. These rapid developments in technology have resulted in the country having the world’s fastest speed of Internet connection. This was of significance because most people today use LG and Samsung products, especially mobile phones. South Korea is not only the largest manufacturer of smartphones, but has also the largest usage of smartphones. The use of smartphones and Internet have revolutionized the manner in which people live ranging from healthcare, to shopping, to education, to religion, and sports among other areas. Everything is being developed with a specific focus to mobile phones. Applications are being developed for smartphones at a very rapid rate. Nearly everything in the current world is Internet reliant, and with South Korea as being at the forefront in this sector it really fascinated me. In summary, the emphasis on education and religion, as well as good governance have spurred economic development in South Korea. The numerous inventions have propelled the nation to a global technological leader. It is a developed country and its populace have very high standards of living. Being an innovative state, it has numerous business opportunities, quality medical care and education. The effects of its economic growth have been felt worldwide. References Amsden, A. (1992). Asias next giant: South Korea and late industrialization. New York: Oxfoed University Press. Bowden, R. (2011). South Korea. New York: Evans Brothers. Byung-Nak, S. (2012). The Rise of the Korean Economy, New York: Oxford University Press. Hong, E. (2014). The Birth of the Korean Cool: How One Nation Is Conquering the World Through Pop Culture. New York: Simon and Schuster. Jenkins, P. (2011). The New Faces of Christianity: Believing the Bible in the Global South, New York: Oxford University Press. Johnson, T., & Bade, D. (2010). Export/Import Procedures and Documentation. New York: AMACOM Div American Mgmt Assn. Kibria, N., Bowman, C., & OLeary, M. (2012). Race and Immigration. Malden: Polity. Kwaak, J. (2014). South Korea Tightens Rules on Marriages to Foreigners. 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