South Korea International Economics Research

South Korea International Economics Research

August 18, 2017

Abstract

        The economy of South Korea has had a notable economic progress.  The South Korean economy grew notably from 1961 to 2008 with a Gross Domestic Product (GDP) of $2.21 to $928.7 billion (Jinhe, 2017).  That economic progress has been continuous with 30 years starting from 1961 until 1994 with an economic growth of 8.4% (Jinhe, 2012).  However, that economic growth was not the product of inadvertent events, but the result of planning and efficiency.  In 1961 South Korea’s government leader, General Park, created an Economic Planning Board (Kim, 1991) tasked with the creation of an economic progress plan.  The detailed reasons of South Korea’s economic progress are evaluated and analyzed through three research questions.  The selected research questions for this paper are: (a) what did South Koreans do to grow their economy? (b) How South Koreans sustained growth in their economy, in terms of economic actions and monetary policy? and (c) What are the threats to the South Korean economy stability and monetary policy?  The answers to those questions revealed that Korea’s economic progress was the product of an effective and appropriate strategy designed under the rigid military statute led by the General Park Chung-hee (Jinhe, 2012, Kim, 1991, and PIIE, 2003).  The progress of the South Korean economy transformed the nation from an agricultural based economy in in 1953 with a $67 GDP per capita to $20,000 in 2008 (Jinhe, 2012).  The focus of the economic plan and policy was on industrializing South Korea (Kim, 1991) and moving its economy towards strong exports.  That strategy led South Korea to become the world 8th largest exporting economy (Statista, 2017) with a Gross National Product (GNI) of $1,411 billion USD (World Bank, 2017).  However, growth did not come without difficulties.  Various threats came to the South Korean economy, but the main one has been government and business corruption (Hassink, 1999 and PIIE, 2003).  Yet, South Koreas economy is an example of remarkable and sustained economic growth running for more than five decades.

Introduction

        The Republic of Korea or South Korea is an example of a nation whose economy and development is extraordinary.  The South Korean economy started with a humble and low income economy to transform into a powerful economic nation.  In detail, by 1960 the South Korean per capita incomes were in the same level as those from Africa, yet the Korean economy grew quick and consistently up to the point of being in 2017 the world’s 11th strongest economy (Krieckhaus, 2017).  In economic terms, by 1953 South Korea was agricultural based country with a Gross Domestic Product (GDP) per capita of $67 (Jinhe, 2012).  Then, in 1961 the per capita income was $92, and in 2008 that figure increased to $20,000 (Jinhe, 2012).  That kind of economic growth in per capita or per person shows an impressive increment of 217.39 times or 21,739% over a period of 47 years (Jinhe, 2012).  Consequently, in the same period from 1961 to 2008 the overall Korean economy grew substantially.  In 1961, the nominal GDP was $2.21 billion and in 2008 that economic metric grew to $928.7 billion (Jinhe, 2012).